What Does the Average ASEAN Consumer Look Like?

The ASEAN Economic Community (AEC) is proclaimed on 31st December 2015, yet the date is expected to pass without much fanfare as the ASEAN has yet to deliver on many of its targets for the implementation of a single market and production base while at the same time many local businesses have not got a pan-ASEAN strategy in place and are therefore not ready for economic integration.

It is however more than ever before relevant to ask what the average ASEAN consumer looks like, because a detailed understanding of the ASEAN and its consumers is essential for companies to come up with an appropriate sales and marketing approach to seize opportunities in the AEC.

Per Household Consumer Expenditure in the ASEAN: 2015

Per-Household-Consumer-Expenditure-in-the-ASEAN-2015

Source: Euromonitor International from national statistics/Eurostat/UN/OECD

Note: Data are forecasts in 2014 constant prices, fixed exchange rates.

A trading bloc with huge potential

  • With over 634 million people, the ASEAN is the world’s third largest consumer market in terms of consumer numbers behind China and India. It is also a relatively young consumer market (with a median age of 28.9 in 2015, compared to 37.5 in China, 37.8 in the USA and 42.4 in the European Union), which enjoys rising incomes and an expanding middle class;
  • Consumer expenditure in the ASEAN is set to increase strongly through to 2030. Between 2015 and 2030, real consumer spending is forecast to grow by 105% – equivalent to a healthy average 4.9% per year. By 2030, the ASEAN will be a market worth over US$3.0 trillion (in constant 2014 prices), which will be bigger than Japan (US$2.9 trillion), the United Kingdom (US$2.6 trillion) and the entire Eastern Europe (US$2.5 trillion).

And with diverse consumers

  • While the average household annual disposable income has exceeded US$100,000 in Singapore since 2014, it remains below US$5,000 in Vietnam. This huge income gap results from the uneven degrees of economic openness, trade liberalisation, financial market development and competitiveness across the ASEAN countries;
  • Mirroring the income gap, the disparity in consumer expenditure is equally large: in 2015 an average Singaporean household spent US$73,704, compared to US$3,164 in Myanmar. Due to this grave disparity, the ASEAN average spending of US$9,090 per household in 2015 does not portray the typical household expenditure in more than half of the ASEAN member countries. Even within each ASEAN country the income and spending gap between regions can often be very large;
  • In addition to the differences in purchasing power and consumer spending, ASEAN consumers are diverse with a multitude of ethnicities, religions, and languages that exists even within each country.

Such diversity across Southeast Asia means that businesses should not rely on a “one size fits all” strategy for the entire region. Instead, businesses should either continue to tailor their approaches for specific countries at least in the short to medium term; or if looking to expand their operation across the AEC, identify cross-country consumer segments in order to be more targeted in their approach.

Beyond the diversities and differences, ASEAN consumers are young, aspirational and increasingly connected (with over a third of the ASEAN population being connected to the internet, and the most internet traffic in the region coming from mobile devices). They also share a strong work ethic that stems from their desire for an improved quality life and greater wealth. This makes the AEC a compelling market, one in which businesses can explore and seize the endless opportunities that integration and diversity can offer.