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Frost & Sullivan Asia Pacific Mega Trends


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Frost & Sullivan Asia Pacific Mega Trends

  1. 1. Global and Asia Pacific Mega Trends Mega Trends to 2020<0000-00> 1
  2. 2. What is a Mega Trend? Impact of Mega Trends on Key Organizational Functions Marketing Mega Trends are global, sustained and macroeconomic forces of development that impact Innovation R&D Budget business, economy, society, Scouting Spending cultures and personal lives, thereby defining our future world and its increasing pace of change Product Technology Planning & Planning Development <0000-00> 2
  3. 3. Top Global Mega Trends Urbanization E-Mobility Smart is the New New Business Models Green Innovating to Zero Infrastructure Health, Wellness and Social Trends Ageing<0000-00> 3
  4. 4. Rise of the “new” super economies in Asia - Indonesia, Vietnam, The Philippines & Bangladesh Indonesia, Vietnam, The Philippines and Bangladesh are expected to be the ―new super economies‖ driving the Asian growth story in 2020<0000-00> 4
  5. 5. Indonesia, The Philippines, Vietnam and Bangladesh are projected to be the next generation of “new” super economies in Asia GDP CAGR in Local currency Age demographics 0-14 15-64 65 years GDP CAGR GDP CAGR Country years years and above Country (07-11) (11-15) Japan 13.1% 64% 22.9% Japan 1.8% 1.8% Australia 5.5% 5.5% Australia 18.3% 67.7% 14% Mature Korea 6.0% 6.9% Korea 15.7% 72.9% 11.4% Singapore 3.5% 6.8% Singapore 13.8% 77% 9.2% India 13.7% 12.3% Developing India 29.7% 64.9% 5.5% China 13.1% 12.2% China 17.6% 73.6% 8.9% Malaysia 5.1% 8.0% Malaysia 29.6% 65.4% 5% Bangladesh 12.4% 10.9% Bangladesh 34.3% 61.1% 4.7% New Philippines 7.9% 8.2% Philippines 34.6% 61.1% 4.3% Emerging Indonesia 15.4% 11.6% Economies Vietnam 34.6% 61.1% 4.3% Vietnam 19.3% 14.0% Indonesia 27.3% 66.5% 6.1% Source: IMF Source: World fact book • The new super economies are expected to grow significantly over the next ten years in comparison with the current stars, China and India • A younger population demographic in these countries is expected to spur local consumption GDP in 2010/2020, Unit :Billion USD<0000-00> 5
  6. 6. What are the implications of these new super economies? • These “new” super economies need significant investments in Infrastructure to support their growth especially in Indonesia, Vietnam and Bangladesh • Investments expected in advanced technologies especially within local / homegrown companies to improve productivity and efficiency in these countries • New emerging economies could be more attractive destinations for labor-intensive and resource based industries over the next decade. • These „new” emerging countries need to be on the radar of organizations seeking the next growth engines in Asia for their businesses.<0000-00> 6
  7. 7. The Aging of Asia Asian populations will age significantly over the next decade<0000-00> 7
  8. 8. Populations in Asia are aging inexorably Population Percentage aged 60 or over50 44.1 • Asian countries for the past 100 40.740 years had relatively young 31.1 populations with an ample supply of30 23.3 labor.20 11.2 11.4 9.9 6.9 5.510 • In the past few years, though, many 0 of these same countries have 1980 2000 2050 experienced a dramatic aging of their China Republic of Korea Japan population. This is a result of longer Population Growth Rate(Percentage) life spans and improved healthcare. 2 1.5 • With lower birthrates, a decrease in 1 population is forcing governments to 0.5 rethink their planning and the 0 direction of their economies-0.5 -1 China Japan Korea Source: UN DATA<0000-00> 8
  9. 9. Analysis of the growing aging population Positive Aspects • With the aging of society , many new types of industries and products will be developed, such as robotics and healthcare for self measurement, are showing dramatic increases . • Other positive developments are the increase in aged care facilities as well as new communities dedicated to assisting seniors living alone. • A benefit of the aging society and labor shortage in some countries is the ability to tap a whole new sector. example, women and the aged population itself. Negative Aspects • Increased high pension and medical costs • Lower supply of labor for industry. • Lower budgets for many services due to reduced tax income. • Motivation or energy of society decreases as the society ages.<0000-00> 9
  10. 10. Investments in infrastructure to dominate government spending in Asia Government spending on infrastructure is expected to provide significant growth opportunities for private sector participation through PPP during the next ten years till 2020<0000-00> 10
  11. 11. Asian nations are in different stages of developmentChina and India are expected to drive the infrastructure investments in the nextdecade • As Asian economies are in different stages of development and maturity, the infrastructure requirements and Mature* investments also differ. • According to Asian Development Bank, the Maturing** infrastructure needs in Asia are estimated to be around US$ $750 billion annually 2000-2010 till 2020. New 2011-2020 Emerging*** • Around 55% of these investments are expected to occur in 6 key countries 0 500 1000 1500 2000 2500 3000 – Mature: Japan, S Korea USD billion – Maturing: China, India Note: – New emerging: Indonesia and Vietnam * Represented by Japan ,Korea ** Represented by China ,India *** Represented by Indonesia, Vietnam • Transportation, Energy, Telecom and Water management are the four major areas for infrastructure investment<0000-00> 11 USD billion
  12. 12. Government and private sector investments required for these areasand these vary based on the sector and economy High High Green technology for water treatment expected to be developed in mature economies and driven mainly by the government to fuel economy growth in the future. Attractive investment Waste treatment facilities opportunities for international Government involvement* to be developed in investors in transportation maturing countries infrastructure. Project Size especially for heavy Focused on new emerging industries. economies and expected to Relevant R&D centers and develop green field projects. financial support needed from government. Greater e-business Smart cars / EVs expected to attract deployment driving the investments in both mature and demand for robust & maturing economies – esp. within the efficient telecom Tier 1 cities. Will also drive demand infrastructure for road reconstruction. Low Private sector involvement* High * The investment size from government / private companies. Transportation Energy Water Management Telecom<0000-00> 12
  13. 13. Growth in Intra Asia Trade Intra Asian Trade will grow exponentially over the next decade<0000-00> 13
  14. 14. A number of major FTA‟s have been signed in Asia 1976 1981 1993 2004 2005 2006 2007 2008 2010 APTA SPRTECA ASEAN ASEAN+3* ASEAN China SAFTA ASEAN Korea ASEAN Japan ASEAN India BIMSTEC* CEPEA/ ASEAN ASEAN+6* Korea Intra Asian bilateral agreements amounted to 13 in 2000 and 82 in 2010 ASEAN Australia * Under negotiation New Zealand The total number of concluded FTA in Asia Stand at 132 as of 2010, with about 50 FTA’s in place in East Asia alone and around another 80 under negotiation/preparation in East Asia. Asia is ahead of the Americas in FTAs per country—on average Asia has 3.8 concluded FTAs per country compared with 2.9 for the Americas Number of FTA‟s by Country:<0000-00> 14
  16. 16. What are the Implications of growing intra-Asia trade? Container Trade Growth 2010-2011 (CAGR) Asia-US 13 Intra Asia 17 Impact on Increasing Asian and volume of Foreign Intra Asian Companies Trade Concerns Meeting the over ‘Asian Cost of Noodle FTAs Bowl’<0000-00> 16
  17. 17. Increased Urbanization and Emergence of Super Cities Asia will continue to urbanize with the emergence of more and more ―super cities‖<0000-00> 17
  18. 18. Asia is becoming more and more urbanized 6000000 Almost half of the Global 5000000 Urban Population in 2020 will USA be from Asia Alone 4000000 Asia 3000000 Europe 2000000 World 1000000 Africa 0 1990 1995 2000 2005 2010 2015 2020 2025 2030 Source: Population Division of the Department of Economic and Social Affairs of the United Nations TRENDS OF URBANIZATION IN MAJOR ASIAN COUNTRIES (in thousands) Secretariat Country 2000 2010 2020 2030 Urban % Urban Urban % Urban Urban % Urban Urban % Urban population population population population population population population population China 454 35.8 607 44.9 756 53.2 880 60.3 India 289 27.7 367 30.1 473 34.3 611 40.6 Indonesia 89 42 129 53.7 164 62.6 193 68.9 Pakistan 48 33.2 64 37 89 42.8 120 49.8 Bangladesh 33 23.6 47 28.1 66 33.9 89 41 Japan 88 65.2 85 66.8 86 69.4 86 73 Korea 37 79.6 40 81.9 41 84.2 42 86.3<0000-00> 18
  19. 19. What are the causes of Urbanization and of the emergence of Mega Cities?Asian cities on average receive 120,000 new migrants each day.The 3 causes of population growth in urban cities are Rural to Urban Migration, natural Births and increased life expectancy.Increased Industrialization in Asia is the key driver for Rural to urban migration. Mumbai’s population, around 19 million as of2010, will exceed 25 million in the next 20 years There are various Push and Pull factors responsible for rural to urban migrations. These factors are social, economical, political and environmental in nature • Unemployment • Potential for • Poverty employment • Crop failure • Promise of a better • Drought lifestyle • Floods • Higher labor wages • Mechanization in • Better services farms reducing need • Safer environment for farm workers • Education and career • Lack of services, opportunities for like healthcare and women education • Political Stability • Lack of Safety • Less risk of natural • Civil unrest hazards<0000-00> 19
  20. 20. Huge Increase in Education Huge Increase In Education Within Asia Pacific As Governments and Businesses Are Moving Towards Becoming Knowledge Based Economies<0000-00> 20
  21. 21. APAC Countries are Becoming Knowledge Power EconomiesCountries Vying for Education Hub Status Across APAC AggressivelyIncreasing Enrolment Of Foreign Students Taiwan 130,000 Korea 100,000 Foreign Students APAC Real GDP Growth China Foreign Students (source IMF) by 2020 500,000 Foreign by 2012 Students by 2020 Japan300,000 Foreign Students India by 2020 Developing Infrastructure to Become Singapore150,000 International Foreign Students Education Hub by 2015 Malaysia Growth at 200,000 Foreign Students Australia 7.1% APAC by 2020 469,619 Foreign GDP Students currently studying Governments and Private Sector within the region have realized the importance of education to create knowledgeable workforce to propel economy in the 21st century.<0000-00> 21
  22. 22. Implications for Governments Education will become more affordable as number of universities will increase Creation of new wealth Increase GNI for the pockets due to Churning country out of IPs from universities Increase in tax collection Will be able to reduce for Government with GOVERNMENT bigger pools of Brain Drain professionals being employed To promote Education Hub by providing Will have to drive initial scholarships, growth by investing in citizenship and work education infrastructure permits Graduates will be come new benchmark of Nation‟s strength/power<0000-00> 22
  23. 23. Implications for the Private Sector New and Innovative Setting up of Industry Will be able to export and businesses spin off from driven Universities that will replicate similar set up over new technologies create strong foundation regionally to tap overseas potential and partnership between Private Sector and Universities Opportunity to collaborate with world renown Businesses will directly universities from the West benefit from talented to set up campuses in workforce APAC. PRIVATE SECTOR Student from Europe, Large Skilled workforce Africa and US could study with strong knowledge in Asian countries at cheaper cost base New workforce will have Private Institution will be skill set to execute cutting able to work in Easy expansion to edge ICT and High collaboration with anywhere within the region government on deploying Technology projects, Thus with talent being widely creating new economies. large scale projects available<0000-00> 23
  24. 24. The Asia Pacific Mobile Broadband Revolution Broadband internet connections will become ubiquitous in Asia<0000-00> 24
  25. 25. Smartphones will become Ubiquitious in APAC Mobile Device Market: Smartphone Unit Sale Forecasts (Asia Pacific), 2007-2015 600 0.6 Mobile Device Sale Growth Total Mobile Device Sales 500 0.5 400 0.4 (millions) Rate (%) 300 0.3 200 0.2 100 0.1 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total Smartphone Sales (000s) Smartphone Sales as a Percentage of Total Device Sales (%)<0000-00> 25
  26. 26. What are the implications of Mobile Broadband Adoption? M-Health • Smartphones are quickly becoming ubiquitous in the region which is driving mobile Internet growth over 3G networks. • Operators are also starting to offer prepaid mobile Internet services in emerging markets and given that over 80% of the region uses prepaid mobile access this will allow more consumers to be connected. • The region has already seen several LTE networks deployed with many more planned over the coming two years. These new 4G networks will offer significantly faster browsing speeds. Machine-to-Machine Communications • Faster networks in the region will enable new services for operators such as mobile health, mobile payments, machine-to-machine communications etc.<0000-00> 26
  27. 27. Huge Increase in Health Expenditure Ageing and growing populations will drive a huge increase in health expenditure in Asia<0000-00> 27
  28. 28. APAC Healthcare Expenditure will increase 151% by 2020, while countries with the lowest projected growth rate will be UK, Italy, & Germany South Korea $127 billion CAGR 5.5% Japan USA $563 billion $3922 billion China CAGR 3.0% CAGR 4.6% $1446 billion CAGR 15.5% Hong Kong $20 billion CAGR 3.2% India Taiwan $331 billion $65 billion CAGR 14.5% CAGR 7.8% Indonesia Vietnam $47 billion $31 billion CAGR 8.1% CAGR 14.8% Malaysia Philippines $25 billion ThailandAPAC $26 billion $25 billion$2927 billion CAGR 8.4% CAGR 11.5% CAGR 8.4%151% increase 2010-2020CAGR 9.2% Singapore $23 billionG7 CAGR 9.6%$6147 billion50% increase 2010-2020CAGR 4.0% Australia $198 billionBRIC CAGR 3.0%$1958 billion212% increase 2010-2020CAGR 12.1%<0000-00> 28
  29. 29. APAC Growth Engines: Healthcare Investments in Vietnam, Philippines,Thailand, & Indonesia OTC drugs due to reliance on self-medication Primary HC & checkups due to increased chronic disease awareness Vietnam, Low cost medical Philippines, devices (reverse Thailand, innovation) Indonesia HC infrastructure for rural areas Private healthcare delivery & public private partnerships<0000-00> 29
  30. 30. Control Over Strategic Assets by China The Chinese Government, either directly or through SOEs, will increasingly seek to gain control over strategic assets throughout Asia Pacific<0000-00> 30
  31. 31. Increasing Control over Strategic Assets by China Outward Foreign Direct Investment by China • The value of Foreign Direct investment 250,000 (FDI) from China has sky-rocketed in recent years, and with restrictions on investment 200,000 by private companies most of this $ millions 150,000 investment has been from state-owned or quasi state-owned firms 100,000 • Asia Pacific (including Oceania) accounts 50,000 for around 60% of FDI • China is seeking strategic control, not just 0 making portfolio investments – in most Africa & deals the acquired share is more than 50% Middle East 2% • The main focus is on natural resources – Americas especially energy (oil & gas, coal) and iron 18% ore, but also on food Asia & • In particular China is seeking to gain greater Europe Oceania 22% 58% control over the supply of resources critical for industrialisation – including coal and iron ore Source: UNCTAD<0000-00> 31
  32. 32. What are the implications of Chinese control over strategic assets? • Increasing scrutiny of deals by Governments – in response to political pressures at home, governments are likely to closely scrutinise deals and can be expected to reject some on ―national interest‖ grounds • As China gains more control over overseas assets (mines, farms, etc) we can expect to see greater sales of Chinese products and services required to work the assets in Asia Pacific markets – such as mining equipment, agricultural chemicals, steel tubes for oilfield use, etc • Much Chinese investment in resources involves investment where the investor is also the buyer of the resource, or is linked to the buyer of the resource (iron ore, coal, etc). This is likely to have the effect of stabilizing and perhaps moderating commodity price increases<0000-00> 32
  33. 33. Huge Growth in Renewable Energy Asia Pacific Leads Growth by Tapping New Wealth Pockets In Renewables Energy Sectors Across The Region<0000-00> 33
  34. 34. Renewable Energy Sky Rocketing In Asia PacificNew Investment in Renewable Global Investment atEnergy by Region, 2010, $BN $211 billion in 2010 North South Developing countries in Asia Pacific America, America, Middle have been major contributors in terms 30.1 13.1 East & of New investment in Renewable Africa, 5 Energy in 2010. Major Developing Economies Investment Europe, in Renewable Energy 2010 35.2 China $48.9 billion India $3.8 billion APAC, Other Asian countries $4 billion 59.3<0000-00> 34
  35. 35. Annual Power and Energy OutlookTop 10 Energy Market Trends for the Decade Power Demand Continued Growth Investment in Renewables New Age for The 10 Most Energy Natural Gas Efficiency Critical Trends that Will Clean Coal Shape the Energy Storage Commercial- isation Global Power Energy Power Plant Industry till Market Decommissioning 2020 Liberalisation Smart Energy Nuclear Power? Source: Frost & Sullivan<0000-00> 35
  36. 36. Top 10 Energy Technologies to Watch by 2020 Energy Storage Waste-to-energy Smart Grid & Super Grid Wind Energy Bioenergy Top 10 Technologies of the Future Following are key technology platforms that are poised to have a profound impact on a number of sectors across the Hydrogen & Fuel Unconventional globe. These areas present a Cells Gas potential high ROI. Energy Clean Coal Management Technologies Solar<0000-00> 36
  37. 37. Key Strategic Conclusions 1. Mega trends are connected and inter-wined which suggests ―synergetic‖ opportunities between them 2. It is important to understand the eco-system of the mega-trend and the elements of the value chain which have most profitability 3. All these trends are global and have global ramifications thereby offering scalable opportunities 4. These forces are changing rapidly and bringing new competencies into play at half the life-cycle speed of the past decade 5. Organisations’ need ―Mega Trend‖ champions and teams within their organisation structure to best exploit the opportunity<0000-00> 37