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As I explore in our “Consumer Electronics in Asia Pacific: How Demographics and Income Shape Demand” global briefing, Households in emerging markets in Asia Pacific are changing as dramatically and as rapidly as the economies of these markets driven by growing population, rapid urbanisation, rising disposable income and growing middle class. While smartphones and tablets benefit from the shift in spending priorities, demand for some categories is likely to slow. As the region takes a more central role within consumer electronics globally, there has never been a better time to look into opportunities as well as the risks it poses.
Asia Pacific is projected to account for some 47% of global consumer electronics value sales by 2020 up from just under 43% in 2015 translating to additional sales of US$45 billion. This is despite companies pushing down prices to stimulate sales, as consumers in the region are still price sensitive.
Asia Pacific is home to more than half of the world’s population while four out of five of the world’s top emerging countries (China, India, Indonesia and Philippines) with the best middle class growth potential are in the region.
The region is also set to record one of the fastest urbanisation rates globally with the expansion of 35% between 2015 and 2030. Despite this, purchasing power remains low as average incomes across social classes remain far behind those in developed regions.
The main consequence for consumer electronics of the changes in macroeconomics has been a shift in spending priorities. The region’s consumers are increasing spending on products designed to be used by an individual rather than a group.
The rise of the middle class in China and India and other major emerging markets in the region is driving consumer expenditure as well as changing consumption patterns towards more discretionary spending and a greater focus on status-related items.
Conversely, growth in demand for televisions, video players and home audio and cinema will be considerably slower, as spending on group and family-orientated products and content will become less of a priority for a growing number of households in emerging markets in Asia Pacific.