Asean business leaders should take advantage of the region’s proximity to China and the rest of Asia to survive in the changing global landscape.
This is what experts told participants of the 15th Management Association of the Philippines (MAP) International CEO Conference 2017, which had the theme “Asean in Business: Building Partnerships in a Growth Network”, on Tuesday.
“Globalization is dead. However, it doesn’t mean that integration is stopping,” TAC Economics Chairman and Chief Economist Thierry Apoteker said in a keynote speech.
Global trade in goods is rapidly changing and growth will not be what it was way back in 1990s, he said.
“Global value chain investments have been declining since 2011. That means that companies are moving less at this integrated and very large value chain. I think this is the major change today,” Apoteker said.
Service exports, however, are not as affected and that is where businesses, especially those in Asean region, could focus.
“[Of] every $100 worth of goods exported worldwide, almost 40 percent of this value is in fact services that are incorporated in this process. So it means that this is very important because that kind of breaking up of value chain creates an opportunity,” he said.
“It is important for Asean businesses to move further to services,” he added.
One way that a company can boost trade in services is if it makes a beeline for the Chinese market.
“To put it in another word … It is very dificult not to be pulled by this kind of gravity force which is exerted by a very large country that is also rapidly growing,” Apoteker said.
Anson Bailey, partner and head of the consumer markets practice at KMPG Hong Kong, said businesses should be prepared to learn new things and take advantage of regional market opportunities.
Asia’s household consumption spending is projected to reach $33 trillion by 2030, he said, far outpacing the $18 trillion and $16 trillion estimated for the United States and Europe, respectively.
“This will be driven by new middle classes and growing millennial population in the region. It is really staring to ramp up,” Baily said.
He also noted opportunities from mobile device use and the increasing role of social media in e-commerce.
Bailey noted that there are 602 million smartphones in China alone while Internet usage is increasing day by day in Southeast Asia. Similarly in Philippines, Internet usage rates are climbing and will continue to climb, he added.
“Today’s Asian consumers are actively connected to everything. Some CEOs did not know the importance of social media and I need you to think the importance of these technologies to businesses,” he stressed.
Lastly, Bailey highlighted that 58 percent of the global millennial population is in Asia.
Given this, he said millennials were an important demographic as they are the ones who are willing to pay for participating in an “experience economy”.