Why ASEAN’s Consumer Markets Unlock New Growth for UK Firms

I’m going to let our UK readers in on a secret.

One of the biggest economic growth stories in world history is happening under our noses. And it brings immense opportunity for those quick enough to take advantage.

That story is the rise of the ASEAN consumer markets, a growth opportunity that firms in the UK should seize.

For decades, Southeast Asia has gone under the radar. Even just a few years ago, this region was largely dismissed as economically backward and politically unstable.

600 million-plus people going about their lives without getting too much attention from the business world.

But that’s changing. Fast.

Today, the Association of Southeast Asian Nations (ASEAN) is one of the world’s fastest-growing regions, in two senses.

Firstly, the ASEAN population is set to reach 741 million by 2035. Of course, sheer population alone isn’t a measure of economic potential – but it’s a good start.

That’s what makes the second point of growth so exciting, and that’s ASEAN’s explosive economic growth. It really is something to behold:

• GDP has increased fivefold since 2000 to over US$3 trillion in 2022
• ASEAN countries are set to be the world’s fourth-largest economy by 2030
• The ASEAN region has signed on to the Regional Comprehensive Economic Partnership (RCEP) free-trade agreement, the largest trading bloc in world history

This all adds up to one thing: ASEAN is a market with huge potential for UK businesses, especially in the consumer space. Here’s why.

ASEAN Consumers Are Young and Connected

Most of ASEAN’s population is under 30. That’s younger than many other countries’ median age, like Japan (46.5 years), the U.S. (40.8 years), and even China (36 years).

And what do young people want?

They want to consume. But not just any old products – they want the latest, coolest, most innovative stuff. After all, they’re digital natives who have grown up with access to the best that technology has to offer.

This means they’re demanding when it comes to the brands they buy from and the quality of the products they purchase.

For UK firms, this spells an opportunity to tap into a vast, young market with high disposable incomes and a taste for luxury goods.

ASEAN Consumers Are Aspiring Middle Class

Not only are ASEAN consumers young and connected, but they’re also moving up in the world — its middle class is expected to be 396 million people strong by 2030. That’s a lot of people with a lot of money to spend.

And what do middle-class people want?

They want to improve their standard of living and maintain their social status. This means they’re always on the lookout for products and services that will help them do just that.

For UK firms, this spells an opportunity to tap into a vast, aspirational market with high disposable incomes and a taste for luxury goods.

Related Resource (eBook): A SEA of Opportunities: Understanding Southeast Asia »

Anti-corruption Initiatives Are Making Headway in Southeast Asia

One of the biggest concerns for businesses looking to invest in ASEAN has been corruption. This is understandable, given that some countries in the region have been plagued by it for years.

However, things are changing. In recent years, there’s been a renewed focus on tackling corruption, with the most public initiative being The ASEAN 2025 Political-Security Community Blueprint.

This encourages “promoting ASEAN cooperation in implementing the UNCAC to prevent and combat corruption”.

Of course, corruption never truly disappears from any market, but it’s encouraging to see a public declaration to change the corruption culture that has plagued the region for so many years.

This paradigm shift is encouraging for UK firms doing business in ASEAN countries, as it creates a more level playing field and makes the region more attractive for investment.

Related Read: Raising Funds 101: How to Value your Singapore Startup for Investors »

Singapore, Vietnam, and Indonesia Are Exceptional Asian Economies

Singapore, Vietnam, andIndonesia alone took more than 90% of foreign direct investment (FDI) from the wider 10-country-strong ASEAN region in 2020 alone.

Why? Because these 3 countries have been leading the way in terms of economic reform, liberalisation, and infrastructure development. They’ve also been making headway in their fight against corruption, which has made them more attractive to foreign investors.

While these 3 countries are probably the bus to get on immediately, the Philippines is very close behind, and it will only be a matter of time before other ASEAN countries catch up.

Related Read: Indonesia to Encourage Foreign Investment With Positive Investment List

How Can UK companies Find Growth in ASEAN?

The ASEAN consumer market presents a big opportunity for UK companies. But, how can they take advantage of it?

There are a few key things to keep in mind. Firstly, successful market entry in ASEAN hinges on fluent knowledge of the local regulations and business culture as a whole.

Secondly, a strong local partner is absolutely essential – they will have their finger on the pulse of the latest trends and can help UK companies navigate the often-complex local business landscape.

A partner will also create connections with helpful government agencies, service providers, and trade groups.

Finally, it’s important to remember that ASEAN is not a homogenous market – each country has its own distinct culture, customs, and regulations.

This means that a one-size-fits-all approach will not work, and UK companies need to tailor their strategies to each individual market.

In saying that, once the willing find the right partner, they’ll be in a prime position to take advantage of ASEAN’s burgeoning consumer markets.

About the Author

Eric Chin

Eric comes from banking background. He provides consultancy to local and foreign entities on the ideal market-entry strategies for setting up or expanding operations in Southeast Asia. Eric also provides advisory to fund managers and family offices on structuring as well as applicable tax incentives. He has also set up many VCC structures for licenced fund managers.

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