Over the past 30 years, globalisation has had a tremendous positive impact on Asian markets, to the point where global investors are touting the region as the next investment hotspot. With such positive trade relations and easy access to each other’s markets, which industries are Asian companies strongest in?
According to the McKinsey Global Institute, the Asian market share of the top 3,000 global companies, each with a market capitalisation of over 5 billion USD, was assessed and further broken down based on industry, revenue, and patent share.
Electronics and E-Commerce: Asia’s Manufacturing Might
Do you ever get the feeling, regardless of where you live in the world, that most products, especially consumer electronics, come from some part of Asia? While the Americas and Europe may be leading in innovation and technological breakthroughs, Asia is unquestionably dominant in the manufacturing sector.
Hence, most products that fall under consumer and industrial electronics originate from companies based in Asia. Adding to this, Asia’s stronghold on the manufacturing sector also means that most electric vehicles and semiconductors are sourced from Asia, especially given that TSMC, the world’s largest semiconductor foundry, is Taiwanese — a key supplier for the electric vehicle industry.
Asia’s dominance in manufacturing and electronics has been well-documented, but the thriving consumer internet services space may come as a surprise to some. However, considering that half the world’s internet population is in Asia, it’s not hard to envisage local companies driving innovation within the region’s online services industry.
Furthermore, although Asian companies make up only 22% of the e-commerce firms within the top 3,000 global companies, they account for as much as half of all patents granted. When examining Asia’s e-commerce landscape, it’s clear why growth is eminent: larger e-commerce platforms such as Amazon and eBay have largely underserved many countries in the region, leaving room for local platforms like Taobao, Shopee, and Lazada to better serve Asian online shoppers, which has led to a revenue share of 31% among the world’s top 3,000 companies.
In terms of e-commerce, it also makes sense for Asian e-commerce platforms to be integrated and work closely with local online payment companies, which has led to a 19% Asian share and 17% revenue share in that specific industry. Closer to home, Sunway University has named e-commerce as one of Malaysia’s fastest-growing industries, with as many as 61% of Malaysian online users reportedly using shopping apps, which are, of course, tied to the aforementioned e-commerce platforms.
Besides e-commerce, Sunway University’s publication has also identified electronics and the Internet of Things (IoT), finance and fintech, business development, and the services sector (which includes sub-sectors such as transportation, storage, food and beverage, accommodation, wholesale, and retail trade) as the nation’s fastest-growing industries, aligning with McKinsey Global Institute’s findings on the strongest Asian industries.
Investment Opportunities in Asia
So, what does this mean for investors looking to grow their wealth in our region? For one, Asia’s manufacturing sector, encompassing consumer electronics, industrial electronics, and electric vehicles, appears to be a safe haven for secure and long-term investment. While semiconductors should be on that list as well, tensions between Mainland China and Taiwan may introduce some supply risks in the industry, which savvy investors should be mindful of.
A safer bet might come from Asia’s vast internet user base, which could lead to potentially higher growth for consumer internet, e-commerce, and online payment platforms — areas investors could capitalise on, especially in Malaysia, with our strong online and internet presence.
When discussing investments, experienced players will always advocate for diversification. As we’ve examined Asian industries where investors can place their wealth, there is no shortage of options and opportunities for such diversity. However, investing can still feel like taking a shot in the dark, and one way to illuminate your path is by following us more on PEGH, where you can get the latest news and discussions on investment in Malaysia, global and Asian sustainability efforts, and business developments that every investor needs to stay informed.
