I recently participated in a panel discussion hosted by the Economist Corporate Network in Singapore about innovation in Asia.
I started my portion of the discussion by sharing three observations about what I had found unique about innovating in Asia: its unbelievable diversity, both between and within countries (and sometimes even cities); the historical focus of many Asian organizations on replication and cost reduction; and Asia’s inconsistent infrastructure (Singapore is amazing, but don’t try to schedule more than two meetings a day in Mumbai).
But what I really wanted to discuss were the three biggest trends I see affecting innovation in the region.
The race for the middle. As my colleagues noted in a Harvard Business Review article earlier this year, the extremes in most Asian markets are well served. Wealthy consumers can enjoy luxury brands, world-class restaurants, and high-end automobiles. Cost-conscious consumers can access incredibly affordable, often inventive solutions. But the middle class remains overlooked. And that middle class is surging. A recent OECD study projected that spending by Asian middle class consumers will have grown from $4.9 trillion in 2009 to more than $30 trillion in 2020. That latter figure would constitute about 60% of global middle class spending (compared to 20% in 2009).
Some companies are explicitly targeting this growing opportunity. In 2009, Godrej & Boyce launched ChotuKool, a $70 refrigerator targeting the 85% of Indians who found existing models too bulky, expensive, and power hungry. The portable, battery-powered refrigerator has been a huge hit. Godrej now plans to extend the Chotu brand to washing machines and other household appliances.
Scott D. Anthony is managing director, Innosight Asia-Pacific.