The Case For Asia

SHASHWITH UTHAPPA on 03 February, 2016 at 12:02


Netflix, Amazon, Uber, Tinder. One common thread that binds these international brands is their recent foray into the APAC market. Why? These brands stand to gain with the strength of numbers.

Love is in the app

The Word AsiaTinder recently set shop in India with the aim of making it one of its core markets. Despite India’s heated intergenerational conflicts and cultural resistance, online dating now boasts of 115 million Indian users, a number expected to grow to 200 million in just two years. India’s dating market is still young, but it has the potential to become a hot growth sector. Platforms are taking note, and brands need to follow suit.

China has a relatively more open culture when it comes to online dating. Around 200 million Chinese leave their rural homes in search of good jobs in the city. They turn to dating apps for social gathering or to find new love. Young Chinese face social (and linguistic) pressure to get married before they hit the age of 30. After that, they are labeled shengnan and shengnu—a “left-over man” or “left-over woman.” Ouch. Chinese are flocking to dating apps, thus driving it to 2.7 billion Yuan[1] in 2015.

Retail therapy

Amazon entered China since 2004, and, well, let’s just say it hasn’t been pretty for them. Alibaba kicked the e-tailer to the curb on its way to controlling 81.5% of the market. Amazon licked its wounds in China and learned from the experience. Though they were burnt in China, they’ve gone on to torch the neighboring market, India.

KPMG expects Indian eCommerce to reach $100 billion by 2020. Urbanization and the empowerment of the Indian middle class will drive tremendous growth, and Amazon is paying attention. The value-driven mindset that many Indians share (I speak from personal experience here) makes eCommerce and mCommerce awfully attractive. Amazon’s ambition to succeed in India caused a bit of a stir when Jeff Bezos was depicted as one of the Hindu gods on the cover of Fortune.

tumblr_o0j4reosal1r9zbojo1_500eCommerce companies are offering everything an Indian consumer could possibly want: payment on delivery, return back policy, choice of payment, same-day delivery or delivery the very next day, price competency. These companies are also helping small retailers dream big by luring international export bulk buyers for them. Connections to the global market can take a small retailer into the big time.

Despite tough competition, the Indian market is a worthy prize to seek. It is home to the world’s third largest Internet user base. While the government hems and haws over FDI in B2C eCommerce trade, there is no stopping Amazon in winning more of the Indian market share.

Beauty is pocket deep

International brands like Proctor & Gamble and Unilever still control more than 55% of the Chinese and Indian consumer market due to their high-end positioning. But South Korean and Japanese skincare brands are leveling up with high quality ingredients and engaging in tough competition in a new era of green cosmetics.

RSM-HOME-600x600Chia Seeds, cucumber, wine, brown rice, honey….one might think these belong to the kitchen, but thanks to South Korea, these products are available for daily skincare products. They stand out in this lucrative market, estimated to reach $121 billion in 2016[2], because of their emphasis on natural and organic ingredients. But industry insiders point that the real driver resulting in this feat is the domino effect of word-of-mouth marketing, sampling and huge K-pop fandom. The South Korean beauty market is valued at a whopping $10 billion dollars with 10% attributed to men’s skincare (one of the largest in the world). Not bad for a country of only 50 million.

While Korean skincare products are increasing popular in the U.S, they are more sought after in China, where imports of Korean cosmetics swelled to more than 250% this year and now account for nearly a quarter of the country’s beauty imports. L2 predicts that despite tough competition from French and U.S rivals, APAC brands will drive global brands away. This comes as no surprise when you see the emulative motive for consumption of Western brands, fading in Asia.

The evolution of consumer culture, the rising middle class and ownership of luxury products to gauge one’s wealth and status has been tantamount to the rapid consumerism in Asia. With this, the consumer needs are also changing. They are more informed, their purchase desire linked stronger to craftsmanship, selectivity in distribution yet with intent to contribute to the local economy. While global brands come with good quality products and better integration of digital, APAC brands are going back to marketing basics by keeping things simple.

What would it take for global brands to cream the Asian market? Will a Glocal strategy rethinking consumer motives work against local brands that truly understand the diverse cultural nuances? Time will tell but the ultimate winner in this battle is clear: the consumer.


[1] Source: The statistics portal

[2] Source: http://blog.m

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