The Asian market is as important as ever. Half of global growth in consumer expenditure will originate in the region in the coming years. As a result, Asia Pacific will attract growing attention from global companies, for many of which Asia will become the key market. However, it is a market that is full of challenges - consumers are diverse, competition from local players is increasing and distribution channels are underdeveloped.
Asia already accounts for over half of the global population, but less than a third of consumer expenditure. Given the vast potential in terms of income growth, Asia is set to become the backbone of consumer markets with an expected 50% of global consumer expenditure coming from Asia by 2050.
Asian consumers are extremely diverse, however key traits that unite the majority of Asian consumers are collective mindedness and strong emphasis on tradition as well as high level of internet usage. As of 2017, Asia Pacific is home to 50% of global internet users.
Asia will remain the key driver for consumer industries over 2017-2022. Consumer electronics and personal accessories will see close to 100% of absolute value growth coming from the region while some of the more saturated industries such as tobacco, soft and hot drinks will see 20-40% of value growth coming from Asia. In between, industries such as beauty, apparel and packaged food lie, all of which will derive around 50% of future growth from Asia.
Asian companies across industries are increasingly visible and prominent due to stronger focus on quality, innovation and specific client needs. This means their Western counterparts will start facing increased competition from domestic players not only in Asia Pacific, but also in their mature home markets.
The consistently rising income levels and increasing number of high-income households will facilitate strong growth in luxury goods in Asia Pacific. Asia is already the biggest and most lucrative luxury goods market and will become even more important in the coming five years due to the rising trend of premiumisation.
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