Global and Asia Pacific Mega Trends

Mega Trends to 2020

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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
business, economy, society,
cultures and personal lives,
thereby defining our future
world and its increasing pace
of change

Innovation
Scouting

R&D Budget
Spending

Technology
Planning

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Product
Planning &
Development

Top Global Mega Trends

Urbanization

Smart
Green

is

E-Mobility

the

New

Innovating to Zero

Health, Wellness and

Ageing
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New Business Models

Infrastructure

Social Trends

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

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Indonesia, The Philippines, Vietnam and Bangladesh are projected

to be the next generation of new super economies in Asia
GDP CAGR in Local currency

Country
Japan
Australia
Korea
Singapore
India
China
Malaysia
Bangladesh
Philippines
Indonesia
Vietnam

Age demographics

GDP CAGR GDP CAGR

(07-11)
(11-15)
1.8%
1.8%
5.5%
5.5%
6.0%
6.9%
3.5%
6.8%
13.7%
12.3%
13.1%
12.2%
5.1%
8.0%
12.4%
10.9%
7.9%
8.2%
15.4%
11.6%
19.3%
14.0%

Mature

Developing

New
Emerging
Economies

Source: IMF

Country
Japan
Australia
Korea
Singapore

0-14
years
13.1%
18.3%
15.7%
13.8%

15-64
years
64%
67.7%
72.9%
77%

65 years
and above
22.9%
14%
11.4%
9.2%

India
China
Malaysia
Bangladesh
Philippines
Vietnam
Indonesia

29.7%
17.6%
29.6%
34.3%
34.6%
34.6%
27.3%

64.9%
73.6%
65.4%
61.1%
61.1%
61.1%
66.5%

5.5%
8.9%
5%
4.7%
4.3%
4.3%
6.1%

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

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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.

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The Aging of Asia

Asian populations will age significantly over the next decade

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Populations in Asia are aging inexorably

Population Percentage aged 60 or over

50

44.1
40.7

40

31.1

30

23.3

20
6.9 5.5

10

11.4

9.9

11.2

0
1980

2000

China

Asian countries for the past 100

years had relatively young
populations with an ample supply of
labor.

Republic of Korea

2050
Japan

Population Growth Rate(Percentage)

In the past few years, though, many

of these same countries have
experienced a dramatic aging of their
population. This is a result of longer
life spans and improved healthcare.

With lower birthrates, a decrease in

population is forcing governments to
rethink their planning and the
direction of their economies

1.5
1
0.5
0
-0.5
-1
China

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Japan

Korea

Source: UN DATA
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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.

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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

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Asian nations are in different stages of development

China and India are expected to drive the infrastructure investments in the next
decade
As Asian economies are in different stages
of development and maturity, the
infrastructure requirements and
investments also differ.
According to Asian Development Bank, the
infrastructure needs in Asia are estimated
to be around US$ $750 billion annually
till 2020.
Around 55% of these investments are
expected to occur in 6 key countries
Mature: Japan, S Korea
Maturing: China, India
New emerging: Indonesia and Vietnam
Transportation, Energy, Telecom and
Water management are the four major
areas for infrastructure investment

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USD billion

Mature*

Maturing**

2000-2010
New
Emerging***

2011-2020

500 1000 1500 2000 2500 3000

USD billion

Note:
*
Represented by Japan ,Korea
** Represented by China ,India
*** Represented by Indonesia, Vietnam

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Government and private sector investments required for these areas

and these vary based on the sector and economy

Government involvement*

High

Low

Waste treatment facilities

to be developed in
maturing countries
especially for heavy
industries.

Project Size

Attractive investment
opportunities for international
investors in transportation
infrastructure.
Focused on new emerging
economies and expected to
develop green field projects.

Relevant R&D centers and

financial support needed
from government.
Greater e-business
deployment driving the
demand for robust &
efficient telecom
infrastructure

Smart cars / EVs expected to attract

investments in both mature and
maturing economies esp. within the
Tier 1 cities. Will also drive demand
for road reconstruction.

Private sector involvement*

* The investment size from government / private

companies.
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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.

Transportation

Energy

High
Water Management

Telecom

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Growth in Intra Asia Trade

Intra Asian Trade will grow exponentially over the next decade

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A number of major FTAs have been signed in Asia

1976

1981

1993

2004

2005

APTA

SPRTECA

ASEAN

ASEAN+3*

ASEAN China

BIMSTEC*

CEPEA/
ASEAN+6*

* Under negotiation

2006
SAFTA

2007

2008

2010

ASEAN Korea

ASEAN Japan

ASEAN India

Intra Asian bilateral agreements amounted to 13 in 2000 and 82 in 2010

ASEAN
Korea
ASEAN Australia
New Zealand

The total number of concluded FTA in Asia Stand at 132 as of 2010, with about 50 FTAs 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 countryon average Asia has 3.8 concluded FTAs per country compared with 2.9 for the Americas

Number of FTAs by Country:

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Current Scenario: The Asian Noodle Bowl

COLOR KEY
Multilateral FTA Signed/In Effect
CEPEA

Multilateral FTA Proposed/Under Negotiation

CEPEA

APTA

Bilateral FTA Signed/In Effect

Bilateral FTA Proposed. Under Negotiation

APTA
SAFTA

CEPEA

Pakistan
SAFTA
BIMSTEC

SAFTA
APTA
CEPEA
BIMSTEC

BIMSTEC
AFTA
SAFTA
ASEAN 3 CEPEA
CEPEA
AFTAASEAN 3
APTA

SAFTA
APTA
BIMSTEC

Maldives
SAFTA

AFTA

AFTA
ASEAN 3
BIMSTEC
AFTA
CEPEA
ASEAN 3 ASEAN 3
CEPEA

CEPEA
ASEAN 3
SPRTECA

ASEAN 3
APTA
SAFTA
BIMSTEC

AFTA +1

CEPEA
AFTA

AFTA
CEPEA

SPRTECA

ASEAN 3

AFTA
CEPEA

AFTA
CEPEA ASEAN 3

ASEAN 3

AFTA
CEPEA

CEPEA
SPRTECA

SPRTECA
CEPEA

Source: Frost and Sullivan

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What are the Implications of growing intra-Asia trade?

Container Trade Growth 2010-2011 (CAGR)
Asia-US

13

Intra Asia

17

Increasing
volume of
Intra Asian
Trade

Meeting the
Cost of
FTAs

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Impact on
Asian and
Foreign
Companies

Concerns
over Asian
Noodle
Bowl

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Increased Urbanization and Emergence of Super

Cities

Asia will continue to urbanize with the emergence of more and

more super cities

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Asia is becoming more and more urbanized

6000000
Almost half of the Global
Urban Population in 2020 will
be from Asia Alone

5000000
USA

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
Secretariat

TRENDS OF URBANIZATION IN MAJOR ASIAN COUNTRIES (in thousands)

Country

2000

2010

2020

2030

Urban
population

% Urban
population

Urban
population

% Urban
population

Urban
population

% Urban
population

Urban
population

% Urban
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

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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. Mumbais population, around 19 million as of
2010, 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

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Unemployment
Poverty
Crop failure
Drought
Floods
Mechanization in
farms reducing need
for farm workers
Lack of services,
like healthcare and
education
Lack of Safety
Civil unrest

Potential for
employment
Promise of a better
lifestyle
Higher labor wages
Better services
Safer environment
Education and career
opportunities for
women
Political Stability
Less risk of natural
hazards

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Huge Increase in Education

Huge Increase In Education Within Asia Pacific As

Governments and Businesses Are Moving Towards
Becoming Knowledge Based Economies

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APAC Countries are Becoming Knowledge Power

Economies
Countries Vying for Education Hub Status Across APAC Aggressively
Increasing Enrolment Of Foreign Students
APAC Real GDP Growth
(source IMF)

China
500,000 Foreign
Students by 2020

Taiwan 130,000
Foreign Students
by 2020

Japan300,000
Foreign Students
by 2020

India
Developing
Infrastructure to
Become
International
Education Hub

Growth at
7.1% APAC
GDP

Korea 100,000
Foreign Students
by 2012

Singapore150,000
Foreign Students
by 2015
Malaysia
200,000 Foreign
Students
by 2020

Australia
469,619 Foreign
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.

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Implications for Governments

Education will become

more affordable as
number of universities
will increase
Increase GNI for the
country

Will be able to reduce

Brain Drain

To promote Education
Hub by providing
scholarships,
citizenship and work
permits

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GOVERNMENT

Graduates will be come

new benchmark of
Nations
strength/power

Creation of new wealth

pockets due to Churning
out of IPs from
universities
Increase in tax collection
for Government with
bigger pools of
professionals being
employed

Will have to drive initial

growth by investing in
education infrastructure

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Implications for the Private Sector

Will be able to export and

replicate similar set up over
regionally to tap overseas
potential

Opportunity to collaborate
with world renown
universities from the West
to set up campuses in
APAC.

New and Innovative

businesses spin off from
new technologies

Setting up of Industry
driven Universities that will
create strong foundation
and partnership between
Private Sector and
Universities

Businesses will directly

benefit from talented
workforce

PRIVATE
SECTOR

Student from Europe,

Africa and US could study
in Asian countries at
cheaper cost

Large Skilled workforce

with strong knowledge
base

Private Institution will be

able to work in
collaboration with
government on deploying
large scale projects

New workforce will have

skill set to execute cutting
edge ICT and High
Technology projects, Thus
creating new economies.

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Easy expansion to
anywhere within the region
with talent being widely
available

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The Asia Pacific Mobile Broadband Revolution

Broadband internet connections will become

ubiquitous in Asia

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Smartphones will become Ubiquitious in APAC

600

0.6

500

0.5

400

0.4

300

0.3

200

0.2

100

0.1

0
2007

2008

2009

Total Smartphone Sales (000s)

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2010

2011

2012

2013

2014

Mobile Device Sale Growth

Rate (%)

Total Mobile Device Sales

(millions)

Mobile Device Market: Smartphone Unit Sale Forecasts (Asia Pacific), 2007-2015

2015

Smartphone Sales as a Percentage of Total Device Sales (%)

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What are the implications of Mobile Broadband

Adoption?

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.

M-Health

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.

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Huge Increase in Health Expenditure

Ageing and growing populations will drive a huge

increase in health expenditure in Asia

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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%
USA
$3922 billion
CAGR 4.6%

China
$1446 billion
CAGR 15.5%

India
$331 billion
CAGR 14.5%

G7
$6147 billion
50% increase 2010-2020
CAGR 4.0%
BRIC
$1958 billion
212% increase 2010-2020
CAGR 12.1%

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Philippines
$26 billion
CAGR 11.5%

Hong Kong
$20 billion
CAGR 3.2%
Taiwan
$65 billion
CAGR 7.8%

Indonesia
$47 billion
CAGR 8.1%
APAC
$2927 billion
151% increase 2010-2020
CAGR 9.2%

Japan
$563 billion
CAGR 3.0%

Vietnam
$31 billion
CAGR 14.8%
Malaysia
$25 billion
CAGR 8.4%

Thailand
$25 billion
CAGR 8.4%

Singapore
$23 billion
CAGR 9.6%

Australia
$198 billion
CAGR 3.0%

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APAC Growth Engines: Healthcare Investments in Vietnam, Philippines,

Thailand, & Indonesia

OTC drugs due

to reliance on
self-medication

Low cost medical

devices (reverse
innovation)

Vietnam,
Philippines,
Thailand,
Indonesia

Primary HC &
checkups due to
increased chronic
disease awareness

HC
infrastructure
for rural
areas

Private healthcare
delivery & public
private partnerships

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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

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Increasing Control over Strategic Assets by China

The value of Foreign Direct investment

(FDI) from China has sky-rocketed in recent
years, and with restrictions on investment
by private companies most of this
investment has been from state-owned or
quasi state-owned firms
Asia Pacific (including Oceania) accounts
for around 60% of FDI
China is seeking strategic control, not just
making portfolio investments in most
deals the acquired share is more than 50%

The main focus is on natural resources

especially energy (oil & gas, coal) and iron
ore, but also on food
In particular China is seeking to gain greater
control over the supply of resources critical
for industrialisation including coal and iron
ore

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Outward Foreign Direct Investment by China

250,000
200,000
$ millions

150,000
100,000
50,000
0

Africa &
Middle East
2%
Americas
18%

Europe
22%

Asia &
Oceania
58%

Source: UNCTAD
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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

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Huge Growth in Renewable Energy

Asia Pacific Leads Growth by Tapping New Wealth

Pockets In Renewables Energy Sectors Across
The Region

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Renewable Energy Sky Rocketing In Asia Pacific

New Investment in Renewable

Energy by Region, 2010, $BN
North
America,
30.1

South
America, Middle
13.1
East &
Africa, 5

Developing countries in Asia Pacific

have been major contributors in terms
of New investment in Renewable
Energy in 2010.
Major Developing Economies Investment
in Renewable Energy 2010

Europe,
35.2

APAC,
59.3
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Global Investment at
$211 billion in 2010

China

$48.9 billion

India

$3.8 billion

Other Asian countries

$4 billion

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Annual Power and Energy Outlook

Top 10 Energy Market Trends for the Decade

Power Demand
Growth
New Age for
Natural Gas

Clean Coal
Commercialisation

Power Plant
Decommissioning

Smart Energy

Continued
Investment in
Renewables

The 10 Most
Critical Trends
that Will
Shape the
Global Power
Energy
Industry till
2020

Energy
Efficiency

Energy Storage

Market
Liberalisation

Nuclear Power?

Source: Frost & Sullivan

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Top 10 Energy Technologies to Watch by 2020

Energy Storage
Waste-to-energy

Wind Energy

Smart Grid &

Super Grid

Bioenergy

Top 10 Technologies
of the Future

Unconventional
Gas

Following are key technology

platforms that are poised to
have a profound impact on a
number of sectors across the
globe. These areas present a
potential high ROI.

Energy
Management

Hydrogen & Fuel

Cells

Clean Coal
Technologies
Solar

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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

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