Global trends, digital catalysts #1
Exploring technology’s impact on people, business and society
In this multi-part series, I’ll outline global trends that have been catalysed by, or amplified by, digital technology. I’ll show how they are influencing our behaviours, businesses and society and what this means for today’s leaders.
Easternisation: new frontiers and new competitors
A global shift in power is afoot, and we all get to enjoy front row seats. Centuries of Western dominance are drawing to a close with Asia emerging as the world’s political and economic force. The continent is now home to over 50 percent of the worlds fastest-growing economies. Known as Easternisation, this shows why businesses must learn to compete in foreign territories and cultures.
This shift has sparked a boom in Asian middle-classes. The OECD estimates that by 2030 China and India will be home to two-thirds of the world’s middle-class population. They are an engine of consumption and investment in education, health and housing. McKinsey & Company has claimed this to be the biggest growth opportunity in the history of capitalism. Meanwhile, Western middle-classes face stagnating incomes, rising education costs and crippling house prices.
But don’t mistake Asian markets for free lunch; they are the worlds most sought-after consumer markets. What’s more, they are the most diverse markets on the planet. Vast differences exist in tastes, demands, demographics and maturity of infrastructure across the region. Local businesses hold a cultural edge, and protectionist regulation can stymie foreign advances.
Foreign businesses can also find the speed of change quite startling. The rapid growth of China’s economy in recent decades has coined the term “China speed”, and this relentless pace shows no sign of slowing. As physical infrastructure matures, the focus is turning towards digital innovation. It should come as no surprise that Asia accounts for 36.8 percent of the global digital transformation market.
Asia boasts many of the world’s fastest-growing companies. They work at the bleeding edge of digital, constantly blurring the line between online and offline (O2O) worlds. Social commerce, super apps and digital wallets are part of everyday life. If you have ambitions to operate in Asia, you should not expect to just tweak Western-centric products, services and business models for Asian sensibilities. Instead, you need a ground-up redesign. Digital and Asian culture must come together seamlessly for success in this market.
Despite domestic successes, Asian companies are not content to stay within their home markets. They are now setting up new infrastructure and partnerships abroad. Tencent and Amsterdam Airport Schiphol launched Europe’s first WeChat Pay smart airport. Alipay and Barclaycard are working to bring Alipay transactions to retail stores across the UK. And Alibaba inked a contract with the Belgian government to launch an e-commerce trade hub. This makes Belgium the first country in Europe to join Alibaba’s Electronic World Trade Platform (eWTP).
“If a company’s directors are not digitally savvy, they’re really putting the future of their company at risk.” — Stephanie Woerner, MIT CISR Research Scientist
If you are looking for relevance and growth, your business must consider Asia. But prepare for change. Success in these markets is likely to call for restructuring. You must reduce barriers to speed. Imbue your company with Asian culture. And innovate around new around digital products, services and business models fit for the competitive context. This needs leaders that can form and execute smart digital vision, strategy and capabilities.
In the next article, I’ll look at how digital has enabled organisations and individuals to take part in global politics.
