The SE Asia Opportunity

I’ve said for some time now that the opportunities in Asia are massive. Having lived there for 4 years and seeing the consumption habits first hand, the market is full of openness, money, innovation and excitement. Luxury is indeed synonymous with Europe, but the Asian markets are fun, vivid, experimental and new. In a century which will be marked by the rise of the Asian consumer, all eyes are turning East.

Specifically, I am talking about everywhere in Eastern Asia ex China. It is true, China presents a huge opportunity for luxury players- but it is my strong feeling that China is turning local. The appetite in China has largely been for either deeply established and recognizable luxury brands, or local players looking to establish themselves and make a name in in the luxury fashion world. One only has to look to Shanghai fashion week to see the growth of talent, and the seriousness with which this home grown talent is being taken. Make no mistake, within our lifetimes we will see a China home grown luxury market, perhaps as big and powerful as ours in the West.

That being said, I have always thought that the other areas in Asia present a unique and interesting opportunity. In short, for brands that are looking to enter Asia- I would strongly recommend thinking outside the box, and looking to the Southeast Asian markets in particular.

And boy, do I feel validated. It was with such joy that I recently saw that LVMH has launched a specific Asian private equity fund. In short, Ravi Thakaran, who founded the Asian arm of LVMH’s L Capital - is launching Asia 3.0- a private equity fund dedicated to the region’s consumer industry. The fund will be between 1 to 1.5bn USD, and will target personal care, hospitality, experiential retail, wellness, and lifestyle. Lastly, Thakaran, who also is the LVMH chairman for SE Asia also plans to create 25 new 1bn USD brands for Asia.

Again, for any brands looking to establish themselves outside of their own markets, SE Asia (the ASEAN countries in particular- Brunei, Burma (Myanmar), Cambodia, Timor-Leste, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam) present a huge opportunity. The region’s economy is 2.6tn USD in total and is the 7th largest in the world, and by 2050 it could be the fourth largest. By 2025, the number of middle class households in the ASEAN countries will top 120m (double the 2010 number). The consumption power of this region is still massively under appreciated, and Accenture estimates that annual consumer spending will rise to $2.3tn by 2020, roughly 80 per cent more than the 2012 level.

Further, the market and growing middle class is highly receptive and open to new goods and strategies that mesh with the South East Asian mentality. For brands looking to enter these markets, a top down Western approach is not recommended. Each nation is highly diverse with differing religions, cultures and customs, and each needs its own strategic offering and plan. However, once open to your product and offering, these economies represent a potential gold mine for brands open and innovative and brave enough to try.

Again, the excitement is real and the trend is your friend. For brands willing to get out of the box and out of their comfort zone, the potential rewards in SE Asia are great.