The most influential Megatrends set to shape the world through 2030, identified by Euromonitor International, help businesses better anticipate market developments and lead change for their industries.Learn More
As discussed in our “Consumer Electronics in Asia Pacific: How Demographics and Income Shape Demand” global briefing, shifting spending patterns have fuelled demand for personal-use, portable electronics in recent years in Asia Pacific. Smartphones, the largest contributor to portable consumer electronics, with sales exceeding US$152 billion in 2015, has benefitted greatly from this trend; as incomes have increased, consumers are spending their available funds on these products, in some cases, even skipping the gradual shift from feature phones stage entirely. Manufacturers are also stepping up investment as smartphones provide provide one of the greatest growth opportunities due to their low penetration rates in emerging markets.
Wearable electronics are also benefiting from the growth of smartphones and the entry of Apple Watch, and the category is set to become the second largest volume driver in portable consumer electronics, overtaking feature phones, by 2018 in Asia Pacific.
While determining consumer patterns, it is important to identify a number of parameters, including income, age and education. These are also some of the paramount indicators defining techsumers, which is an important consumer group driving sales of consumer electronics globally. Having outlined the factors that foster the development of techsumers, it is possible to identify markets where the environment is most conducive for this group to become mainstream.
Japan’s older overall population means relatively low numbers of high-income 15-49-year-olds, but the country leads in higher education attainment rates. In Taiwan, the opposite is true, with a flourishing young, rich population, coupled with relatively low higher education rates among the general population.
The combination of these factors implies that only a small proportion of the population in emerging markets in Asia Pacific has an interest in and ability to be a techsumer and that there is a limited number of services available to these consumers in their home markets. Therefore, smartphones, tablets and wearable electronics manufacturers in the region need to look beyond this consumer group, targeting much wider demographics and income levels in order to succeed.
India is projected to overtake the US to become the second largest smartphone market globally by 2019, when sales will reach 172 million units. Many global smartphone manufacturers are capitalising on the looser foreign investment rules surrounding the “Made in India” campaign and setting up manufacturing plants within the country. This is expected to reduce production costs and make global manufacturers’ prices more competitive in line with those of local players.
While China will continue to hold on to the top spot, year-on-year growth will slow rapidly over the forecast period, as it approaches its peak. The rollout of the country’s speedy LTE connectivity programme and the decline in feature phones are pushing sales of smartphones to a new high, with one in three consumers purchasing a smartphone in 2015. However, ongoing concerns regarding an economic slowdown in the country are likely to dampen consumption, and growth is expected to be flat by 2020.
Indonesians’ love affair with social media, such as Twitter and Facebook, and the desire to stay connected are benefiting sales of smartphones. Smartphones are becoming a necessity for many consumers, particularly the youth population, as they allow them to stay connected while on the go.
It should be noted that the emerging economies of Asia Pacific have a much higher share of the population earning below the national average than in many developed economies. As a result, the target consumer group for high-end electronic goods is relatively limited. In order to increase penetration, more needs to be done in terms of price promotions or intense marketing activities.