Marketers should widen gaze in Asia

16 August 2010

SINGAPORE: Brand owners seeking to enhance their position in Asia could gain significant benefits from looking beyond India and China, and investing in nations like Indonesia and Thailand.

Singapore's economy is expected to enjoy growth of 15% in 2010, a total that stands at 7% for Malaysia, 6.6% for Indonesia, and at least 6% for both South Korea and the Philippines.

While China is inevitably drawing considerable attention, Catherine Yeung, associate director at Fidelity in Asia, believes substantial rewards were available elsewhere.

"China is a huge influence, but a lot of Asian countries are going through similar changes themselves such as urbanisation, building new infrastructure and rising middle classes who are consuming more," she told the Daily Telegraph.

"They also have well-run, prudent banks and focus more on domestic demand so we are very positive about Asia as a region, not just China."

Indonesia is another attractive possibility, as 55% of its citizens are under 30 years of age, and its GDP is expected to increase by 8% in 2011.

LG Electronics and Caterpillar have recently taken aim at the country, where Unilever has already established a major presence.

More broadly, Hugh Young, of Aberdeen Asset Management's Asia Pacific unit, argued the conditions observable in APAC may be without precedent.

"One of the benefits of the region is that economies can grow faster here, as Asian countries do not incur associated research and development costs so goods and services can be acquired at a much faster rate," he said.

"Let's not forget that it took the industrial revolution 200 years or so to produce the silicon chip. Emerging markets have thus been able to take one giant short cut.'"

Glen Finegan, at fund managers First State, suggested that even though India is rightly at the heart of most local strategies, Bangladesh, Sri Lanka and Pakistan might offer sizeable returns for early movers.

Thailand is rather more stable than many of its near neighbours, but is equally set to experience impressive fiscal expansion of 8% this year, and has seen consistent improvements in earnings levels in the last decade.

"India has some fantastic companies and there is an incredible entrepreneurial spirit. It also has a good record of corporate governance," he said.

"But it has just become too expensive to invest there and bargains are much harder to find. It doesn't help India's cause that there is so much choice within Asia at much cheaper prices.'"

Jim Walker, managing director of Asianomics, a Hong Kong think tank, was of the view that the Asian Crisis in 1997 had assisted Asian firms prosper in the current downturn.

"The long-term outlook for Asia is good given that balance sheets here are in better shape than in Europe and elsewhere. That is the result of the cleansing process following the Asian Crisis," he said.

"Asia's economies will continue to decouple from their Western counterparts, increasingly able to find sources of supply and demand within their own economies."

Walker added: "There may be the odd year when growth slows, but in the absence of a double-dip recession in the developed world or a home-grown credit crisis, Asia should continue to grow at stellar rates in the near term as well as the long term."

Data sourced from Daily Telegraph; additional content by Warc staff