South Asia will become the epicentre of middle-class growth in 10 yrs: Kent Wertime
e4m Conclave: Kent Wertime, Co-CEO, Ogilvy Asia-Pacific, spells out how the Asian market will fulfill its growth velocity promise and the setbacks the region endured due to Covid
The 20th edition of e4m Conclave had a special address by Kent Wertime, Co-CEO, Ogilvy Asia-Pacific, on the topic ‘Will Asia fulfill its Velocity Promise?’.
Starting the session, Wertime shared, “Covid has been a global stress test. We are still much in the stress test and this year will show potential fractures. These are not things that will immediately fold, but over time. Businesses that are not able to continue and government systems that will fail over time due to lack of funding will have a downfall. It is going to be about systemic change and acceleration through the stress test.”
During his address, Wertime remarked, “The big concern is the global growth model that we became accustomed to. As we start off 2021, we do look at China at the end of 2020, and see that they managed to get back to growth. Therefore, there is nothing foretold that the future is going to be a bleak one.”
Wertime highlighted the growth of the middle class and in particular the emerging middle-class in the Asian market. There is an uncertainty in the light of Covid; if these emerging middle-class markets will take off or not.
Sharing if Asia will fulfil its velocity promise in the path to economic growth, Wertime says, “In China, there has been a dynamic shift in consumers and also the society. Economic increases bring about some social impacts. Until Covid, there was an enormous rise in Chinese tourism. There was also a rise in entertainment (Chinese boxoffice), digital society and commerce. The reality is that in the past, a lot of people have focused on global inequality. With the Covid hit and changes in the economy, the move towards equality on a global basis will go in a dismembering effect and some may decline.”
Wertime stated that if China gets back to its typical growth, it will continue to add a lot of middle-class consumers. “According to the projections and our velocity study, South Asia is becoming the epicentre of emerging middle-class growth in the next 10 years. We did some modelling of where the growth will come from. Countries like India, Pakistan, Bangladesh, South East Asia, Philippines, Indonesia and Vietnam were seen as being central to that growth. We need to look into the future to see if that will be a realistic arc of growth,” shared Wertime.
Talking about Covid’s impact on the velocity of growth, Wertime says, “The past year has been a step back. The concern is that there has been an economic hit in developing Asian countries. This is because the GDP and the employment of South East Asia and the South Asian region is related to the informal sector which was hurt badly economically during this time. These countries were dependent on travel and took a massive hit.”
Wertime remarked that women, who are the velocity drivers, were most affected by the pandemic. “With the new poverty, the hit that women will take economically as opposed to men will be high in proportion. Also, the age range of 25-34, who would not go into that emerging middle-class benefactor, will slip back into poverty.”
During his session, Wertime pointed out that women will be an important part of the economic story and social change in the future. He mentioned, “A part of what has been driving growth has been the improving numbers of female higher education. This has been leading to more senior women roles in the workplace. Women have begun to outstrip men in graduate degrees. Women are the ultimate force in the change of the economy. One of the dangers right now is that young girls are at the risk of not returning to school due to the pandemic. There was an increase in women entrepreneurship, which has also been hit hard due to Covid. However, we also see that women form an important basis of social selling that acts as a catalyst for other areas of growth.”
According to Wertime, a major factor in the velocity growth in many Asian countries has been around urbanization. “The story of velocity is not of a megacity, but the story of urban new growth areas. The greater Delhi area is one example. The 2nd and 3rd tier cities are real economic engines. They are growth engines because several businesses continue to look at expanding their footprint in these new growth areas. They also continue to be new venues for entertainment outside of primary urban locations.”
Another area of pride in the growth velocity has been technology. “There was enormous growth before Covid. However, some of the impact of Covid on digitization has been a shift to commerce and logistics, more direct to consumer and digital payments.”
“Consumers, before and after Covid, are going to make demands from brands. We have, in the past year, seen that there have been major pushes for companies to go green and support local initiatives. Also, to play a role and truly be game-changers, making serious commitments. Even though there has been an impact on purchase habits, some of those demands from brands have become very resonant and will be very important for brands to continue to look at,” commented Wertime.
Concluding the session, Wertime left audiences with a message saying, “It's important, despite Covid, to take a progressive view of where the market will ultimately continue to go. We don’t know whether the economic bounce back will happen as quickly as we want. Not every market will be China in its bounce back, but we do think it is important to maintain a progressive view that has focus and foresight. I’m optimistic that whatever trajectory Covid takes will not stop the positive velocity of where Asia is heading. It certainly means some modifications and changes as people’s lifestyles no doubt will have some alteration. A lot of the velocity drivers will continue to make progress and be important to all of us as we look at how to develop marketing in the future.”
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