Markets and industries have always evolved as businesses strived to create new conveniences and value for their customers while at the same time capturing increased revenues and profits.
Historically for many industries, this has meant that quaint specialty shops have been slowly displaced by larger and larger stores that offer greater variety and one-stop convenience and have come to define complete sectors. In a similar vein, today’s familiar sectors are being usurped by online ecosystems, digital consumer marketplaces that defy traditional sector boundaries. Banking and telecommunications, for example, have experienced a portentous evolution. The products and services of individual traders or subsectors, like foreign exchange and lending, were absorbed into bigger entities, forming today’s modern topography of industrial sectors.
And now, with the rise of digital technology, the partitions between these modern sectors are crumbling. Borders are becoming less relevant, and one day economists might be looking back at “quaint” sectors such as banking, telecommunications, and utilities.
Companies around the world are facing these challenges to traditional configurations, and in ASEAN, where so many have only recently awakened to the idea of transnational markets, understanding this evolution is both urgent and valuable. As a trade bloc, ASEAN makes up the world’s fifth largest economy, trailing only the United States, the European Union, China, and Japan. In 2016, its economic output totaled about $2.6 trillion, a production level that is expected to more than double by 2030.
This dynamic region is being pushed by a many strong factors. Internally, the consuming class within the bloc is not only getting bigger, but also getting richer. In 2013, ASEAN held about 83 million consuming households—those with enough income to make significant discretionary purchases—and by 2030 their number is expected to increase to more than 160 million. And the share of those households making more than $20,000 annually is expected to double over the period.
Just as importantly, this growing community of consumers is embracing the digital economy with gusto. By one estimate, about 3.8 million new users are coming online every month in ASEAN, making the bloc the world’s fastest growing internet market. Between 2015 and 2025, e-commerce receipts in ASEAN are predicted to grow from about $5.5 billion to almost $100 billion, a 17-fold increase.
Yet even with these strong fundamentals, companies in ASEAN and indeed the trade bloc itself will find it difficult to reach their growth potential without a clear understanding of how new technologies are tearing down borders, real ones that once stood between markets and metaphorical ones between industries.
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