ASEAN 2015: HOW CAN YOU PREPARE YOUR BUSINESS FOR WHAT LIES AHEAD?
In light of the growing uncertainty surrounding the regional economic integration of ASEAN in 2015, being ready for what lies ahead presents challenges for even the most well-prepared companies.
As the deadline for ASEAN 2015 looms, the marketplace is rife with speculation, opinion, counter-opinion and rhetoric on whether the member states are prepared. One view which is shared by an overwhelming majority, however, is that the ASEAN region will play an increasingly important role in the global economy in the years to come. And with good reason. The ASEAN region has huge potential for growth in the coming years – Nielsen estimates Southeast Asia’s GDP will grow by close to 7 percent per annum over the next decade. The region boasts a population of 600 million, and within this population is a rapidly expanding middle class community who are establishing the financial means to move beyond subsistence living. While today’s Asian middle class consumer population represents around 30 percent of the global middle class, by the end of this decade that number will increase to more than 50 percent of the global middle class, representing more than US$2 trillion in new consumption in Southeast Asia alone. As the region’s middle class population expands, they are also becoming more aspirational and seek out opportunities to trade up to premium offerings which demonstrate their rising social status.
At the opposite end of the spectrum, the region has an expanding pool of affluent consumers who are cashed up and spending big on everything from travel and leisure to luxury goods, fine dining, cars and real estate. By 2020 global spending on luxury goods is expected to increase by 20 percent to around US$1.2 trillion, and much of this growth will come from Asia. In Southeast Asia, Nielsen estimates the affluent consumer population will double between 2013 and 2020, and their discretionary spending will rise by about 5 percent per annum, representing an additional US$100 billion.
Adding to this growth in middle and affluent class numbers, the positive economic outlook for Southeast Asia has generated consumer confidence levels which are among the highest in the world – today three of the world’s top 10 most confident nations hail from Southeast Asia.
To accompany this strong wave of consumerism, significant investment is going into infrastructure to provide stable platforms for businesses. The Asian Development Bank estimates ASEAN nations will need more than US$500 billion dollars of infrastructure investment in various forms by 2020, and these unprecedented commitments will be critical to provide an attractive business environment.
Now, with changes through the ASEAN agenda, organizations may be able to operate within and across the Southeast Asian region in different ways, opening up new efficiencies, options and opportunities.
But with these opportunities come challenges. For those already doing business in the region, competition will increase in the years ahead as the world’s largest companies turn to Southeast Asia to drive their revenue growth. And as the barriers of doing business are removed, new and unfamiliar competitors will emerge. Conversely, multinational organisations can expect to face competition from Asian giants in markets outside of Asia as they begin to grow and move beyond their traditional markets.
To successfully navigate the complex and unique ASEAN landscape companies will need to be armed with the knowledge and confidence to make swift and informed decisions. ASEAN 2015 will kick-start and accelerate change across the region and it is important to think ahead and prepare for the future. A sound strategy is imperative, and companies which are able to remain agile and anticipate changes before they arrive will emerge as winners.
Insights contained in this article are taken from Nielsen’s ASEAN 2015: Seeing around the corner in a new Asian landscape report which focuses on three key areas: the importance of economic, political and consumer change in the region; implications of ASEAN 2015 for businesses; and potential winning strategies. Download the full report now or for more information contact Nielsen.