Asia Tech Podcast http://www.ATP.show Asia Tech Research http://www.AsiaTechResearch.com The Digital Frontier by Graham D Brown

1. the digital
frontier
REPORT
4
ASIATECH RESEARCH
The Digital Frontier

2. #asiamatters ASIATECHRESEARCH
Graham D Brown
Report Author
Thanks for reading my #asiamatters Report
“The Digital Frontier”.To learn more about
what I do, and get regular updates and
insights from my Asian research, connect
with me on Linkedin.
Connect with me on Linkedin

3. download them free from www.AsiaTechResearch.com
#asiamatters
Get All 4 Reports in this Series
ASIATECHRESEARCH

4. There are more people living inside that red circle than outside it
#asiamatters
Asia’s Digital Frontier
ASIATECHRESEARCH

5. #asiamatters ASIATECHRESEARCH
Asia’s digital frontier is evolving fast, but
not all markets at the same velocity.
There are 2 key stories behind the
speed of change to focus on in 2018.

6. These two regions are driving the bulk of growth in Asia’s internet economy
#asiamatters
It’s a tale of 2 key drivers…
ASIATECHRESEARCH
1. China
2. Southeast
Asia

7. #asiamatters
1. China
ASIATECHRESEARCH

8. 48% of GDP and 415 million new jobs in next 20 years
#asiamatters
China’s Digital Economy Explodes
ASIATECHRESEARCH
China’s digital economy, already
home to the world’s largest
population of internet and
smartphone users, is likely to
create 415 million jobs by 2035,
bolstering technology’s share to
48 per cent of gross domestic
product, according to forecasts
by the Boston Consulting Group
and AliResearch Institute.
- South China Morning Post 10 Jan 2017

9. E-Commerce in China is happening on a scaleThe West has never seen
#asiamatters
Chinese E-Commerce Delivers…
ASIATECHRESEARCH

10. China continues to dominate, and its share of trade is growing
#asiamatters
China: >50% of World E-Commerce
ASIATECHRESEARCH
0
10
20
30
40
50
60
0
500
1000
1500
2000
2500
3000
2016 2017 2018 2019 2020 2021
China ecommerce sales
% of worldwide
SOURCE:ASIA TECH RESEARCH BASED ON EMARKETER DATA 2017

11. #asiamatters ASIATECHRESEARCH
China has leapfrogged the rest of the
world in E-Commerce volume.With
fewer legacy retailers than the West,
Chinese stores and Chinese consumers
have gone straight to digital.

12. ChineseVideo Market grows 1000% in 6 years
#asiamatters
Online Video in China
ASIATECHRESEARCH
BillionsofRMB
0
20
40
60
80
100
2012 2013 2014 2015 2016 2017 2018
Annual market revenues
SOURCE:ASIA TECH RESEARCH BASED ON IRESEARCH DATA 2017

13. #asiamatters
2. Southeast Asia
ASIATECHRESEARCH

14. Even the world’s smartest internet company underestimated Southeast Asia
#asiamatters
Southeast Asia digital adds $3 trillion
ASIATECHRESEARCH
0
1500
3000
4500
6000
2015 2017 2019 2021 2023 2025
base
worst
best
SOURCE:ASIA TECH RESEARCH BASED ON GSMA,WORLD BANK, IMF, ITU, DELOITTE,TELENOR,AT KEARNEY DATA
FORECASTS FOR ASEAN DIGITAL ECONOMY 2015-2025

15. #asiamatters ASIATECHRESEARCH
Key to the growth of Southeast Asia’s
digital frontier is the movement of Risk
Capital out of China into regions
seeking Outsized Returns.Alibaba,
TenCent etc will be key to Southeast
Asia’s growth in the next 5 years.

16. Future growth will only be accelerated by the shift of Risk Capital out of China
#asiamatters
Southeast Asia beats expectations
ASIATECHRESEARCH
Southeast Asia is now the world’s
third largest region for internet
users — with more people online
than the entire U.S. population —
and internet is having a bigger
impact on the region than
originally thought, according to a
new report co-authored by
Google.
-Tech Crunch 12 Dec 2017

17. 2 Categories account for >2/3rd of Southeast Asian transactions
#asiamatters
Travel and E-Commerce drive SEAsia
ASIATECHRESEARCH
0
50
100
150
200
250
2015 2017 2025
Ride Sharing
Online Media
ECommerce
OnlineTravel
SOURCE: GOOGLE TEMASEK DATA 2017
SOUTHEAST ASIA E-COMMERCE MARKET VALUE BY CATEGORY ($ BILLIONS)

18. There are more people living inside that red circle than outside it
#asiamatters
E-Commerce in Southeast Asia
ASIATECHRESEARCH
0
25
50
75
100
2015 2017 2025
$88.1bn
$10.9bn
$5.5bn
Annual estimates
SOURCE: GOOGLE TEMASEK DATA 2017

19. There are more people living inside that red circle than outside it
#asiamatters
E-Commerce Southeast Asia 2025
ASIATECHRESEARCH
Indonesia
Thailand
Philippines
Myanmar
Vietnam
Singapore $5.4bn
$7.5bn
$8.2bn
$9.7bn
$11.1bn
$46bn
SOURCE: INTERNATIONAL MONETARY FUND 2018

20. #asiamatters
Mobile First
ASIATECHRESEARCH

21. Millions of 4G Mobile Connections 2015-2020E
#asiamatters
Half the World’s 4G Mobile Connections
ASIATECHRESEARCH
13%
21%
3%
3%
3%
56%
SOURCE:ASIA TECH RESEARCH BASED ON CISCO DATA 2016
2015
13%
13%
7%
7%
8%
52%
2020

22. Heaviest users in Southeast Asia
#asiamatters
Asia leads Mobile Social Media
ASIATECHRESEARCH
SouthEast Asia
China
USA
UK
Japan 1 hrs
1.8 hrs
2 hrs
3 hrs
3.6 hrs
SOURCE: GOOGLE TEMASEK DATA 2017
Average hours mobile social media per day

23. Young Indians amongst the highest users of mobile-only internet
#asiamatters
India leads Mobile First
ASIATECHRESEARCH
India
Malaysia
China 37 %
41 %
46 %
SOURCE:ADOBE 2017

24. Middle Classes drive social media usage in developing economies
#asiamatters
The Middle Classes and Social Media
ASIATECHRESEARCH
China
Brazil
USA
UK
France
India
Germany 20 %
23 %
26 %
30 %
30 %
33 %
51 %
SOURCE:ASIA TECH RESEARCH BASED ON DALIA RESEARCH DATA 2017

25. #asiamatters
New Retail Frontiers
ASIATECHRESEARCH

26. Invests US$2.9 bn in massive tech-fuelled supermarket chain
#asiamatters
AliBaba Drives Innovation
ASIATECHRESEARCH
There are chefs in-store ready to cook up what you buy, which you can then eat in the canteen

27. % Annual Retail Sales Growth 2015-2018 by Regio
#asiamatters
Asia Drives Global Retail Sales
ASIATECHRESEARCH
APAC LATAM MENA NAM EUR WORLD
3.4%
0.9%
2.6%
4.3%
3.8%
4.9%
3.3%
1%
2.5%
4.6%
3.4%
4.8%
3.2%
0.9%
2.4%
3.9%
3.4%
4.8%
+2.9%
+0.8%
+2.5%
+2.9%
+2.4%
+4.6%
2015 2016
2017 2018
SOURCE: ECONOMIST INTELLIGENCE UNIT 2015

28. 7Fresh stores feature these self-steering carts that follow you around
#asiamatters
JD Retail Innovation
ASIATECHRESEARCH

29. #asiamatters
Emerging Leisure Class
ASIATECHRESEARCH

30. #asiamatters ASIATECHRESEARCH
To really understand the impact of Asia
on the digital world. we must first look
at the main driver of change:Asia’s
growing Middle Classes…

31. #asiamatters ASIATECHRESEARCH
If China pursues the structural
reforms and technological
upgrading needed to maintain
rapid economic growth, its middle
class should exceed one billion
people in 2030, up from 157
million in 2009.
- Lee Jong-Wha, Huffington Post

32. #asiamatters
China will have 5x as many Middle Class
Households as the US by 2020
ASIATECHRESEARCH
MiddleClassHouseholds(millions)
0
100
200
300
2012 2020
5252.5
249.5
135.5
SOURCE:ASIA TECH RESEARCH & OXFORD ECONOMICS

33. E-Commerce,Travel and Lifestyle key beneficiaries of growth
#asiamatters
Middle Classes drive Mobile
ASIATECHRESEARCH

34. Almost all of the next billion middle class consumers will come from Asia
#asiamatters
Asian Middle Classes are Exploding
ASIATECHRESEARCH

35. #asiamatters ASIATECHRESEARCH
The vast majority
(88 %) of the next billion
people in the middle class
will be Asian.
- Brookings Research 28
Feb 2017

36. % compound annual growth rate (CAGR) 2001-2016
#asiamatters
Annual Retail Sales Growth
ASIATECHRESEARCH
China
Vietnam
Malaysia
India
Thailand
Philippines
Hong Kong
Indonesia
Taiwan
USA
South Korea +1.9%
+2.7%
+2.9%
+4.7%
+4.8%
+5.9%
+6.3%
+7.1%
+7.5%
+9.3%
+12.3%
SOURCE: OXFORD ECONOMICS, DELOITTE SERVICES

37. #asiamatters ASIATECHRESEARCH
In my grandfather’s day, setting
up a business is about survival,
and today it is about improving
standards of living, like buying
properties, taking a holiday, the
next generation of iPad, Ferrari
and Porsche. People are creating
better lives for themselves
- Kennedy Cheng, CEO of
Lxpert

38. 2018 revenues more than USA and Europe combined
#asiamatters
China leads online fashion sales
ASIATECHRESEARCH
FashionSales$USBillions
0
50
100
150
200
250
300
2016 2017 2018 2019 2020 2021
285.3
260.5
228
193.9
159
125.8
140.5
130.8
119.2
107.7
96.7
86.8
96.490.383.876.869.863.3
USA Europe China

39. Source: China Daily 2016
#asiamatters
China has 100 million registered pets
ASIATECHRESEARCH

40. Market doubles in 5 years
#asiamatters
Digital Travel Sales in APAC
ASIATECHRESEARCH
2014 2015 2016 2017 2018 2019
$242.6bn
$214.9bn
$189.7bn
$163.9bn
$139.1bn
$116.1bn
SOURCE: ASIA TECH RESEARCH,
EMARKETER, SKIFT
Market value of online & digital travel sales in
Asia Pacific 2014-2019 (forecast)

41. A major beneficiary of the growing Asian middle classes
#asiamatters
Online Travel Southeast Asia
ASIATECHRESEARCH
MarketValue
Ground transport
Hotels
Airlines
SOURCE:ASIA TECH RESEARCH , SOJERN
MARKET VALUE OF ONLINE TRAVEL CATEGORY IN SOUTH EAST ASIA 2015 - 2025 (FORECAST)
2015 2025E
$13.1bn
$36.4bn
$40.1bn
$12.5bn
$6.6bn
$2.5bn

42. Asians are increasingly seeking travel experiences within Asia
#asiamatters
Middle Class + Sector Competition
ASIATECHRESEARCH
“Asia Pacific is a region that is seeing
tremendous growth and experiencing a
travel boom with the rise of a more
affluent middle class, and lower cost of
travel.”
- Bart Bellers

43. Total compound annual growth 2016-2021 %
#asiamatters
FMCG Market Growth
ASIATECHRESEARCH
Myanmar
Vietnam
Indonesia
China
Philippines
Thailand
Hong Kong
Malaysia
Singapore
Japan 1.9 %
4.1 %
6 %
6.3 %
6.7 %
8.1 %
8.4 %
10.1 %
10.9 %
12.5 %
SOURCE:ASIA TECH RESEARCH BASED ON EUROMONITOR, IMF AND ROLAND
BERGER DATA 2018

44. #asiamatters ASIATECHRESEARCH
Graham D Brown
Report Author
Thanks for reading my #asiamatters Report
“The Digital Frontier”.To learn more about
what I do, and get regular updates and
insights from my Asian research, connect
with me on Linkedin.
Connect with me on Linkedin

45. download them free from www.AsiaTechResearch.com
#asiamatters
Get All 4 Reports in this Series
ASIATECHRESEARCH