Global and Local View of the Asian Region

Too often Asia is generalised as one entity when we would be much better off describing the region as ‘the Asias’ due to the regional differences. However, in recent years we have seen three macro-­waves of development in Asia. 

The first began in the 1960s/70s when Japan emerged as an economic powerhouse and the second was the emergence of the ‘dragons’ Hong Kong, Taiwan, South Korea and Singapore. We are currently living in the third wave of development, the era of rapid growth in main­ land China. Change is constant and fast, and the country has seen development in all sectors. 

However, commercial barriers introduced by the US, and the recent pandemic, have accelerated changes that were already on the way and the Chinese economic environment is therefore increasingly difficult to navigate.

The Chinese Reform and Opening-Up policy of the 1980s was a surge of economic libera­lisation by the government in its creation of a form of ‘capitalism with Chinese characte­ristics’. This led to monumental economic growth and the emer­gence of large private businesses such as AliBaba and TenCent. 

Nevertheless, China remains a One­Party State, and the State still has the “commanding heights of the economy”. Some of these large companies have come to be perceived as becoming too large, and that as such anti­monopoly laws should apply to them as well. 

In addition, as a result from the recent diplomatic tensions, we have recently seen a regression from global interconnection. 

This monopoly of power is exemplified in the recent trade and information war between China and the US and has been further consolidated by the effects of Covid-19 and the closure of borders across the world.

In fact, China’s outbound investments have been decreasing since 2016. The trade war did not help, and Covid-19 further worsen this trend. 

However, through strategic projects like the Belt and Road Initiative, China continues to grow towards becoming one of the world’s leading economic powers.

These are big brands – Huawei, TenCent, AliBaba – which are local equivalents of players such as Amazon and there­ fore want to grow and gain an international reputation. 

Unlike in America where the fashion, music and the way of life have been admired and desired for the last 50+ years, there is not yet a real international desire to imitate Chinese culture. 

Chinese brands need to create goodwill in order to export their image worldwide. By creating association with European cultural and sporting events, they may be able to achieve this

It is very likely that China will continue to purchase Western products, in particular luxury fashion, but there is not yet an established culture in Europe of buying luxury goods from China. 

However, the Chinese market is maturing there are certain brands that have enjoyed some success in the West. For example, Icicle or Bosideng, the Chinese fashion brand, have been featured in Milan and London’s Fashion Weeks. 

On the other hand, in a form of reverse psychology, this is targeted mainly at Chinese consumers. A brand becomes attractive when it is seen as being successful in Europe.

Brands such as L’Oréal are continuing to do very well. In the meantime, China is in the process of introducing a new system to certify imported beauty products, which would allow it to filter imports and make it more difficult for international companies to access the Chinese market. This new legislation acts as a silent barrier, which will allow China to protect itself, and also develop similar brands at home.

In fact, what we are currently seeing is a decoupling of the world. One generation grew up with the belief that the world was becoming more and more connect­ ed, in terms of business, ideas, cultures and people. Yet, there is now a large part of the world turning away from this – as is the case in Turkey, the US or the UK. The sense of a global community is not universal. China has created its own digital ecosystem that doesn’t exist anywhere else in the world. For instance, L’Oréal manages its digital operations and communication completely differently in the US and in China. The Western world lives under the hegemony of the GAFA players, but the Chinese dig­ital ecosystem and centralised than the West and built on two or three meta­-platforms that assist the Chinese in every aspect of their lives. And this system is still consolidating. /

Alban Neveux, Group CEO at Advention