Asia Pacific, led by China, is the world’s biggest fintech adopter

Mr. Dan Roberts, Global Head of Business Banking, HSBC said with a fast-growing and digitally-native middle class, Asia Pacific would continue to be the world’s growth engine. Combined with a very dynamic business environment, this presents tremendous growth opportunities for businesses that can leverage the rapid digitization of this vast ecosystem.

Hereunder are the six key trends of Asia Pacific new economy businesses which businesses should pay attention to:

Region-wide growth

China will remain Asia Pacific’s dominant new economy force, but its importance will be rivalled by India as a source of digital innovation, while Southeast Asia, thanks to the expected growth of its middle classes, will establish itself as the region’s other major digital market.

B2C now; B2B soon

Consumer-facing companies and fintechs will continue to attract the largest share of investment as e-commerce, payment, delivery and personal finance platforms – often combined as “super-apps” – are rolled out the serve the region’s emerging markets. But as markets mature, attention will turn more and more to higher-value-adding B2B start-ups in areas such as enterprise productivity, education, healthcare and clean-tech. Australia is pointing the way forward in many of these areas.

Demographic drivers

The continuing growth of Asia’s middle classes, and especially the emergence of Gen Z consumers will be the biggest single factor driving digital economies across the region. But though societies with younger demographics and larger populations will be the forefront of change, as Japan is showing with its “Society 5.0” model, Asia’s more prosperous, ageing societies, too will also be rich sources of innovation.

Localized business models

The region’s many distinctive societies, economies and politics will lead to proliferation of localized business models. Malaysia, for example, is set to enhance its already strong position in Islamic finance, while in Indonesia, a host of social commerce start-ups are using local knowledge to grow their businesses across the country’s many underserved islands, echoing China’s Pinduoduo which built its e-commerce empire by concentrating on lower-tier cities.

Manufacturing spill-over

Robotics and automation are transforming factories. Rapid prototyping is allowing companies to develop new goods faster and at lower cost. Blockchain and tracking technologies are facilitating efficiency, traceability and transparency along industry supply chains. The region’s manufacturing and exporting strengths, especially those of East Asia, will be further enhanced by new digital technologies.

ESG on the rise 

As the region moves to address climate change, opportunities to expand the reach of new economy businesses will arise as entire economies embrace the need to track and analyze carbon emissions, install and operate smart renewable energy systems, replace fossil-fuel powered transport networks with electric ones and put in place green finance solutions to pay for all these.

Asia Pacific’s future-makers

The accelerated adoption of new technologies during the pandemic has upended existing practices and habits, including how people work, shop, consume information, attend schools and universities, and receive public services. This massive shift has opened up opportunities for many types of companies – not only pure digital businesses, but also traditional industry players which needed to embrace new digital ways of operating.

HSBC said, technology- focused companies across the region are carving out focus areas in line with these macro changes. A few examples include content creators in South Korea, who found new audiences for their webtoons in the US. Australian B2B business services providers expanded their global reach, finding businesses across the region in need of their apps. And Indonesia and Thailand’s start-up ecosystems had a landmark year in 2021, minting four new unicorns between the two countries.

Looking to the future, Asia Pacific’s Emerging Giants – high growth and high potential businesses currently valued at US$500 million or less – will reshape the ways in businesses operate and people manage their daily lives across Asia Pacific in the years to come.

The follow-on effect will be continued transformation of the region’s economies, including broadening and deepening its manufacturing hubs, strengthening and increasing transparency across supply chains, and ultimately boosting the service sectors on which the region’s future prosperity will rest.