Entrepreneurship And Higher Learning In Asia: The Generation Issue by Matthews Asia
Change has taken place so rapidly in Asia that different generations, even within the same family, have vastly different perspectives, expectations and consumption habits.
Identifying sustainable growth in economies and businesses is at the core of what we, at Matthews Asia, try to do. What makes a business sustainable can depend on many factors-social, political and economic, to name a few. But then the question is: even if we have successfully identified these factors and changes, how will they play out? The course of change is not necessarily smooth, nor is it an unpredictable and chaotic series of jumps. The truth may be something in between.
On a company level, there can be huge changes as some products and services catch on and others go out of fashion. Often, these are brisk and ephemeral changes-a new fad or fashion-Angry Birds or the latest must-have Louboutins. However, on another level, there are more permanent trends such as the rise of mobile phone usage for leisure and the emerging desire for luxury brands. Such changes are not merely fleeting but are generational in nature. And, being products of a new generation, they are formed by the experiences and attitudes of a new wave of consumers that will dominate spending power for the next decade or more.
The West talks about its Generation X, Generation Y and the Millennials. Each generation is attributed a shared attitude. Asia, too, has its generations—many in China who came of age over the last 30 years have seen their wealth increase while their welfare safety net has shrunk and the government has retained its one-party grip on power. Indonesia and Vietnam, in their own ways, are developing new political regimes and, with varying degrees of success, growing their industrial base. Attitudes toward financial security, individuality or manual labor versus higher education can vary dramatically across geographies and generations. Asia remains one part of the world where optimism about the future remains widespread among citizens. But where will that optimism be reflected in simple purchases-first house or first car? Or perhaps it will show in an enthusiastic embrace of new technology, a desire for a higher quality of life, or in social and environmental change.
A Generation Born Free
Let’s take China, for example. Thirty years ago, living standards were probably lower than they were during the Depression-era U.S. There were limited supplies of decent food, limited health care, no variety in fashion and no real holidays. There was, however, state-run media, whose idea of entertainment was listening to traditional-sounding paeans to the Communist Party sung by people dressed in military uniform. How has that childhood experience defined the attitudes of China’s 40-somethings today? For certain, they have seen a vast expansion in living standards and have a great array of consumer items on which to spend their money. But they are also the first to emerge from a communist state, to be freed of many restrictions, but also to be cast afloat on a free labor market. Should we be surprised if they have not wholly embraced consumer spending for frivolity and luxury, but instead are focused on personal security, precautionary savings and owning property?
However, the attitudes of today’s 20-year-olds are vitally important for understanding patterns in spending, both by government and among households, in the decades ahead. What will Asia look like in the year 2035? A new generation is emerging for whom security, including that of living standards, is less of an issue––a generation that is accustomed to finer things than its parents’ generation had, with an emergent desire to consume. This is a generation that embraces new technology, and that perhaps holds different attitudes toward saving and investment.
These generational differences are writ large across Asia. There are countries at different levels of wealth and with different generational changes. Much of Southeast Asia is young, but its societies are just emerging from one-party rule and moving from an agrarian lifestyle to take up jobs in factories. Elsewhere, among middle-class households, the younger generation may be less inclined to perform hard manual labor to earn money when they see opportunities such as emerging finance and services industries—opportunities to become doctors, lawyers, venture capitalists or entrepreneurs—as a new way of life.
So, for investors to be able to make better decisions in their Asia investments, it makes sense to spend some time trying to understand how different generations view life.
What are the continuities, the changes that are defining each new wave of consumers? To get the answers for this year’s issue of AsiaNow, our investment team went beyond the usual reports, articles and other sources we rely on for everyday research, and spoke directly to individuals and families from Asian countries to hear-in their own words—how sweeping change over the past three decades has affected their lives. Armed with this knowledge, we hope to have a better appreciation of the extent to which Asia’s economies can sustain high levels of growth, despite increasingly consumer-oriented societies. And we might have a better context for making decisions about which businesses are likely to prosper for many years-and to avoid overpaying for the near-term performance of companies that have just, by luck as much as judgment, hitched themselves to the latest fad.
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