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With internet users in Asia Pacific (APAC) now making up 50% of the world's total online population, the region presents an exciting opportunity for digital marketers.
APAC is also the fastest growing digital economy in the world, with the number of internet users increasing by 27% between March 2015 and September 2016 — but for westerners it can prove a tough nut to crack.
It’s important to understand some crucial facts in order to realise the huge business potential.
1. APAC is not just China
The rise of digital in China is definitely one of the most exciting opportunities in the APAC region for marketers, with many unique quirks and nuances. The behemoth nation also has incredible influence in the area, with many other APAC countries observing Chinese business customs.
Digital marketers familiar with North America and Europe may feel they have a grasp on catering for multiple markets; however, APAC’s history and geography mean that there are far greater differences between countries in the region.
Westerners should have few issues in Australia or New Zealand, but make sure you do your due diligence for any of the other countries. It is necessary to have “someone on the inside” in some countries in order to overcome cultural hurdles.
2. There's a huge variety in internet usage
Perhaps the most important difference between the APAC countries is the differing levels in internet penetration, i.e. the percentage of people online. There’s a huge variation, with Japan at the top of the list with 91.1% of the population online, compared to a tiny 1.2% in Timor-Leste.
Markets where internet usage is already high will offer the easiest way into the region. However, markets where internet usage growth is the highest will offer the biggest opportunity for investment. To give you an idea of potential growth, although APAC internet users make up around 44% of users worldwide, less than half of the region is currently online.
These stats collected by We Are Social show the APAC countries with the highest internet growth between March 2015 and September 2016.
3. It’s all about mobile
With an average GDP per capita of around $11,000 ($3,000 below the world average) affordability is a huge factor for new internet users in APAC. That’s why most new users are accessing the internet through mobile devices — a much cheaper alternative to desktop. This is being facilitated by cheap phone and data bundles, which have been responsible for the huge growth in internet usage in Timor-Leste.
To give you some idea of growth, the GSMA estimates that at the end of 2015, 62% of the population (2.5bn people) subscribed to mobile services. A further 600m subscribers are expected to be added by 2020, representing a 24% increase.
Mobile users aren’t just going online, they’re actively engaging in m-commerce, and are twice as likely to do so than other regions according to insight agency Global Web Index. One reason for this is that most new mobile users in APAC are millennials, who are much more comfortable with buying on mobile.
We all know that mobile-first ecommerce strategies are becoming more important in the West, but if you’re seriously considering taking on the APAC region, any new product seems more likely to succeed if it incorporates m-commerce targeted at millennials.
4. It’s the epicentre of the emerging middle class
The amount of people with disposable income is set to explode in the APAC region over the next decade. A report from 2013 by EY Singapore states that by 2030 two-thirds of the global middle class will reside in the APAC region, with the population in Europe dwindling to just 14%.
The emerging middle class (EMC) is a group earning between $2 to $20 a day. This is important because it’s the point at which it’s considered people start to have disposable income.
Unsurprisingly, a popular way to spend this income is to get online. In a recent study of the emerging middle class in APAC it was found that 42.2% of EMC consumers own a smartphone, computer or tablet. This shows that a great number of those coming online in the region belong to the EMC.
Alexis Karklins Marchay, co-leader of EY’s emerging markets center, said:
The emergence of a new middle class, with spending power to match developed nations, will offer tremendous opportunities to businesses.
[These] opportunities will not be confined to consumer goods: the emergence of a wealthy middle class will also open up the markets for financial services or the health sector, for instance, in new territories.
Up until now, however, many large Western companies have found it hard to break into the market. It’s thought this might be because there’s a mismatch in what we expect from the Western middle class, compared to the Eastern EMC.
A study by the Eden Strategy Institute into the EMC in Vietnam, Indonesia, India and the Philippines found that the greatest desires of these consumers are having a healthy life, and becoming closer to God — a far cry from the increasingly obese and atheist West.
This is one reason why simply transplanting what works in the West to the East is not necessarily going to work: a problem Uber is currently facing. Businesses that tap into the particular cultural needs of the region are most likely to succeed. This includes keeping an eye out for how things are changing.
Although many countries still hold firm to their traditional values, Western culture continues to gain influence, especially in the younger generations. It's important to understand exactly how this paradigm shift is playing out in each country.
A final word
The main takeaway from this overview of APAC is that it's changing at lightning fast speed. There's a surprise around every corner, which makes it an extremely exciting area to work in. But this unpredictability also brings many challenges.
One thing's for sure — if you want to work in APAC, you better have your fingers firmly on the pulse. The greatest prize will go to those that can spot the trends before they even happen.
To learn more on this topic, check out these Econsultancy resources: