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Asia rising — McKinsey Top 10 Trends and what they mean for IT

by Mark P. McDonald  |  September 4, 2009  |  2 Comments

Over the summer McKinsey published their top 10 trends for the next year or so in Harvard Business Review in July 2009  This post discusses the trend related to Asia continuing its rise as an economic power.

Asia rising – a stable trend

McKinsey sees Asia as a continuing its rise in importance and growth based on its fundamental drivers of rising productivity and increased capital accumulation and investment.  They point to an IMF statistic that Asia is expected to account for 22.8% of global GDP, up from 7.1% just 30 years ago.

McKinsey’s recommendation calls for continued investment in Asia, working with carefully chosen local partners, building relationships with governments and adapting offerings and operations to local markets.

Asia is powerhouse and a factor in every company’s global strategy.  Information and technology play a multifaceted role in those strategies.  The obvious and common connection between Asia and IT is the rise of offshore outsourcing companies found in India and other countries.  But there is more.

ITs deeper contribution in your Asia strategy is in its ability to use information, communications and coordination to address the market, demographic and geographic challenges in this region.

Use IT to lighten your operating model in Asia these markets areNOT like markets in the U.S. or Europe.

Here are a few high level observations about IT in the face of this continuing trend.

  • Being active in the market counts so know the limitations of technology and its inability to replace every face-to-face relationship, build trust or substitute for time.
  • Lighten SG&A using simplifying processes to handle the large volumes and lower overhead entailed by these markets.
  • Collaborate with control to reach and engage markets in the next 50 or 300 largest cities in Asia. IT gives you the ability to partner while protecting IP, brand and product integrity.
  • Tune the supply chain, as logistics are a significant challenge in the world’s largest geographic and demographic market particularly in the ‘next 20/50/200 largest markets.’

Avoid creating a ‘lite’ copy of your business model.  Tailor your model to Asia by blending local market requirements and local partner capabilities with retained critical the global capabilities.  Use IT as the glue in this blended model connecting lighter regional operations with the global information and transaction core.

Why these suggestions?

Asia is a large market of many consumers and fewer companies.  The consumer market is large because of its population but it has individually smaller opportunities as the middle class in India and China starts at $20,000.

The commercial market structure has similarities with Southern Europe, as there are a few very large companies, few in the middle, and many smaller companies.

Both markets are demanding requiring world standard feature/function and efficacy, but at a different price point.

The Asian market is diverse across ethnicity, religious, cultural and city/country dimensions.  Market solutions that work in metropolitan and costal markets may not be the ones to work in the next 20/50 or 300 largest cities.

McKinsey is right that Asia continues its rise and development, both as a market and source of growth.  However, it is a unique marketplace where information, communications and partnering can help address its market, demographic and geographic challenges.

Category: 2010  strategy  

Tags: 2010-planning  business-strategy  it-and-business  strategy-and-planning  

Mark McDonald, Ph.D., is a Vice President and Fellow Emeritus in Gartner for General Managers Program.

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