ASEAN 2015: Are You Ready? Key Implications for Australian Businesses
As the deadline for ASEAN 2015 looms, the marketplace is rife with speculation and opinion 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 seven 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.
The overlying objectives of ASEAN is to remove the complications, risk and inefficiencies out of doing business across the region, to take down the barriers that restrict a more open and competitive landscape where smart, strong businesses can prosper – and workers and consumers share in the benefits.
These changes will mean that organisations will be able to operate within and across the Southeast Asian region in different ways, opening up new efficiencies, options and opportunities. As an economic trade partner for the ASEAN region, Australia is set to benefit from these new trading terms.
ASEAN’S TIME IS NOW: TAPPING INTO THE OPPORTUNITIES
- Middle Class Explosion: 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.
- Spending Power: 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. With a thriving economy, booming population growth, expanding investment and wealth dispersion – consumers in this region have an accelerated appetite for goods and services.
- A Love of Luxury: 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. Consumers in the ASEAN region are early adopters and impulse shoppers. They are also among the most label-conscious in the world, with the majority are willing to spend more on designer products – particularly for clothing and shoes.
- Rise of the Little Emperors: The ASEAN nations currently have some of the youngest consumers in the world – a consumer segment that is definitely opportunistic for Australian businesses. Wealthy parents of these ‘Little Emperors’ are willing to pay a premium for products across a vast array of categories including infant formula, packaged food, nappies, toys and games, electronics, and education services.
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, look outside the domestic market and future-proof their local offering 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.
For more information contact your local Nielsen representative.