How can your business benefit from Asia’s impending consumption boom?
Asia’s consumer market is growing. According to business and finance publication the Australian Financial Review (APR), the middle class is expected to more than triple from 1.8 billion in 2009 to 4.9 billion by 2030—and it expects 2/3 of that middle class to reside in Asia. That’s a lot of consumers with enough disposable income to significantly propel business growth across a variety of sectors, including food and beverage industries. From convenient fast food chains to luxury goods like spirits and wine, opportunities are abundant. But do you have what it takes to grow alongside this growing market? By remembering these key points, you could be on your way.
Don’t expect the boom to happen overnight
This point applies to more than just the upcoming Asia consumption boom, but really any market growth in general. As the Australian Financial Review notes, consumption booms throughout history haven’t come all at once—they can take decades to fully develop. Enter the market and spend capital expecting to gain it back immediately with plenty of interest, and you could be setting yourself up for a quick failure. But with the right planning, a slow build is not a bad thing. All that this means is that any consumption boom currently in progress in Asia is far from reaching its peak. There is plenty of time to carefully and thoughtfully plan a strategy in the region.
Keep your quality high for consumers ready to spend
As any financial boom progresses, middle class and wealthy consumers with money to spend will be looking for high quality products with desirable brand names. “The wealth-effect will start with higher demand for the best-known Western products and eventually work its way to second-tier players,” Tempo Asset Management principal Joe Bracken told AFR. Even if your products are not yet known on a global level, any top quality luxury product has a strong chance of building a following in time within this emerging market.
Know the market you’re entering and prepare to adapt
If you’ve never entered the Asia market before, be aware before going in that understanding the market and its needs is essential to having any kind of success, even during a boom where the market is inherently more interested in foreign products. Global brands that have been immensely successful elsewhere have still struggled here due to a lack of true market understanding.
"Walmart, Tesco, McDonald's, Yum! Brands and other multinationals have struggled to achieve consistent rapid growth in Asia,” Kevin Bertoli, portfolio manager of Asian equities at PM Capital, told APR. “The reality is domestic consumers want domestic products. We prefer Asian companies that better understand local markets and have stronger manufacturing and supply networks." This isn’t to say that global companies can’t come into the Asian market and succeed—food businesses like KFC and Pizza Hut in particular have done immensely well by tailoring their menus to Asian tastes. That willingness to adapt will set you apart.
- Starbucks Corporation plans to open hundreds of new stores in JapanDrink
- Radisson Hotel Group ramps up expansion plans in Africa with 10 new hotel signingsHotels & Hospitality
- Chipotle plans sales comeback with marketing blitz and online salesRestaurants
- General Mills signs up golfer Jordan Spieth as brand ambassadorRetail