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Asia’s baby boomer generation will redefine social and work norms

31 May, 2013

The Asian BaoChas

As the baby boomer generation of Asia (those born in the 70s and 80s) takes over from their parents, they will be the wealthiest, longest living, most mobile generation this part of the world has seen in a millennium.

These ‘BaoChas’ (from Chinese Baobei and Hindi Bacha) will do for this region what the post war generation did for the US, Europe and Japan. They will redefine social and work norms, and will produce consumer products and services that might be completely alien to western companies.

In this dynamic ‘frontier environment’ the key areas of focus for us will be companies started by mature, ethical and global entrepreneurs that focus on the consumer story in the region. They will do this by building asset- and labour-light businesses that address the young populations’ (70 percent of them are below the age of 35) needs and wants. A few key areas of focus for us include:

(1) F&B/FMCG/Media: Consumption patterns are changing led by increased disposable income and a younger generation eating more protein and packaged foods. They will buy baby food, speciality food (organic, lactose free, gluten free and many more) and will patronise brands that help them define their own unique image in a changing society.

They will also start to export popular culture to other parts of the world, first in the form of media content (Gangnam style, J-pop and much more) and then as consumer brands and others.

Emerging companies will need to build efficient logistics and supply chain systems to address this vast market. Food technologists and packaging companies will need to adapt to local tastes and challenges. Technology will play a key role in this.

(The QSR industry in India alone will grow from $100 billion today to $240 billion by 2020. While established brands from the west will certainly get a share of this, new brands and products will claim a large chunk of this market.)

(2) Healthcare: Unfortunately, the lack of a government supported safety net in terms of healthcare will create a huge opportunity for companies to address increasing lifestyle diseases among emerging Asia’s citizens (diabetes, lactose intolerance, cardiac issues, digestive disorders, orthopedic disorders). This will also create an interest in recreational sports, healthy food, and nutritional supplements among others.

Medical devices, data capture and analysis systems, stem cell technology and 3D printing are some fields that will get a boost in this space.

(70 percent of south Indians and Asians are lactose intolerant and heart disease is a major cause of death in north India. By some measures, more than 50 percent of all children in China and South Korea need corrective lenses.)

(3) Education: Low quality of government schools and higher education institutes and the increasing importance of education in defining success will lead to a massive growth of the private education and education support industry. Reducing family sizes and dual income families will mean that spending per child will go up.

Technology will change the way people learn from K-12 and beyond. Corporates will get more involved in training staff to supplement the low quality of public education.

(Two-thirds of urban parents pay for some sort of private tutoring for their children. Private tutoring in South Korea in 2011 was 80 percent of government spending on public education. Private schools for the poor in India are overflowing with parents often willing to pay a quarter of their monthly income as fee.)

(4) Travel and Recreation: Cultural and religious affinity encourages the emerging middle classes to travel regionally while the wealthier classes venture to the west. A boom in low-cost airlines, reduced communication costs, proliferation of budget hotels and regional trade (Free Trade agreements have helped) has lead to a boom in regional (domestic and international) travel. Smaller, dual income families will spend more on recreation and travel.

A majority of all online transactions in emerging Asia are travel and ticketing related. Cruise businesses, restaurants, hotels, sports franchises and others will all see a larger chunk of the consumer’s disposable income come to them.

Given our interest in consumer and enabling technologies, we are quite excited about the potential of various technological sectors, including (1) automation and robotics, (2) 3D printing (3) speciality food and nutritional biology (4) ICT in the healthcare and education space among others.

Innovative products and services in addition to the entrepreneurs’ ability to execute creatively in extremely difficult business environments (especially in India) will make the difference between success and failure.

Potential roadblocks

While the above will change the face of this region and will create immense wealth and opportunity for the people here, I am extremely cognisant of the fact that this comes with significant challenges that include the following:

– Corruption and crime are skyrocketing both in government and in companies (stakes are large)

– Disparity among the rich and the poor is increasing; this is a precursor to social upheaval

– Leverage in companies and on individuals without an adequate credit history system could lead to a major financial melt down

– Completely out of control asset prices

– High tax evasion rates and the ‘parallel economy’ fuel a politico-criminal nexus

– Disconnect among the ruling classes and the masses

– Lethargic and increasingly corrupt judicial system

– Regional rebellions and separatist movements fueled by illiteracy, religious fanaticism and political disenfranchisement could spiral out of control

Rising above the tide

In the ‘wild wild east’ of our times, success will require a perseverance and diligence that comes with a deep understanding of the unique aspects of governance and culture in Asia.

As entrepreneurs ourselves, we believe that teams that succeed in building game changing companies in emerging Asia will be focused yet adaptable, visionary yet detail-oriented and unbending in their ethical standards. While there is no mantra for success, the following are a few patterns we have seen in successful companies in the region.

(1) Manage money wisely, frugality as a corporate culture increases your chances of success

(2) Technology is an enabler; don’t get so enamored with it that you forget about selling

(3) Hire people who are smarter than you and empower them to make decisions

(4) Be extremely organised and follow-up constantly

(5) Know your customers and listen to them

(Sameer Narula is managing partner of August Capital Partners which is a Singapore based investment company with a focus on early stage consumer oriented businesses in the emerging Asia region (ASEAN plus India.)

To become a guest contributor with VCCircle, write to shrija@vccircle.com.


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Asia’s baby boomer generation will redefine social and work norms

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