How Asia’s growing middle class is reshaping global consumption
Asia's middle class is growing at much faster rates compared to Western countries, and Asian consumers have increasing influence in shaping product and service development decisions worldwide.
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With the exponential growth of Asian economies, the consumption balance is shifting from the West toward the emerging markets in Asia. As Asian consumers now have more influence in shaping global consumption trends, enterprises increasingly prioritise entering these markets and catering to the diverse needs of the Asian middle class.
Over the last decades, China’s economic reforms, globalisation and digitalisation have propelled the growth of the middle-class populations across Asia. China’s middle class has been among the fastest-growing globally, and various other emerging economies, such as India, Singapore, Thailand, and Vietnam, also saw significant growth in their middle-class populations.
Based on Pew’s income classification, China’s middle class rose from 39.1 million people in 2000 to roughly 707 million in 2018, making up slightly more than 50% of the entire Chinese population. By 2020, China accounted for 37% of the global middle-class population, and according to the Brookings Institution, it is estimated that two in three members of the middle class will be Asian by 2030.
THE MIDDLE CLASS OF ASIA IS SETTING NEW CONSUMER TRENDS
With its fast-growing percentage of affluent consumers, the middle class of Asia is now driving demand and shaping global consumption patterns across various sectors, ranging from travel to luxury, education, technology, wellness, and infrastructure.
Luxury retail is among the forerunner sectors shifting investment focus away from European centres like London and Paris towards Asia. Bain & Company expects local Chinese spending to account for up to 28% of global luxury consumption by 2025, up from 11% in 2019.
“We are going to see a relocation of investment away from some of the more mature markets and see a reinvestment in the Chinese market because of the surging consumption there,” Joëlle de Montgolfier, executive vice president of global consumer products, retail and luxury practices at Bain & Company tells Vogue.
Similarly, Asia’s middle class have an increasing influence on other consumer goods as well. For example, the Chinese market now accounts for roughly one-third of all global sales of passenger vehicles.
THE EXPANSION OF THE GLOBAL MIDDLE CLASS
While the consumption patterns among the Asian middle class resemble its Western counterparts in many aspects, several key elements differentiate them. For example, unlike most global middle classes, Asia’s emerging markets are not concentrated only in the big cities. In places like China and India, the middle class are scattered all around the country. In some cases, middle-class consumer groups in smaller towns even grow faster than in big cities.
As there are essentially many different middle classes across the Asia-Pacific region with heterogeneous economic and cultural backgrounds, it will pay dividends for brands to identify the unique characteristics of different markets and get to know the aspirations, needs and wishes of these consumers.
As we look further into the future, the growth of the Asian middle classes will open up opportunities for brands to cater to consumers who are ready to spend money on more premium products and services.
Besides its demographic potential, the Asia-Pacific will also likely be a popular destination for foreign investment as enterprises seek to diversify supply chains to reduce geopolitical risks.
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