Asian Consumption to Drive Growth
Aspirational spending is the key that will drive consumption in
Asia as a continued trend for decades, says HwangDBS
Investment Management
Business Times Online (NSTP) & Bernama - 19 March 2008
Kuala Lumpur - Asian consumption will drive economic growth in the long run, shaping the changing landscape for investors in Asia, according to HwangDBS Investment Management Bhd. In a report released today, the company said there has been a shift in spending attitude from the past generation’s frugal living to currently where shopping is no longer just a necessity but part of the Asian lifestyle.
“The vibrant and exciting story on Asia looks set to dominate the next decade as the region is clearly shifting from being an economy led by secular developments in the global scene to domestically driven shifts in consumption and investment,” HwangDBS said.
“Aspirational spending — this is the key that would drive consumption in Asia as a continued trend for decades,” it said. The low penetration in sectors such as consumer durables and mobile subscription indicated that there was still much room for growth, HwangDBS said.
“International brands will be clamouring to capture a share of the booming consumer markets in Asia and will invest aggressively to build their brands in these new markets,” it said. HwangDBS said the growing middle class aspiring to better their lifestyle will be behind the driving force of Asia’s economic growth in 2008, amid mounting global uncertainties and impending US economic turbulence.
“The common theme across Asia is rising per capita income, which is driving up affordability of big-ticket items such as property or car, spurring consumer spending,” it said. Malaysia and Hong Kong have the most households reporting a rise in income over the past 12 months, with 87 per cent of Malaysians having received a salary increase in the past 12 months, the report stated. “With the emergence of a global managerial and professional class, a growing large group of Asia’s young now have more disposable income and are more internationally inclined in their outlook and consumer choice,” it said.
“Simultaneously, the rising incomes bring a new wave of consumers, which were previously not economically active, entering the consumer market. Households in Asia become active consumers at surprisingly low income levels, driven by aspirational attraction for strong and leading brand names,” it added. HwangDBS said Asians are now striving to trade-in and trade-up to improve their lifestyle and want to be perceived as early product and trend adopters rather than followers.
“Studies also show that image is more important in Asia than in the West, thus brands with credibility and influence are highly respected and paying a premium for the quality is deemed worthwhile,” it said.