1. Understanding the drivers of change in the Asian environment, and what they mean for the way Asian competition will work in the future, is the first step towards creating new strategies in order to succeed in Asia. That’s what I would like to take you through this morning by understanding the mega trends happening across the region.

2. GROWTH SET TO CONTINUE: Marco-Economic Outlook for Asia/Pacific
GDP growth (%)
Size of Middle Class (in million)
And Asia Pacific is set to provide the highest economic growth of any global region throughout 2010 and beyond, lead by these 2 developing economies, India & China, dominating growth in other countries, including Japan. There will be no globalization without Asia, and no Asia without China and India.
Countless western companies know that their presence in Asia is indispensable, not only from a growth potential and as an actor in a pretty solid market, but also because it is where the competition of tomorrow will take place. Asia is a place for innovation. This is the picture of Asia today but keep in mind Asia is NOT like Europe and the diversity in this part of the world makes generalization dangerous. Putting Asia under a homogeneous roof would be an oversimplification.
Highest growth region with changing trade patterns and increasing portion of domestic demand
Every 1% gained in private consumption translates into over $70b more in consumption
1) Source: Economist Intelligence Unit Update; 2) Master Card estimates

3. REGION ASIA – THE NATURE OF THE BEAST
Singapore
Japan
Thailand
Ethnic
groups:
Languages:
Religions:
% sales of modern
trade
Ave. price
per footwear (€)
Chinese, Malay, Indian, Others
English, Malay, Mandarin, etc.
Christian, Buddhist, Muslim, etc
>80%
48.2
Ethnic
groups:
Languages:
Religions:
% sales of modern
trade
Ave. price
per footwear (€)
99 % Japanese
1 % Others
Japanese
Shinto Buddhist, Others
>90%
>48
China
Ethnic
groups:
Languages:
Religions:
% sales of modern
trade
Ave. price
per footwear (€)
75% Thai
8% Chinese
17% Others
Thai
Buddhist, others
~30%
14.1
India
Ethnic
groups:
Languages:
Religions:
% sales of modern
trade
Ave. price
per footwear (€)
93% Chinese
7% others
Mandarin
>100 dialects
Confuc-ianism Buddhism,Taoism, others
<10%
3.4
Ethnic
groups:
Languages:
Religions:
% sales of modern
trade
Ave. price
per footwear (€)
336 major tribes
Hindi
1,600 dialects
Hindu
Muslim
Others
<5%
2.3
People
Trade Struc.
The area is so vast that delineation of boundaries is not easy.
Pricing
High
Mid
Economic development
Low
Very Low
Source: Lit search; CIA Factbook; BCG analysis

4. REGION ASIA – THE NATURE OF THE BEAST
Population in mio.
2001
2007 FC
2015 FC
2016 FC
China
1,278
1,339
1,380
1,386
India
1,027
1,112
1,235
1,250
Indonesia
214
232
254
257
Japan
127
125
Vietnam 80 89 94 95
Philippines 78 85
100
102
Thailand 63 66
Korea 47 49 51
Malaysia 24 25 29 30
Taiwan 22
Australia 19 20
Hong Kong, China 7 6 9
New Zealand 4
Singapore 3
Calcutta
2,993
3,179
94,217
95,055
Population
Half of the world population
Young population …
… >50% below 30 years old
Increasing concentration in cities
… 30% 0 to 14 years old
This Region is as diverse in its beliefs as it is in its culture. It spans the most populated countries in the world - India, with the world’s largest democracy, as well as an increasingly capitalist China, and also the most staunchly Stalinist country, North Korea. In Asia there are still another 4 countries with populations above 100 million; Indonesia, Pakistan, Bangladesh and Japan, as well as a number of medium-sized countries, Vietnam, Philippines, Thailand, Myanmar and South Korea, all with between 60 to 80 million inhabitants each.

5. ASIA PACIFIC RELATIVE SIZE OF ECONOMIES
10000
China
India
1000
Indonesia
Japan
Philippines
100
Vietnam
Korea
Thailand
Population (million)
Malaysia
Taiwan 10
Hong Kong
Above all, the region is divergent in prosperity, economic size and success. It contains 7 countries with high-income economies; Hong Kong, Japan, Singapore, South Korea, Taiwan and, if we widen the definition of Asia, Australia and New Zealand. But it also includes a sizeable number of countries with real income per head much lower like India, Vietnam, Pakistan, Mongolia, or Laos.
Singapore
100
1000
10000
100000
GNI Per Capita (US$) 2002

6. GNI Per Capita (US$) 2002 PPP
ASIA PACIFIC RELATIVE SIZE OF ECONOMIES MEASURED WITH PURCHASING POWER PARITY
10000
China
India
1000
Indonesia
Thailand
Japan
100
Korea
Philippines
Population (million)
Vietnam
Taiwan
Malaysia 10
Hong Kong
At market prices, Japan today dominates the region with 56% of the total GDP of east and south Asia. Together Japan, China, India and South Korea generate 85% of the GDP of the Region.
We can identify 6 mega-trends in the region:
Singapore
1000
10000
100000
GNI Per Capita (US$) 2002 PPP

7. THE 30 LARGEST CITIES IN THE WORLD
City
Country
Ranking
Population
Tokyo
Japan 1
33,413,000
Mexico 2
21,701,925
New York
USA 3
21,199,865
Seoul
South Korea 4
20,156,800
Sao Paulo
Jakarta
Indonesia 6
18,206,700
Osaka-Kyoto-Kobe 7
17,646,900
Delhi
India 8
17,367,300
Mumbai 9
17,340,900
Los Angeles 10
16,895,945
Le Caire
Egypt 11
16,244,700
Calcutta 12
14,362,546
Buenos Aires
Argentine 13
14,235,106
Manila
Philippines 14
14,140,000
Moscow
Russia 15
12,622,400
City
Country
Ranking
Population
Shanghai
China 16
12,190,000
Rio de Janeiro
Brazil 17
11,629,629
Teheran
Iran 18
11,475,100
Paris
France 19
11,376,193
Ruhr
Germany 20
11,291,100
Karachi
Pakistan 21
10,807,800
Dhaka
Bangladesh 22
10,545,897
Istanbul
Turkey 23
10,301,400
Londres
Royaume Uni 24
10,229,219
Lagos
Nigeria 25
9,529,700
Beijing 26
9,376,200
Bangkok
Thailand 27
9,308,924
Chicago
USA 28
9,157,540
Kinshasa-Brazzaville
Congo 29
8,915,800
Nagoya
Japan 30
8,657,000
From Village to Metropolitan Areas
Considering that 65% of the population is still living in rural areas today, it is forecasted that by 2012, 55% of the total population will live in an urban environment.

8. UNDERSTANDING ASIA By 2010……
30 towns of >5 million habitants in USA, 6 in Europe)
Shanghai, Bombay > 20 million
Beijing, Indonesia, Manila, Calcutta, Delhi, Tianjin, Dacca >15 million
Just think of Singapore, in the 1950’s it was a shanty town, but is now a city of environmental friendliness and safety, supported by an electronic management of public services. The urbanization rate of Asia is of such an amplitude that an estimated 84,000 people per day, everyday, for the next 10 years will move from a rural area to an urban environment.

9. UNDERSTANDING ASIA 6 Megatrends in the Region
NOMINAL PRIVATE CONSUMPTION FOR ASIA-PACIFIC AT A GLANCE
6 Megatrends in the Region
Nominal private consumption (US$ Bn)
from village to Metropolitan
from export to market demand
from poverty to major savings
from labor force to advanced technologies
from isolation to integration
the asianisation of the world
2003
2008
Asia-Pacific Aggregate
From export to market demand
The second mega-trend is the rise in domestic demand. In Asia, the middle class is undergoing rapid expansion, is more urban and with a high degree of education. Without a doubt, this middle class is adopting a modern life style and reshaping the economies through robust domestic consumption which contributes to this growth.

10. UNDERSTANDING ASIA 6 Megatrends in the Region
China
Asia
Europe
USA
30%
20% 6%
10%
from village to Metropolitan
from export to market demand
from poverty to major savings
from labor force to advanced technologies
from isolation to integration
the asianisation of the world
From poverty to major savings
The third mega-trend lies in the history of saving rates in Asia. Over the past decade, on average, Asian households have saved more than 20% of their incomes. Comparative rates are on an average 10% in Europe and 5 - 6% in the USA

11. UNDERSTANDING ASIA 6 Megatrends in the Region
from village to Metropolitan
from export to market demand
from poverty to major savings
from labor force to advanced technologies
from isolation to integration
the asianisation of the world
From labor force to advanced technologies
Fourth, the industrial activities in Asia are generally associated with an image of an abundant and cheap labor force. All countries are now pursuing objectives to improve their productivity faster, with the best techniques, and by encouraging the massive use of advanced technologies, from domestic origin if they can.

12. UNDERSTANDING ASIA 6 Megatrends in the Region
from village to Metropolitan
from export to market demand
from poverty to major savings
from labor force to advanced technologies
from isolation to integration
the asianisation of the world
From isolation to integration
Another trend in the region is the theme of Asian integration. Trade between Asian countries is now growing more than twice as fast as Asian trade with the rest of the world, reflecting a rapid increase in competition between Asian-based companies. An active cooperation between the countries, lead by Japan, is now taking place in the region. The economic vitality in this area is pretty contagious across the countries.

13. UNDERSTANDING ASIA 6 Megatrends in the Region
from village to Metropolitan
from export to market demand
from poverty to major savings
from labor force to advanced technologies
from isolation to integration
the asianization of the world
The Asianization of the world
Finally, with the recent world dynamics, there is now a new balance between East and West. The fact that we will no longer conceive of the Region Asia Pacific as markets, but from now as actors is nothing less than a revolution. With the 21st century, we will witness a new political and economic superpower - China.

14. CHALLENGES FOR ASIA PACIFIC
Poverty
Unemployment
Financial Fragility
Infrastructure
Corruption
Deregulation & Trade Liberalization
Finally trade reform is an absolute necessity for improving trade rules and liberalization which will benefit all countries, especially poor people in developing countries.
Those are the mega-trends and the challenges that the region is facing.

15. Source: “media Portfolio” 16 July 2004
THE TOP 20 BRANDS ACROSS EIGHT ASIAN MARKETS
BRAND
CATEGORY 1
Sony
Consumer electronics 2
Nokia
Mobile phone 3
Kodak
Camera/Film/Office Equipment 4
Panasonic
Computer/Consumer electronics 5
Coca-Cola
Soft drinks 6
Canon
Camera/Office equipment 7
Toyota
Automotive/Motorcycle 8
Honda 9
Fuji
Camera/Consumer electronics 10
Nike
Sports apparel/Accessories/Footwear 11
Rolex
Luxury watch/Accessories 12
McDonald’s
Fastfood/Coffee chain 13
Mercedes-Benz
Automotive 14
BMW 15
Shell
Petrol/Oil company 16
adidas 17
Samsung
Automotive/Consumer electronics 18
Marlboro
Cigarette 19
7-Eleven
Convenience store/Supermarket 20
Yahoo
Internet search engine
Firstly, the brand competition is definitely increasing fast in Asia, with many local brands, particularly from the more aggressive Chinese firms
Source: “media Portfolio” 16 July 2004

16. So to conclude this chapter, Asia, the whole of Asia, and not just east Asia, can and will have an agenda for the new Millennium.