Asia is massive, for lack of a better word. It is the largest and most populous continent in the world, has the most stable regulatory conditions, and is home to some of the most dynamic and diversified Asian economies and cultures. However, it also represents one of the greatest business opportunities and expansion prospects in the world.
Let’s concentrate on five key reasons why multinational companies should prioritize Asian markets when considering doing business there.
Asian markets together constitute the world’s second-largest consumer market
Even though it may take some time for any country to surpass the massive consumer economy found in the United States. When the pre-COVID markets of China, Japan, and South Korea are combined, the amount spent is nearly nine trillion USD, far exceeding the eight trillion spent by EU member countries. Furthermore, the GDP of China and Japan, the world’s second and third-largest economies, is rapidly nearing previously inconceivable US levels.
More impressive is a recent McKinsey report that claims that by 2040, Asia may very well account for 40% of the world’s economy, consumption, and GDP. And the trend appears to be intensifying right now, with China shortly overtaking other countries’ loudest consumers of luxury products.
China and its rivals in the region, Japan and South Korea, already have a combined market value for luxury goods that is 25% higher than what US consumers spend on the same high-end products.
Asian markets together account for the world’s second-largest consumer market
Consumer spending and luxury goods are undoubtedly not the entire pictures, as Asia is currently home to four of the top ten oil consumers in the world, including China, Japan, and South Korea once more. China and Japan are among the top four oil consumers worldwide.
Japan, the fourth-largest exporter in the world, imports roughly two-thirds of a trillion dollars’ worth of products and commodities every year, including everything from copper ore to integrated circuits to cutting-edge weapons. With investments in fighter jets, drones, missiles, and a variety of other hardware that is too sensitive to mention here, Japan is an incredibly lucrative business partner for the US defense industry.
It has the most intra-regional commerce and regional trade partnerships
When the Regional Comprehensive Economic Partnership Agreement (RCEP) between ASEAN and six other regional nations takes effect in January 2022, member states will account for 30% of global GDP. it will quickly surpass North American and EU agreements.
The agreement will make it easier for businesses to grow their footprint across numerous locations and will aid in streamlining the movement of products and services across member-state boundaries. Having the financial and commercial centers of Hong Kong, Shanghai, Singapore, Seoul, and Tokyo all within an hour of one another is an additional benefit.
Asian countries have a large pool of talent in many fields
It makes sense that the area with the highest population in the globe would have a sizable labor pool. US IT firms have long hired highly trained local workers from nations like China and India, but as the middle class expands throughout much of Asia, there is more money available to invest in education.
Examples of Asian economies that are constantly growing include Indonesia, the Philippines, and to a lesser extent Myanmar and Vietnam, all of which have sizable populations and tremendous room for economic growth. Numerous competent local workers are now expressing interest in and looking to test the waters of non-traditional destinations outside of Silicon Valley after honing their skills in the more developed economies of their neighbors and becoming impatient to wait for organic career advancement.
Another large source of locally skilled labor in Southeast Asian nations like Thailand, Indonesia, and the Philippines is the medical sector. Care workers speak English and other languages and have received education at a fraction of the cost in their home countries. They are prepared to address the labor shortages in aging countries such as Western Europe and Japan. It is home to the world’s fastest-growing technology hubs as well as the busiest shipping hubs.
Numerous locations in Asia are regarded as some of the most important worldwide centers for emerging technologies. But Singapore, which is home to 80% of the top global tech firms and is recognized by KPMG as the world’s top tech innovation hub, has recently attracted the most attention.
One day, perhaps, this “Small Silicon Valley” won’t need the qualifier “little” before its moniker. Its popularity is largely attributable to a government that rewards tech companies and encourages them to create locally rather than just sell pre-existing products.
Final thoughts
Despite all of these benefits, companies that want to expand into Asia must be based in Asia. Making investment worthwhile requires knowing how to build a profitable and long-lasting presence in Asia, and the businesses that have had an actual, long-term impact all have sizable operational capacities there.
A time may not be far off when starting a firm in Asia before expanding outside will be necessary. It may be here already!
