Asia-Pacific’s digital story is all about growth — massive growth. Digital is the key to addressing the wants and needs of current and future online consumers, who will represent half of Asia’s population by 2020, up from one-third today.
By 2025, today’s fast-changing technologies — including the mobile Internet, the Internet of Things (IoT), cloud technology, 3-D printing and advanced robotics — are expected to lead to 30% GDP growth in Southeast Asia alone, 20% to 30% GDP growth in India, and up to 22% GDP growth in China. Tech entrepreneurs are already leveraging digital platforms and quickly building billion-dollar fortunes, thereby challenging traditional business models and industries. Four of the top 15 worldwide global public Internet companies (Alibaba, Tencent, Baidu and JD.com) are based in China; their total combined market value is $542 billion. And now, venture capitalists and equity firms looking for the next Alibaba are pumping billions of dollars into e-commerce companies such as India’s Flipkart, hoping to unearth the next new thing.
Asia-Pac has become a crucial growth engine for many companies, across industries — perhaps sooner than most global economy pundits had imagined. While digitally-enabled consumers throughout the world are shaking up business models, value chains and ecosystems, nowhere is this more apparent than in this region. What’s happening in Asia-Pacific is a preview of the changes that will come to other regions.
Our recent white paper “Asia Rising: Digital Driving,” based on our primary research, highlights that digital-first is the new norm in Asia. In fact, 96% of companies we surveyed in the region say they are well on their way to digitally transforming their businesses, generating new levels of value at much faster rates than in first-world economies.
Based on our findings, we believe it is critical for global decision-makers to learn from the first-hand experience of leaders in the Asia-Pac, both to participate in the enormous opportunities of digital transformation and to incorporate the region’s game-changing innovations, business strategies and successful approaches into their own businesses. In particular, global leaders should take note of the following lessons from the region’s digital advances:
There is no West-East strategy in a “digitally-level” world. Global companies will need to deal with aggressive technology-charged companies based in the Asia-Pac region, many of which are free from the burden of legacy systems and outdated business practices, and are able to quickly adapt to innovative processes and take greater risks. These new competitors will not restrain themselves to their home country or region. The digitally-level world enables them to move westward and strike into the home territories of many companies that reside in the first world.
One such example is Alibaba’s initial public offering (IPO) in September 2014, the largest in the world to date, generating an extraordinary $25 billion. Global companies need to move beyond viewing emerging markets as a low-cost, low-quality product-push destination, and leverage the region’s technological breakthroughs. For instance, global companies such as Levi’s, GE, P&G and many others are already leveraging Asia-Pac for technological breakthroughs. The mindset shift should be rooted in global headquarters and executed at the local level.
Asia-Pac can be seen as a laboratory for disruptive mobile innovations. Today, 43% of Web traffic in Asia comes through mobile, compared with the global figure of just 33%. Moreover, the region accounts for more than half of the world's smartphones today. It is evident from our study findings that mobile capabilities are at the center of companies’ customer engagement strategies. By reinventing grocery shopping with mobile, for example, Tesco in South Korea has increased sales by 130% in just three months. An enormous opportunity awaits global leaders who import the region’s mobile innovations.
Winning the battle for next-generation talent with an outside-in approach. To transition to the new digital economy, companies need to find, recruit and retain the hybrid skill sets at the core of out-performing competitors. However, many struggle to attract top talent. Companies are providing inter-company training and retraining, along with recruiting digital skill sets from outside their industry. For instance, DBS Bank was the first in Singapore to incorporate hackathons into its talent development program. Additionally, 44% of the companies we surveyed plan to “acquihire” (acquire through the acquisition of an entire organization) digital technology skills to fill the gap quickly. A number of banks are already pursuing this type of strategy for their next-generation talent. Global business leaders can learn the best practices of addressing the talent gap to build a digital-first organization.
While every company will follow a different path to digital transformation, consistent nuts-and-bolts lessons from digital winners can be learned and applied. Leaders in the Asia-Pac region must execute with bold precision to meet the greater ambitions of what it means to be digital while providing an example to the rest of the world of how the digital revolution will unfold.
To learn more about the digital advances being made in Asia-Pac, read our white paper Asia Rising: Digital Driving. For a data-driven view of our study findings, check out our infographic Looking East for Digital’s Future. For more insight on digital business transformation business-technology trends, visit Cognizant’s Center for the Future of Work.