The world is looking intensely at Asia today. Not for its spirituality or its exotic cuisines, but as a critical contributor to the sustenance of its core economic superiority. Having reached a “launching pad” level of economic growth (or getting there real fast, depending on the specific country), and with its very large young populations, Asia is moving rapidly towards becoming not only the world’s largest producer and consumer, but also  the largest productive workforce. Marketers and policy makers everywhere are keen to know how to exploit the rapid transformation happening here.

We begin with a macro perspective on the big environmental changes occurring in Asia today, then examine the consumers more closely with selected insights about youth and women, and finally end with a discussion on some thoughts on how marketers can devise strategies to deal with this exciting new opportunity - Asia. We have resisted the temptation to quote extensive demographic data and focus instead on consumer issues. Nonetheless, ‘Asia’ is not one entity, and any attempt at addressing it as one, must necessarily become a little panoramic in nature.

1. The Meta Trends

To simplify the myriad changes taking place here, we will use the concept of Meta Trends. A meta trend is a transformational or transcendent phenomenon, not simply a big, pervasive one – it implies multidimensional or catalytic change, as opposed to a linear or sequential change. It happens as a result of evolutionary, system-wide developments that occur simultaneously in a number of individual demographic, economic, and technological areas. Instead of each being an individual free-standing global trend, it is a composite of trends. A brief description of these trends at a macro level will be followed by a more in-depth exploration of the impact of these trends on consumers and their consumption behavior.

Three meta trends transforming this region today are discussed below:

Economic growth and globalization: 

High GDP growths throughout most of the region and impressive increases in exports and outsourcing income have led to higher incomes and better living standards. Real average household incomes will continue to increase between 1.3% and 4.9% per annum between 2002 and 2012. High income segments are projected to grow even more rapidly in size. For e.g., the number of households earning over US$30,000 in 2001 will increase by 8.6% in urban South Korea, 3.3% in Taiwan, 4.9% in Singapore, 3.7% in Hong Kong and even 1.3% in Japan (Asian Demographics Ltd).  Needless to say, there are vast differences between countries in levels of economic development – from the cheap, high quality labour of China; to the high technology-high value consumer market in Japan; the increasingly wealthy ASEAN consumers; the potential alliances with the highly developed Korea and Taiwan; or the relatively poor, but highly optimistic, talented and fast developing Indian business outsourcing market.

A couple of major shifts occurring in today’s Asia are worth noting here - China’s scattering of the pattern of orderly Asian “flying geese” development, and the breakdown of national economic “baronies”.

Asia’s traditional model of economic advancement was often described as “flying geese” in formation. Each country began by manufacturing and exporting simple, labor intensive products like garments and shoes and assembly of low end products. As it accumulated more capital and know-how, it moved through products of intermediate complexity and then to high-value added products and services. As one country moved on to the next level of value added, another developing country would take its place at the lower-value end. Japan led the flock, followed by Hong Kong, Singapore, South Korea and Taiwan. Then came Malaysia, Thailand, Philippines and Indonesia in the tail. Albeit somewhat simplistic, this concept of national geese flying in formation underlay many a government policy and corporate strategy. It shaped the pattern of what diversified Asian-owned companies invested in next and where multinationals located their activities in Asia. Then, along came China. China is not flying in the cozy formation; it is simultaneously making rag dolls and semiconductors and highly specialized machinery (810,000 researchers, 48% growth in spends on R&D as a %of GDP in just three years). All this on a scale large enough to redraw the competitive map!

So, now that the flying geese model has been exploded, companies must review their existing supply chain operations, and get away from too much vertical integration towards a model where each subsidiary in Asia supplies specialized components or focuses on particular activities in the overall supply chain.

The second important shift is the breakdown of national baronies. Multinationals have so far typically approached Asia as a collection of separate national markets due to vast differences in regulatory mechanisms, local standards; access to finance etc.., not to mention culture and language. Local country managers often became local barons: each in charge of a highly autonomous subsidiary within the Asian network. Today, a potent cocktail of falling trade barriers, deregulation of national markets, and falling costs of transport and communication is opening the door to new sources of competitive advantage based on cross-border economies of scale and co-ordination.

In the relatively poorer countries, as governments focus on meeting key challenges in infrastructure development, labor market rigidities, social development and institutional reform, economic expansion will continue to get an even greater impetus.

While world trade is still more ‘regional’ than global (intra NAFTA=49%, intra EU=61%, intra Asia=53%), the move towards increasing globalization is well on its way. Asian firms, by virtue of serving as suppliers to Western firms are gaining a high degree of competence in not only negotiating and dealing with Western customers, but also in managing very efficient production facilities, with high quality products.

Universal connectivity and the death of distance:

Some of the biggest changes are taking place in the Information Economy, where the rapid adoption of new communication technologies by governments, businesses and consumers has played a catalytic role. It is noteworthy that seven out of the top ten global IT firms are located in Southeast Asia (Business Week). Apart from the legion Japanese, Legend of China, Creative Technologies of Singapore, and the Bangalore IT and BPO companies are but a few examples of this trend. Asian governments are investing heavily in ICT hardware and software; in many “backward” countries, the absence of legacy systems provides an exciting opportunity to leapfrog.

The Internet and e-commerce will put to bed the traditional IPLC (international product life cycle) theory, and products and technologies will simultaneously trade and develop across the western and eastern parts of the globe.

Universal connectivity will be accelerated by the integration of the telephone, cell phone, and other wireless telecom media with the Internet. Soon, all long-distance phone calls, plus a third of all local calls, will be made via the Internet, while 80% to 90% of all Internet access will be made from Web-enabled phones, PDAs, and wireless laptops. Most important of all, in less than a decade, one-third of the world's population - 2 billion people will have access to the Internet, largely via Web-enabled telephones. In a very real sense, the Internet will be the "Information Highway"-the infrastructure, or infostructure, for the computer age. The infostructure is already speeding the adoption of flexiplace employment and reducing the volume of business travel, while making possible increased "distant collaboration," outsourcing, and off-shoring.

Social Adaptation:

The forces of modernization – economic growth, connectivity, women’s education, urbanization, and institutional order - are producing dramatic social change in the region. In order to adjust to these environmental changes better, people tend to utilize specific psychological modes of adaptation. We see two of these mechanisms in frequent use in Asian societies – cognitive compartmentalization and psychological dissociation.

Cognitive compartmentalization is evident in the way people are seen dealing with the spiritual vs. material culture conflicts. In the modern world, western material culture apparently overshadows eastern material culture. While it is tempting for Asian societies to embrace the materialism of western culture, they cannot bring themselves to accept that western spiritual culture (ethical principles, social values etc...) is also superior to theirs. The easiest way to deal with this inconsistency is to simply compartmentalize culture into material and spiritual – this way it becomes easier to adopt the new material culture. Another manifestation of such cognitive compartmentalization is the way in which people are adopting changing social norms between their public and private lives. Many Asian men profess strong pro-democratic leanings in their business and political life, but are highly authoritarian in their attitudes and behavior inside the family.

Psychological dissociation is another mechanism by which people cope with rapid change. Idea-behavior dissociation is evident especially among the youth where we see strong social pressure (e.g. peer group pressure) forcing a quick change in behavior (fashion, music/sport preferences, brand name adoption etc…) for social conformity. A change in attitude or idea association may actually occur later toward maintaining consistency with the behavior change.

Interestingly, current trends in the United States, suggest that the three great cultural consequences of industrialization-the urbanization of society, the institutionalization of work, and the atomization of the family - may all be reversing, as people adapt to their changing circumstances. The U.S. Census Bureau reports that, during the 1990s, Americans began to migrate out of cities and suburbs into exurban and rural areas for the first time in the twentieth century. Simultaneously, information work has begun to migrate out of offices and into households. Telecommuting is a growing knowledge-age phenomenon. About 80% of companies worldwide now are estimated to have employees who work at home, up from 54% in 2003. The number of telecommuters in the United States grew 63.2% between 1999 and 2003. Given the recent accelerated growth of telecommuting, self-employment, and contingent work, one-fourth to one-third of all gainful employment is likely to take place at home within 10 years. Meanwhile, growing numbers of baby boomers find themselves living with both their debt-burdened, underemployed adult children and their own increasingly dependent aging parents. The recent emergence of this "sandwich household" in America resonates powerfully with the multigenerational, extended families that commonly served as society's safety nets in pre industrial times, and is in fact still dominant in many parts of Asia, especially in the rural areas.

Overall, Asia though, will still need to first go through the process of urbanization to some extent, before the impact of this reverse movement is felt. It could be hastened dramatically if governments make a determined effort to develop the infostructure and the infrastructure required to permit this sort of decentralization to be effective. Some governments are indeed determined to do so, and we may see a faster transfer of such family structures than we might imagine.

The three meta trends described above appear most marked when we look at Asia, though they would in some measure apply to many other parts of the world too, especially the trend towards universal connectivity. In addition, there is one other trend we describe below which we see emerging strongly in the western world today, but is yet to impact Asia in the same way. This is what is called “Transactional Transparency”.

Long before the massive corporate malfeasance at Enron, Tyco, and WorldCom, there was a rising global movement toward greater transparency in all private and public enterprises. Originally aimed at kleptocratic regimes in Africa and the former Soviet states, the movement has now become universal, with the establishment of more stringent international accounting standards and more comprehensive rules for corporate oversight and record keeping, plus a new UN treaty on curbing public-sector corruption. Because secrecy breeds corruption and incompetence, there is a growing worldwide consensus to expose the principal transactions and decisions of all enterprises to public scrutiny.

While most consumer and public interest watchdog groups are demanding even more stringent regulation of big business, some corporate reformers argue that regulations are often counterproductive and always circumventable. They believe that only 100% transparency can assure both the integrity and competency of institutional actions. In the world's law courts-and in the court of public opinion-the case for transparency will increasingly be promoted by nongovernmental organizations (NGOs) who will take advantage of the global infostructure to document and publicize environmentally and socially abusive behaviors by both private and public enterprises. The ongoing battle between institutional and socioecological imperatives will become a central theme of Web newscasts, Netpress publications, and Weblogs that have already begun to supplant traditional media networks and newspaper chains among young adults worldwide. Many of these young people will sign up with NGOs to wage undercover war on perceived corporate criminals.

In a global marketplace where corporate reputation and brand integrity will be worth billions of dollars, businesses' response to this guerrilla scrutiny will be understandably hostile. In their recently released Study of Corporate Citizenship, Cone/Roper, a corporate consultant on social issues, found that a majority of consumers "are willing to use their individual power to punish those companies that do not share their values." Above all, our improving comprehension of humankind's innumerable interactions with the environment will make it increasingly clear that total transparency will be crucial to the security and sustainability of a modern global economy. But there will be skullduggery, bloodshed, and heroics before total transparency finally becomes international law-15 to 20 years from now.

The three meta trends described above – economic growth and development, universal connectivity and social adaptation, are causing change in Asian society and consumer values at a fast pace.

2. The Consumer

The most Optimistic in the world : This title deservedly belongs to Asian consumers, specifically those living in China and India, where each country had more than three-quarters of respondents upbeat on the future of their respective economies, job prospects, personal finances and spending intentions (ACNielsen Online Consumer Confidence survey, 2005). Asia accounted for eight of the world's 10 most optimistic countries about growth in their local economies over the next 12 months. The United States was ranked ninth.

The same survey shows that in the Asia Pacific region overall, 40% of consumers thought their economies had improved over the last six months, and 53% expected further improvement in the next year. Conversely, 48% of U.S. respondents and 40% of Europeans stated that they felt their respective economies had deteriorated over the last six months. In addition, only 43% of U.S. consumers and 31% of Europeans were confident their economies would improve.

Going the Western Way?

As we look at changing consumers in Asia, what strikes us at first glance is that economic development seems to affect changing lifestyles and attitudes in a startlingly linear fashion, and Westernization gets more and more pervasive.

Demographically, this is evident in fertility rates, age breakups, and size of households. Fertility rates are decreasing with increasing economic development, and households are getting smaller. The percentage of households with two or less members is a clear indication of this trend. India (11%) and China (26%) are much lower than the more prosperous Japan (53%), Singapore (41%), and South Korea (51%), but are headed the same way.

A parallel trend is seen in increasing literacy and education levels, particularly so amongst women. Urbanization is similarly occurring rapidly.

Youth and their attitudes and lifestyles are the other strong indicator of how prosperity brings about universality in culture. Several studies find that there is a great deal of convergence of global teen values, such as consumerism, materialism, independence, self-expression, openness to new ideas & cultures, flexibility, mobility, and enjoyment of life. In an interesting experiment, an advertising agency shot videotapes of teenager’s rooms in 25 countries. From the gear and posters on display, it was hard to tell whether the rooms were in Los Angeles, Mexico City or Tokyo. Asian teens are no different – in a 2002 study involving teens and adults from 11 Asian markets, teens ranked values such as individualism, ambition and freedom much higher than did adults. Whether it is the Thai ‘sabaii sabaii’ ethos, or the Malaysian “Selamba..... it’s a lepak life”, youth shows a cool, take-it-easy style with a great deal of optimism.  Peer group pressures continue to exert their influence; Indonesian youth want to look good and have a girl/boy friend to make an impression in their “barkada” (circle of friends). A love for music, computer games, and sports, Internet savvy,  TV & media hungry, a live-for-the-moment hedonism, and an obsession with brands is a familiar description of youth anywhere in the world today.  

If we assume, even for a moment then, that youth is indeed one global culture, it becomes pertinent to examine what is happening among this group in the western societies, and its impact on Asia.

Developed societies will increasingly take their cue from Gen X and the millennial generation (aka Gen Y or generation dot-corn), rather than the baby boomers who have dominated its thinking for most of four decades. This will tend to homogenize basic attitudes throughout the world, because Gen X'ers and especially the millennials around the globe have more in common with each other than with their parents. Throughout the 1990s-effectively, their entire adult lives-Gen X'ers and the millennials knew only good economic times, and the economic downturn at the turn of the century seemed to them a confusing aberration rather than a predictable part of the business cycle. Most expect to see hardship on a national level, but they both want and expect prosperity for themselves.

Gen X'ers and the millennials are the most entrepreneurial generations in history.

 This will prove to be a global trend, as members of generation X and the millennials throughout the world tend to share values. Gen X and millennial entrepreneurs are even playing a significant role in the current economic growth in India and China, where they are becoming a major force in the Communist party. In the upper classes of metro India, the younger generations dress and think more like their American counterparts, not their parents. In China, the democratic fervor that spawned Tiananmen Square has been replaced by capitalist entrepreneurialism.

Another arresting observation is that young people around the world are being expected to delay entry into adulthood ever longer. This is happening, in large part, because the platform one needs to reach for successful adulthood is getting higher. An information society requires that young people learn more to become full members. The growing need for literacy skills in adult life extends beyond the workplace. Literacy is required to navigate complex insurance papers, retirement packages, legal regulations, and countless other complicated bureaucracies that are part of everyday life. Adults must be literate just to keep up with their own health care. In addition to literacy, adolescents need to develop more versatile interpersonal skills to navigate the different worlds of home, work, and school-worlds of increasing complexity and diversity. Adult relationships are becoming less scripted and more transient, and teens need to develop skills for negotiating more ad hoc associations. Adults also must be able to operate in more-diverse social worlds. On the job, around the neighborhood, even within families, there is an increased likelihood that young people will need to know how to relate with people from different cultural and religious backgrounds. In developing the knowledge and vernaculars to move smoothly and communicate effectively across various social worlds, adolescents will need to acquire skills to change language, posture, tone, and negotiation strategies to adapt to multiple milieus. The adolescent who is able to function in only one world is increasingly ill-- prepared for adult life.

Obstacles to Adulthood

As the platform of adulthood rises, the ladders required to get there lengthen. These boosted demands and longer ladders can increase the precariousness of adolescence, since a longer climb to adulthood creates new disadvantages for those who lack the financial means, emotional support, or mental capacity to keep climbing.

Acquiring advanced education and opportunities for learning diverse life skills often requires family wealth. Even when tuition is covered by grants and scholarships, families must have sufficient wealth to be able to forgo the income their college-bound children would otherwise provide; many poor families, especially in developing countries, cannot afford this sacrifice. By contrast, middle- and upper-class youths throughout the world are gaining access to new resources, such as after school programs, camps, tutors, travel opportunities, computers and new technologies, which will prepare them for both the literacy and life skills of modern adulthood.

Girls are at a particular disadvantage in many nations, facing sex discrimination as an obstacle to obtaining even basic education and social skills. Especially in South Asia, girls are more likely to be pulled from school at an early age and are thus less likely to develop critical literacy skills. Across most of the world, girls face more demands for work in the home and restrictions on movement that constrain their opportunities to gain direct experience with diverse social worlds. As rates of divorce and abandonment rise worldwide, so do the risks for young women who fail to obtain skills to function independently. As they reach adulthood, uneducated women are increasingly vulnerable to poverty and exploitation.

Rising to the Challenge

The good news is that youths in most parts of the world are optimistic about their lives and that, despite the greater demands and longer ladders, the majority of young people are rising to the challenge. Rates of illiteracy among 15-- year-olds have fallen from 37% to 20% since 1970, UNESCO statistics show. Rates of high school and college graduation across most nations continue to climb. And there is little question that many young women have more versatile skills for taking care of themselves and navigating public environments today than they did yesterday. (The Study Group on Adolescence in the 21st Century, led by author Reed Larson, is sponsored by the Society for Research on Adolescence and the International Society for Behavioral Development).

The average IQ of a young adult today is 20 points higher than in 1940. It seems likely that youths' abilities have grown as they have responded to the increased complexity of modern life. (New Zealand political scientist James Flynn gathered intelligence test scores of young people over the last 70 years. Because new norms for the tests are established every few years, the publicly reported scores have shown little change. Once Flynn went back to the unadjusted scores, however, he found the IQs of young people rose dramatically over this period)

The general decrease in family size also contributes to youths' better preparedness for adulthood. Smaller families mean that parents can devote more attention and resources to each child. Parents in many parts of the world are adopting a more responsive and communicative parenting style, which research shows, facilitates development of interpersonal skills and enhances mental health.

Can corporates take this opportunity to provide “way stations” along the climb that allow young people to rest, gather themselves, and consider alternatives?

Women too are changing rapidly in Asia. With increasing education, many more of them are now working, seeking independence and greater power and control of their lives. A recent study across Hong Kong, Singapore, Taipei, Bangkok, Manila, Jakarta and Kuala Lumpur discovered that female professionals represent the fastest growing segment of Asian ‘elite’, (i.e. people over 25, and currently employed in senior positions in business, government and education). The propensity to work has been increasing steadily for women, and now as many as 54% of women work (average across Taiwan, South Korea, Thailand, Philippines, Australia, Japan, Malaysia, Indonesia). Even the number of women in the executive and legislative councils in Hong Kong has been increasing every year.

Not surprisingly, women’s attitudes are undergoing a transformation too. Several studies show an increase in the desire for socioeconomic independence and societal consciousness, and a parallel decrease in submissiveness and traditionality. Even family orientations among the younger women are changing, with women deciding to postpone and/or limit children.

The effects of these changes among youth and women are visible across consumption and lifestyle practices. To illustrate but a few, we see Asians emerging as the biggest fans of fast food in the world (ACNielsen Online Consumer Survey, 2004, across 28 markets). On a market-by-market basis, nine of the top 10 markets globally consuming take-away on a weekly basis hailed from Asia Pacific. Hong Kong ranks as the world’s No. 1 in terms of frequency of fast food restaurant visits followed by Malaysia (59%) and the Philippines (54%). On diet, exercise and grooming, across the Asia Pacific region, over two thirds of consumers are currently trying to lose weight in spite of the fact that only half of them consider themselves to be a little, somewhat or very overweight. Whether there is a legitimate need to lose weight seems to be unimportant; peer group pressure, waif-like celebrities and super models plastered across our magazines and TV screens appear to have raised the bar on what people consider an acceptable weight for themselves. In China and Singapore where almost half of the people believe they are at the right weight, there are still 66% and 80% respectively who are trying to lose weight.

Across categories, we also see a reflection of global trends towards convenience, sensory indulgence, health and wellness, and individuality. The extent to which these have permeated across sections of societies and their expressions vary considerably by market and category, but the overall shift is in the same direction.

Overall, thus we observe a clear trend towards western lifestyles and attitudes in a multitude of areas – the most notable change being the shift from a collectivist society towards more individualist values as economic growth happens. Does this mean then that there will eventually be a single global culture, and as man ‘progresses’, he will reach an apex, leading to the “end of History”? The increasing exposure of cultures to one another can conceivably diminish a sense of national identity, and we may see a world that will be one city, with cyberspace the town square. Will this be the future of tomorrow’s Asia too, then?

We do not think so. We tend to agree with Professors Ronald Inglehart and Wayne Baker, whose views are explained briefly below:

Economic progress is certainly associated with pervasive, and to an extent, predictable, cultural changes. But it is misleading to view cultural change as "Americanization" or even “Westernization”. There will be shifts in the values of people in eastern nations as they get more prosperous, but it will not produce a uniform global culture. The future may look like McWorld, but it will not feel like one.

The World Values Survey data (a two-decade-long examination of the values of 65 societies coordinated by the University of Michigan's Institute for Social Research) shows us that the world views of the people of rich societies differ systematically from those of low-income societies across a wide range of political, social, and religious norms

The two most significant dimensions that emerged reflected, first, a polarization between traditional and secular-rational orientations toward authority and, second, a polarization between survival and self-expression values. By traditional, we mean those societies that are relatively authoritarian, place strong emphasis on religion, and exhibit a mainstream version of preindustrial values such as an emphasis on male dominance in economic and political life, respect for authority, and relatively low levels of tolerance for abortion and divorce. Secular-rational societies tend to have the opposite characteristics.

What the map shows us is that cross-cultural variation is highly constrained. That is, if the people of a given society place a strong emphasis on religion, that society's relative position on many other variables can be predicted-such as attitudes toward abortion, national pride, respect for authority, and childrearing. Similarly, survival vs. self-expression values reflect wide ranging but tightly correlated clusters of values: Materialistic (survival-- oriented) societies can be predicted to value maintaining order and fighting inflation, while postmaterialistic (self-expression-oriented) societies can be predicted to value freedom, interpersonal trust, and tolerance of outgroups.

Economic development seems to have a powerful impact on cultural values: The value systems of rich countries differ systematically from those of poor countries. If we superimpose an income "map" over the values map, we see that all 19 societies with an annual per capita GNP of over $15,000 rank relatively high on both dimensions, placing them in the upper right-hand corner. This economic zone cuts across the boundaries of the Protestant, exCommunist, Confucian, Catholic, and English-speaking cultural zones.

On the other hand, all societies with per capita GNPs below $2,000 fall into a cluster at the lower left of the map, in an economic zone that cuts across the African, South Asian, ex-Communist, and Orthodox cultural zones. The remaining societies fall into two intermediate cultural-- economic zones. Economic development seems to move societies in a common direction, regardless of their cultural heritage. Nevertheless, distinctive cultural zones persist two centuries after the industrial revolution began.

But a society's cultural heritage also plays a role: All four of the Confucian-influenced societies (China, Taiwan, South Korea, and Japan) have relatively secular values, regardless of the proportion of their labor forces in the industrial sector. Conversely, the historically Roman Catholic societies (e.g., Italy, Portugal, and Spain) display relatively traditional values when compared with Confucian or ex-Communist societies with the same proportion of industrial workers. And virtually all of the historically Protestant societies (e.g., West Germany, Denmark, Norway, and Sweden) rank higher on the survival/self-expression dimension than do all of the historically Roman Catholic societies, regardless of the extent to which their labor forces are engaged in the service sector.

We can conclude from this that changes in GNP and occupational structure have important influences on prevailing world views, but traditional cultural influences persist.

Religious traditions appear to have had an enduring impact on the contemporary value systems of the 65 societies. But a society's culture reflects its entire historical heritage. A central historical event of the twentieth century was the rise and fall of a Communist empire that once ruled one-third of the world's population. Communism left a clear imprint on the value systems of those who lived under it. East Germany remains culturally close to West Germany despite four decades of Communist rule, but its value system has been drawn toward the Communist zone. And although China is a member of the Confucian zone, it also falls within a broad Communist-influenced zone. Similarly, Azerbaijan, though part of the Islamic cluster, also falls within the Communist superzone that dominated it for decades.

Modernization theory implies that as societies develop economically their cultures tend to shift in a predictable direction. Our data supports this prediction. Economic differences are linked with large and pervasive cultural differences. But we find clear evidence of the influence of long-established cultural zones.

Do these cultural clusters simply reflect economic differences? For example, do the societies of Protestant Europe have similar values simply because they are rich? No. The impact of a society's historical-cultural heritage persists when we control for GDP per capita and the structure of the labor force. On a value such as interpersonal trust (a variable on the survival /self-expression dimension), even rich Catholic societies rank lower than rich Protestant ones.

Within a given society, however, Catholics rank about as high on interpersonal trust as do Protestants. The shared historical experience of given nations, not individual personality, is crucial. Once established, the cross-cultural differences linked with religion have become part of a national culture that is transmitted by the educational institutions and mass media of given societies to the people of that nation. Despite globalization, the nation remains a key unit of shared experience, and its educational and cultural institutions shape the values of almost everyone in that society.

Further evidence for cultural differences overriding in some ways economic prosperity is also seen in the four famous Hofstede cultural dimensions viz. Power Distance, Uncertainty Avoidance, Masculinity-Femininity and Individualism-Collectivism. Typically, Individualism increases with economic growth, and to an extent so does Power Distance, however Masculinity-Femininity is independent of prosperity. There is also considerable evidence to show that religion is correlated with these dimensions in significant ways.

Let us now see some illustrations of the ways in which culture influences our consumers in Asia.

Youth, our most interesting target group for the future consumer: A little while ago, we discussed how Asian youth is increasingly mirroring western lifestyles and attitudes. There are however, some critical differences worth highlighting here.

   Source: Based on empirical and cross referenced studies, Thomas Tan Tsu Wee, 1999

While these are rather sweeping and “general” statements of difference, some examples of specific country led differences include:

• A very high need for conformity among the Japanese, who choose style over comfort in their apparel preferences as compared to their American counterparts;

• An increasing amount of discretionary spending income for youngsters even in middle income families in China, often referred to as the “little emperors”, or the “six pocket syndrome” (the one-child policy has led to indulgence not only by parents, but also two sets of grandparents, all of whom frequently indulge the young);

• Even upper income Indian teens say that getting independence and space from their parents is not especially important. It is more important for them to be good people, good providers and good guides.

• Severe competition for school/college admissions and jobs comes with its own set of pressures for some teens in India. The global exposure has led to soaring ambitions-perfect job, perfect body, the best clothes, latest gadgetry-and the easiest route is through good education. But when even a 90% score is not enough for university admissions, the pressure is unbearable. Add to it the confusion of zipping hormones, mysterious changes in the body and lack of reliable adult confidants and it is a pressure situation Superboy would crumble under. Faced with rebellious children, parents are often at a loss to understand where they have gone wrong. It is their desire to "drive" their children into performing combined with intense peer pressure. The relationship with the opposite sex doesn't make the emotional tumult any easier. Bombarded with snippets on sex on the Internet, unsure about what is right; teenagers may whirl in a vortex of uncertainty and anxiety. Many become obsessed with chatting, flirting (or more), with strangers. They live their lives on the Net, losing all social skills. "With the breakdown of the joint family structure, the confused children have fewer people to turn to; children don't want parents to be friends, they want parents to be parents", says Arun Kapoor, director, Vasant Valley School, Delhi.

• A study on filial piety (one of the first of all virtues in Confucian society) in China shows that while youth feel they should support their elders financially when they get old and respect them, there is a clear reluctance to obey them. Elders on the other hand, expect obedience from young but not necessarily any financial support.

Women, another interest group:

A couple of interesting insights here will illustrate that while women are moving towards greater independence and freedom, the effects of many years of cultural conditioning will play a role.

• Interesting differences between women in China and South Korea indicate that Chinese women place greater emphasis on Self respect and Warm relationships with others whereas Korean women also look for more Excitement. It has been observed that the greater the importance of excitement, the greater the experiential needs (i.e. fashion consciousness) of the market in general. 

• A study among young, single, working women across major cities in Asia (Bangkok, Beijing, Hong Kong, Jakarta, Seoul, Singapore, Taipei and Tokyo) explored the Masculinity-Femininity (Mas/Fem) dimension in Asian society and threw up a fascinating insight.  Masculinity stands for a society in which social gender roles are clearly distinct; men are supposed to be assertive, tough and focused on material success, whereas women are supposed to be more modest, tender and concerned with the quality of life. Femininity stands for a society in which social gender roles overlap. Of the countries covered in this study, Japan has the highest Masculinity score, and Thailand and South Korea the lowest. Women were asked what qualities they would look for in a boyfriend and in a husband. Across all cities, women want a husband to be healthy, wealthy and understanding, but seek personality, humor and intelligence from a boyfriend. This finding was most pronounced in the countries with highest Masculinity, such as Japan. This would indicate that if the boyfriend is the symbol of love, and the husband the symbol of family life, in masculine countries, love and family life are more often seen as separated whereas in the feminine countries, they are expected to coincide. 

Taking the same framework further, we find that most Asian countries score considerably low on the Individualism-Collectivism index, including the wealthier countries like Japan, Singapore, Hong Kong and South Korea indicating that even this dimension is at least somewhat independent of economic influence. This has significant implications for the concept and implementation of relationship marketing. Clearly, key components of service delivery such as face time & manner, and complaint handling need special attention. Even brand relationships and commitment hold different meanings for these cultures, for e.g. private label in general is slow to gain acceptance here. While Europe is the strongest market for private label, across the 38 markets surveyed, eight of the bottom 10 hailed from Asia, with Japanese and Malaysian consumers (35%) in least agreement that Supermarket Own Labels were a good alternative to other brands. Of course, Private label awareness and acceptance in Asia and other developing markets will in part go hand in hand with the growth of the Modern Trade in these countries, however, it is interesting to see that even in Japan, the attraction of major well known multinational and local brands with strong brand equity supported by heavy advertising is very intense. Does the emphasis on relationships mean that consumers need products that “speak” to them, and that they can relate to more strongly?

3. Thoughts for Marketers

In this final section, we discuss some key areas where we believe companies will need to focus their efforts on to succeed in Asia. Strategies will doubtless to be category and country specific; we will provide a macro perspective here.

The Consumer Goods Industry Cycle

Large consumer goods companies, especially multi-nationals tend to meet market challenges in similar ways. In the last few years, companies have been rationalizing and reshaping their product portfolios through mergers and acquisitions, with the aim of gaining leadership in a few core categories. Next, to reduce costs and finance growth, most companies went after productivity gains. Large savings came from global purchasing and from centralized supply chains facilitated by information technology. Such gains led to investments in marketing and product innovation, expansion of brand portfolios and entry into new categories. As competition in the new markets gets stiffer, there are again moves to rationalize brands and focus on core strong brands.

Is there another way? In Asia, most certainly!

The mass markets

The most striking opportunity is the much written about BOP (Bottom-of-the-Pyramid), and companies who have innovated single mindedly for this market have been successful.

One of the most successful examples is the Unilever experience across India and other Asian countries. With toilet soaps, shampoos and detergents, the aim is to make high-quality goods affordable and accessible to poor people earning a tiny margin on broad-based sales and building a consumer base that will stay loyal as it grows more affluent. Clearly, this calls for an immense focus on execution and supply chain efficiencies are paramount. For example, to slash packaging costs in Indonesia, it sells Sunsilk shampoo in plastic bags instead of bottles with four color printing; it has also introduced bulk containers of its Blue and margarine, Sariwangi tea and Sunlight detergent so consumers can buy the quantities they can afford. Much like the shopkeepers of pre-branding days - branded, but available “loose”!

Another example is Ford. Ford is building open-air dealerships in rural Thailand; they construct these dealerships cheaply, and rice and sugar-cane farmers, potential customers who would feel awkward and inconvenient in Bangkok’s posh, air-conditioned showrooms find it easy and comfortable here.

ABN Amro Bank opened branches in remote Indonesian provinces, but avoided urban areas where competition was forcing closures of other foreign banks.

Baron International, an Indian company distributed the Japanese Akai’s audio and video products in India in the 1990s. Since the economic liberalization of the 1990s, the purchasing power of Indian middle class consumers has increased and a desire to own such products has been riding high. However, inherent in the consumer psyche is the reluctance to part with goods that are in working condition. Consumers are appalled by waste, and would not be easily convinced to throw away their old television sets. Baron’s managers saw a great opportunity in the rural markets. Realizing that here is a huge market for used television sets, they quickly created a trade-in scheme that linked urban and rural retailers. Urban consumers were able to avail of exchange offers, and upgraded happily; rural consumers could buy affordable sets and dealers in both areas were happy. Baron was the most profitable firm in the business at that time – making a 46% return on capital employed! While Baron no longer holds the license, the “exchange offers” continue to be employed by marketers across a range of products!

In the Chinese market, SAB (South African Breweries) started its expansion in China with the northern hinterland, gradually expanding into other markets. This allowed the company to build its capacity slowly, without having to face the tough competition of the foreign breweries ready to slash prices in Shanghai or Beijing. As in other markets, SAB started its Chinese expansion by building a beachhead, then slowly increasing its presence in ever-expanding circles until it had the region firmly under its control. In 2004, SAB was the second largest beer maker in China – no small achievement in what is the largest market for beer in the world.

Another great example of a company with rural expertise is the Indian paint company, Asian Paints, who has a market share of over 50% despite the presence of large multinationals in the country. Its products are priced low and so have been successful in other developing countries as well, such as Nepal and Fiji. Asian Paints has developed an expertise in dealing with low-income, often illiterate consumers who only buy small quantities of paint they later dilute to save money.

Product development and design to adapt to cultural needs is so obvious it merits little emphasis. From LG’s mobile with a built in compass that gives Muslims the direction to pray, or Nokia’s handset with the built in torch to allow truckers and other consumers with low access to electricity a significant convenience, to McDonald’s high degree of localization (Japan – rice based dishes, teriyaki burgers; Taiwan – hangout for students to do homework; Korea – a place for women to chat over coffee; Hong Kong – lavish birthday parties…), to even De Beers attenuated positioning strategies (for diamonds have different meanings in different markets), innovating to suit cultural attitudes is a must.

Venturing into services is one more key strategic option open to marketers of consumer goods, particularly in Asia. A long tradition and the continued expectation of “being served” is a strong need across several Asian markets with their large labor pools and a history of high Power-Distance cultural norms. It is noteworthy though that the concept of service can be very culturally sensitive. Collectivist cultures are said to operate under communal exchange norms, where people have no expectation of monetary payment for helping their relationship partner, they prefer to get noncomparable benefits in return and do not expect prompt repayment for benefits given. In the banking services sector in India, this sort of relationship with nationalized banks has been the expectation for a long time, and consumers find it difficult to accept that service levels are calibrated to account size and profitability, as multinational banks do.

Moving away from traditional vertically integrated business models to new structures where a large part of the operations are outsourced is yet another strategy with potential in these markets. Semiconductor companies are a good example of this kind of new strategy. The new structures in place now include subsidiaries in different Asian countries, where one does the circuit design, another photolithography, and a different location the so-called “back-end packaging” of the final chip.

One noteworthy example of how a company can combine these various strategies to excellent advantage is consumer electronics giant Philips. To exploit the rural and underserved markets in India, Philips has 300 distributors whose yellow vans trundle over bumpy dirt roads selling hand-crank radios for $3.25 and 14-inch “starter” TVs for $125. It has also partnered with an NGO to outfit a van that carries its medical equipment, two doctors and a big satellite dish to some of India’s remote villages. Those who can’t afford are treated free, those who can, pay $2.25 for an X ray, $10 for a battery of prenatal tests. This effort gets the Philips name plastered all over the country and soon may help to distribute products normally out of reach. Along with these initiatives to tackle the BOP markets, Philips exploits two other big business opportunities. One is the markets at the top end which include the newly rich consumers of the latest cell phones, plasma TVs, electric razors etc… in the shining malls of Shanghai and Kuala Lumpur or the large institutional buyers (government in China, private sector in India) of high technology MRI medical equipment. The second is the highly profitable use of the talent pool of Indian software engineers who write the software for all Philips DVD players, most of its digital TVs and some for its X-ray and MRI machines, and accountants and financial analysts who provide back-office support. These white collar workers work at a fraction of what it would cost the company in any other market. 

Alliance strategies are yet another route to success in these markets. Two companies tie up to offer products/services under a joint brand name where the strengths of each brand can be exploited competitively. Hero Honda two wheelers in India is a case in point. The local Hero group has market knowledge, distribution networks and contacts; Honda has cutting edge, Japanese technology and gains access to the large and lucrative Indian two wheeler market. TCL is a similar electronics brand in China.

The Innovation Adoption Curve

A typical worry while entering new markets is how and what pace to set for the introduction of new launches in the region. What sort of adoption rates should be expected? Is there anything we need to keep in mind while setting these expectations?

Needless to say, adoption rates are dependent on several aspects of the mix. However, there are two interesting culture based conceptual perspectives we can apply here to guide future planning. One is the premise that consumer innovativeness could be “cognitive” or “sensory”. Cognitive innovativeness refers to the tendency to enjoy new experiences that stimulate the mind. Such consumers seek novel or challenging mental experiences and activities, such as thinking, pondering, problem-solving etc… Sensory innovators, on the other hand, engage in activities that arouse the senses, and enjoy internally generated experiences such as fantasies and daydreams as well as externally available stimulants which provide thrill and adventure. Cultural differences exist here, but there is little evidence to show which countries tilt which way. In some studies, even temperature has been shown to affect peoples’ sensorial sensitivities, but whether it also affects innovation adoption is not conclusively proven. However, once a link is established, the implications on product development and retailing are obvious, and can be a source of competitive advantage.

The second premise is based on the Adoption curve, which is typically steeper for Asian markets. If we were to divide consumers in segments based on when they adopt a new product/brand, (e.g. lead adopters – first 2.5% of all trialists, early adopters – next 13.5%, early majority – next 34%, late majority – next 34% and laggards – last16%), and then look at these distributions by region, we find that overall Asian markets show a different curve. This is because these markets show high Collectivism and Uncertainty Avoidance. Hence, they are less willing to take the social risk to be the first to try new products. However, the discomfort of being left behind presses them to follow suit if they believe others have tried the product. They have smaller percentages of innovators, early adoptors and laggards, and a large percentage of early and late majorities, reflecting the early hesitant state to try new products and the rush to switch brands once new products have been accepted. The progression of new launches behaves like a “Wave”. This has crucial implications and suggests that companies must find ways to exploit the strong  word-of-mouth driven adoption rates. This calls for innovation not only on the product front, but more importantly for new ways to generate, manage and monitor word-of-mouth, a highly underleveraged weapon today.

Transparency as a strategic advantage

This may sound a little strange to western companies, but can actually be used to good advantage. “The Inscrutable Asian” has often been a barrier to smooth business transactions in this area. It is not just the communist governments in some countries, but often even key institutions and companies across the region that reflect opaqueness to such an extent that distrust becomes a natural outcome.

One example of how this need gap was exploited is seen in the story of Asia Commercial Bank in Vietnam. In a generally opaque banking environment, also beleaguered by private shareholders or communist party connections in government banks, ACB makes a healthy profit in a unique way. It is a relatively transparent company in a country where few exist. Transparent bookkeeping, qualified staff and strict lending policies seen for the first time, combined with a clean bill of health from an independent auditor (E&Y) invited not just foreign investment in the bank, but also won the trust of its customers.

Overcoming cultural values of restraint

The effects of economic growth and connectivity are certainly making Asians materialistic in their values – but these effects are most pronounced among the youth segments, and in the upper income groups in larger cities. They are certainly spreading to all segments of society, but at varying degrees and speed. Importantly, however, the legacy of many hundred years of culture is not easy to shrug off, and very often, the traditional values of thrift, restraint and self control surface in consumer decisions. How can marketers actually help consumers cope with these dual pressures? Can there be thrift and treat together?

We know from studies on shopping behavior that thrift shopping provides a multitude of moral and self-esteem benefits to consumers. One of the most interesting beliefs here is the notion of sacrifice – that by buying something cheaper, or on sale, the consumer is giving up on the perfect, brand-new, shining product, and is therefore earning moral plaudits. This ‘sacrificial’ desire is no doubt an overall declining motive, but nonetheless still exists in considerable numbers to make it a significant enough opportunity to address. Especially when most others will be focused on capitalizing on the new values only!

Understanding benefits from thrift shopping, we find they include hidden or less obvious treats – “the thrill of the hunt”, the indulgence in something just because “it only cost ten rupees”, “the pursuit of the unexpected”, the consumption due to a preplanning of needs for others with a mental calendar of household celebrations and events etc…. All of these can be addressed very profitably by creative retailers. As modern trade continues to expand in Asia, there will also be other opportunities that emerge from a deeper understanding of why women shop. Increasingly, shopping is not merely the acquisition of things; it is the buying of identity, especially in a changing society. This is particularly true in a collectivist culture like Asia. Women have confessed to go shopping for various reasons – Browsing, Socializing, People-watching or voyeurism and ‘Parading’ or narcissism. Strong cues indeed for savvy retailers to provide opportunities to cater to these needs!  Offers can be bundled or packaged such that there is an element of treat even in thrift, shopping environments, especially service personnel can provide some of the other benefits shoppers seek.

Relationship Marketing should be given more attention by marketers in this region than it is today. Loyalty programs need to go beyond the 6000-points-will-get-you-a-toaster stage. For example, Chivas Regal customizes their programs in China, inviting heavy drinkers for tasting sessions where they are educated about whisky, and can become connoisseurs. “China is so optimistic and people here are looking for experiences from outside the country but may not necessarily know what to do. They are looking for guidance”. For luxury brands, the personal touch is particularly critical. Opulent gifts help, but it is the personal touch that drives really good CRM. Non luxury brands are also initiating relationship programs. Braun is collecting information from customers across China, marking the start of its biggest customer relationship scheme in Asia.

Summing up,

1. Three meta trends that are transforming Asia are economic growth and development, connectivity and information technology and social adaptation.

2. While consumers in Asia are following an overall movement towards westernization in terms of empowerment of women, common youth lifestyles and aspirations, the fundamental cultural influences of collectivist values, a masculinity driven society and self control & spirituality will continue to exert powerful, if hidden, pressures. This will be especially true as western society will rediscover similar values and universal connectivity will result in a fast percolation of these new trends as well.

3. Strategies for marketing success include addressing opportunities at the mass markets, venturing into services, moving away from traditionally vertically integrated business models, using corporate and transactional transparency as an advantage, employing word-of-mouth tactics to diffuse adoption of new products and devising thrift-cum-treat products/offers, and lastly, applying relationship marketing practices and concepts extensively.

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