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The challenges faced by Asia's businesses have changed over the years but the region's entrepreneurial spirit endures down the generations, writes Lawrence Yeo.

Decades ago, creating an enterprise in Asia was about survival. The key growth constraints local entrepreneurs faced were slowing customer expenditure caused by economic slowdowns, limited market size, tight credit and the unwillingness of new generations to take over family businesses.

Nowadays, Asian entrepreneurship is about financial freedom, social work or raising living standards, and targets the middle- to upper-class customer segments.

The region’s economic growth continues to provide new sunrise business opportunities, especially in consumer goods. Within Asia, changes in the consumer landscape significantly influence the creation and direction of enterprises.

In 2015, Asia’s mainstream consumer base (lower middle, middle, upper middle, upper class) formed 25% of the population. From 2015 to 2025, the biggest growth of a projected 900 million-strong mainstream consumer base will come from India (new lower middle class) and China. Indeed, China, Indonesia, South Korea and the Philippines are expected to grow their middle to upper middle classes; their consumers prefer more premium products, new experiences and healthcare, while India’s focus will be on housing products.

Many south-east Asian entrepreneurs are reorientating their businesses toward these growing areas in addition to those covered by the Trans-Pacific Partnership and other trade pacts, which enlarge market size and facilitate flows of trade in finished goods, labour and capital. These level the playing field and benefit SMEs, which can participate in regional supply chains.

Top Asian cities with the greatest consumer spending growth over the next decade include Seoul, Tokyo, Shanghai, Beijing, Delhi, Jakarta, Hong Kong, Guangzhou, Mumbai and Tianjin.

Expect to see more Asian SMEs growing their businesses while competing with larger companies and new entrants from outside Asia. In turn, growing Asia SMEs will provide the most net new jobs, boosting economic prosperity and upgrading consumer classes to the next level.

Changing population demographics also affect Asia businesses – for example, some countries, such as Singapore and Japan, have ageing populations. Then there is the growing millennial, tech-savvy, eco-friendlier ‘strawberry generation’ PMETs (professionals, managers, executives and technicians). They are more willing to take over family businesses as their higher education, skills and regional experience enable them to modernise their businesses and better manage local branding and operational aspects.

While the business-to-consumer entrepreneurs are scrambling to manage change, disruptions and their rapidly evolving portfolio, business-to-business entrepreneurs are following suit to cater to their business-to-consumer customers. It is a challenge for Asian entrepreneurs to address new opportunities amid growing competition and the risk of failures. Resilient Asians will continue to adapt well in evolving Asia.

Lawrence Yeo is CEO of AsiaBIZ Strategy, a Singapore-based consultancy that provides Asia market research and investment/trade promotion services. Email: lawrence@asiabizstrategy.com

This article is sourced from fDi Magazine
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