Many Asian nations still demonstrate substantial economic growth in comparison to their Western counterparts – for example, China's GDP growth for 2016 of 6.7% eclipses the US figure of 1.6%[1].

“In China, the retail e-commerce market was worth some US$800bn in 2016; it is almost double the size of the US market and is growing many times faster,” according to Richard Martin, Managing Director of IMA Asia, an executive peer group forum working in the region.

“By the end of this decade, that e-commerce market in China will be larger than the combined markets of the United States, Britain, Germany, France and Japan," he says, adding that multi-national firms that understand how to run a digital business in these fast-growing nations may be able to capture some of this momentum in their own operations.

Martin told the American Express Inside Edge conference that Asian emerging markets are the fastest growing markets in the world, outpacing both mature markets and all other developing markets.

“In real terms, Asia as a whole is showing 6% economic growth," says Martin. “South-East Asia is cranking out growth at 5%," he says. According to Martin, more than 60% of all new car building capacity added in the world from now until 2021 will come from Asia.

“China dominates, but India is also important. India will be able to add more car building capacity than all of North America, which includes the United States, Canada and South America."

Legacy slowdown

Martin says his manufacturing clients remark how digitalisation is changing the way manufacturing and services firms operate. Much the same applies to resources firms.

Martin believes that part of the reason for Asia's rapid growth is that there are fewer legacy systems to hinder fast-growing businesses.

“[Western business] is knee-deep in legacy systems," Martin says, adding that the technology that firms bought in the last five years, will commit them to a certain path.

“That may not now be the right path," he says.

Local firms operating in Asia’s emerging markets are quicker to accept that, as most hadn’t bought the big IT systems prevalent in advanced markets in the 2000 decade according to Martin.  Moreover, such firms are much closer to the disruptive challenge from ecommerce giants in China.

Many Asian firms see it as a duty to keep replacing old with new systems, he says.

In a recent meeting with 80 Chief Technology Officers from around the world, Martin said many planned to launch their latest technology products in Asia, because they felt the region is more receptive and more able to embrace new ideas, than developed economies.

Says Martin: “Asia is where the fast adopters are. A company can come down to Australia, the US or Europe and say 'Here's stuff we're doing. It's bleeding edge technology'.

“And they will reply: 'Go away. Come back, we're not interested.' In China, they'll say:

'We want that stuff fast. It's the only way we're going to stay in the market.' "

Martin says many Western firms don't just have legacy systems - they also have legacy management, recruitment styles and business practices at odds with their Asian peers.

For example, many Asian businesses are moving staff out of their own buildings and into their customers' offices. Companies are no longer driven by quarterly or annual results, but rather by relationship-building and retention of existing customers.

New Recruits

The way people are being recruited is also changing, Martin says; older firms often ask for the impossible.

He cites a chemical firm looking for a new employee. The desired qualifications may include a pharmacy degree, an MBA, 15 years' experience, and transformational leadership and team building capability; or perhaps knowledge of cloud computing and artificial intelligence.

“You're not going to find these people out there. There are very few Renaissance men."

New recruits – especially millennials - now expect to be part of a digital story, he says.

“If you don't know the digital story for your company, you are in trouble. If your staff, or your customers, sees that you don't get it, you're in trouble. Hopefully your competitors won't see that's missing, because once they figure out and move on you, you're in trouble. You need to get that clarity really fast."

Asian CEOs are already on top of this, says Martin. Many now run globally significant businesses, and have great resources inside their companies.

Companies like Alibaba, Tencent and JD.com have incredible scale - and they don't have legacy systems around to hold them back.

“They can say: 'Oh, I'm going to put a team in India on this, and see what they can do.' "

Companies now realigning themselves to be part of the Asia growth story may hope to take a percentage point of global market share every year, but Martin believes that first, they may benefit by figuring out how to run digital businesses, Asia-style.

“That's going to be a big part of the agenda for all of you for the next few years," he says.

Key Takeaways

• Western firms stand to benefit from growth opportunities in Asia.
• Co-locating can bring firms closer to their customers' needs and wants.
• Millennials may play a bigger part of a company's digital narrative.

[1] The World Bank, https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG, accessed 04/12/17