When marketers think of Asia’s growth potential for global brands, they most often think of China and India, two countries that account for over a third of the world’s population. But there’s another part of Asia that needs to be more than just an afterthought.
It’s Southeast Asia, made up of a collection of dramatically diverse countries, from affluent Singapore to largely Muslim Indonesia to youthful Vietnam and beyond. While Southeast Asian countries diverge on many points – religion, language, politics, economic development and more – they have one critical thing in common. Together, they form the world’s next engine of growth. Whether global marketers are ready or not, it’s time to look seriously at emerging Asia beyond China and India.
Most importantly from a brand perspective, consumers in Southeast Asia are numerous, young, increasingly online and rapidly entering the middle class. The region’s population is already 600 million, almost twice that of the United States, with over half under the age of 30, according to Accenture. That’s a significant population in the early days of their lives as consumers – and with more disposable income than ever before.
Nielsen predicts that Southeast Asia’s middle class will grow to a third of the total population by 2020. They’re already among the world’s most optimistic consumers; Indonesia, Philippines, and Thailand made Nielsen’s list of the top 10 most confident markets. Importantly, one-third of the region is online according to Internet World Stats, with a smartphone often serving as a first and perhaps only connection to the Internet. The outcome of these factors is a young, tech savvy population with an appetite for an aspirational middle class lifestyle.
The question of how global brands can tap into Southeast Asia’s promise has become more urgent with the ASEAN Economic Community coming into effect in 2015. This will create a single market for goods, services, investment and skilled labour to move freely between Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. This economic union will certainly spur greater activity by regional brands and should prompt global brands into action lest they lose out to homegrown favourites.
But it won’t be easy for global brands to make inroads, particularly as the region is far from homogenous. In fact, few other regions in the world see so much disparity between neighbours. Cambodia opened its very first shopping mall this year while Singapore, with almost nine times the GDP, is a world-class luxury-shopping destination. The Philippines is 83 per cent Catholic; Thailand is 94 per cent Buddhist. In Malaysia, over half the population uses social media, while Myanmar has just 1 per cent Internet penetration. Brunei is home to just 400,000 people while Indonesia weighs in with a population of 244 million. And these are just a few indictors of the many differences in religion, culture, ethnicity, language, economic standing and digital uptake that characterize the region.
What this means for brands is that no one approach will work for all markets. First, experience with brands and product categories varies widely depending on each country’s economic progress. In Myanmar, low-income consumers are acquiring their very first household durables like refrigerators and air conditioners after years of economic isolation. In Vietnam and, to a lesser extent, Cambodia and Laos, brands are just starting to be used as a form of self-expression, according to a TNS report. Compare these markets to Singapore or prosperous cities like Kuala Lumpur and Bangkok where a strong middle class supports a sophisticated consumer culture.
Additionally, much to the chagrin of those who champion global advertising campaigns, the diversity of the region makes it more challenging for a single message to work effectively. It’s unlikely that a campaign idea conceived in London or New York and intended for developed markets will resonate across all of Southeast Asia. That might work for the niche audiences of luxury brands but it will be a challenge for marketing everyday consumer goods, particularly if the category is new to local consumers and requires education.
Still, the effort of breaking into Southeast Asian markets is well worth it. The region is the world’s seventh-largest economy with a combined GDP of $2.4 trillion USD, according to McKinsey, ranking just behind the UK’s $2.5 trillion. McKinsey predicts it will be the world’s fourth-largest economy by 2050. Marketers with an eye on growth should start thinking about how best to reach tomorrow’s power consumer: a twentysomething year-old Muslim in Jakarta whose version of middle class means owning a smartphone and a motorcycle.
As the search for growth continues to pull global brands towards the east, one of the least understood regions in the world is fast becoming one of the most important.
Stephanie Myers is engagement director, Asia Pacific at WPP's POSSIBLE in Singapore