The Asian Connection

How Asia is driving global tech trends, and how we’re also apparently responsible for driving up prices.

Portrait of Tammy Strobel

How Asia is driving global tech trends, and how we’re also apparently responsible for driving up prices.

Gerard Tan, GfK Asia
Gerard Tan, GfK Asia

Yes. You. Me. Asians. During the recent 2018 IFA Global Press Conference in Rome, GfK Asia’s Gerard Tan shared with me some of his findings for the tech landscape in the past year or so. He also drew some very interesting connections between tech adoption rates in Asia and why we’ve been looking at the wrong sales numbers all this while.

First, let’s take a look at some facts. Nearly 60% of the world’s population already live in Asia, and according to GfK, two thirds of the World’s middle class as well by 2030. Asia also boasts 4 of the World’s top 10 largest economies and 5 out of 10 World’s fastest growing economies. What do these numbers mean? We’ve got the largest concentration of the world’s populace with disposable income.

So let’s get back to topic. For the past few years, we’ve seen a boom in smartphone usage, and as mobile computing grew, it impacted other industries, mainly digital cameras and PCs. In GfK’s own market data report for the Asia Pacific region, the demand for tech goods saw a universal drop in almost every category between 2016 and 2017. Display (TV) sales fell 5%, cameras dropped 14%, PCs saw a 7% decline. Even smartphones had only a tiny 1% increase.

However, in the same report,GfK data showed that TV prices increased by 7%, digitalcameras by 16%, smartphonesby 12%, and PCs by 10%. So, even though consumers were buying less tech devices across all categories, they were spending more for premium devices. The net result is a market that’s buffeted by increased prices rather than increased volume.

So why is this happening? With a growing middle class as mentioned above, Asia has found an appetite not just for new tech, but premium tech that’s pushing the perceived value of devices up. For examples, the PC market is benefiting from the popularity of gaming, and just like sporting goods, people are willing to pay more for PCs and peripherals that are supposedly gaming-grade.

There’s also correlation for increased spending with the saturation of mobile devices, connectivity and adoption of mobile payment technologies such as digital wallets and biometric authentication. Again, Asia is just more comfortable with technology, according to Gerard. In a GfK Future Buy 2017 survey, a massive 90% of respondents in China use a mobile device for shopping, and APAC has a healthy 71%. Compare this to just 44% of respondents in Europe.

And speaking of China, it is quickly becoming the promise land for tech adoption, where nascent trends can go “viral”; the latest being smart homes. Between a short three-month period, smart speakers went from being a relatively negligible product category to a must-have device, spiking in sales value from 9 million USD in October 2017 to 35 million USD by December 2017.

Another category that saw explosive growth in 2017 in Asia Pacific was personal audio. Sports headsets grew by 78% over 2016, while true wireless took off in a massive way in 2017, with a 1,271% growth. Sure, it’s a new category, but basically what GfK sees is that the Asian hunger for technology is driving adoption and pushing innovation. This is why 7 out of the top 10 global smartphone brands are from Asia, and 4 out of 9 global AI innovation centers have been setup in Asia as well.

The only downside to all this, is that we don’t really get to complain that every new smartphone is more expensive than the last because we’re the ones that’s been willing to pay the premium.