17th Apr 2015
The Future of Growth
By Jarek Ziebinski, Chairman & CEO, Leo Burnett Asia Pacific
It is not rocket science that the business of communications, our business, flourishes in economies with strong growth and scale. The direct correlation between advertising expenditure and strong economies is well known and proven throughout recent history. As much as what we do is about understanding people and in some ways the future of their behaviour against the backdrop of technological advancement, it is as important for us to understand where the future of business and our opportunities will be. Using the core of economics – from facts and data that already exist today – I will make an attempt to “gaze into the crystal ball”, to see where the possible future of growth is at.
Much has been said in the media about the softening growth of the China’s GDP following its latest announcement that it will cut GDP growth to 7% - its slowest growth rate in two decades. However one thing that most agree is, a 7% GDP growth rate remains to be an envy of most countries today.
On that note, let’s take a closer look at the facts. With a population of 1.4 billion today, China has been projected to account for 20% (or $27 billion) of global luxury sales this year. By 2030, not only will China contribute 28% to the global GDP, it will also take over as the world’s biggest economy. If we stop here, we will be shortchanging ourselves. If we delve deeper, you will see that in the same ranking, India is the third largest economy by 2030 after U.S. By then, India (a country with 350 million English speakers today) will be contributing 11% to the global GDP. By 2060, China and India will jointly contribute close to half of the global GDP, a portion which will be bigger than all developed markets. To further prove this point, Professor Danny Quah of London School of Economics put out a provocative paper on how the center of the world economy is shifting eastward. He calculated the average location of economics activity across geographies on Earth through the last few decades and establish a journey of the economic center of gravity which started in the 1980s from the mid-Atlantic to a point literally between China and India by 2050.
Do we stop here? Not really. An Ernst & Young report published in 2013 showed that by 2030, two-third of the world’s middle class will be in Asia-Pacific - China, India, Singapore, Malaysia, Japan, South Korea, Vietnam, Indonesia and Philippines- making it the center of all consumer purchasing power.
Can we then conclude that the future of growth is in Asia-Pacific? Based on these scenarios, perhaps. Yet if there is one thing that is constant, it is that we live in times of unprecedented change where we cannot afford to rest on our laurels. Environmental changes, natural disasters, social unrest, countries disputes, threat of terrorism, could all completely tip the scales in a different direction.
As leaders of our fields in global communications companies, I think it is imperative that we consider the possibilities of these scenarios, take a step back and review if we are doing and investing enough to prepare our companies, our teams for the growth of tomorrow. More crucially, are we as organisations, structured in a way that allows for flexibility in operation to navigate business risk or take advantage of opportunities? The fast changing landscape of economics, communications and technology have swiftly changed the face of our business. There is no reason not to completely change the way we perceive challenges, seek solutions and chart new geographical territory of business.
2008 was a defining moment in which many economists are quick to call it the start of a recession. As Edie Weiner, president of Weiner, Edrich, Brown, Inc rightfully pointed out in a TEDx speech, a view that I personally subscribe to, regardless of the ups and downs of the markets, this is not a recession but a fundamental transformation. To succeed, we need to stop focusing on what was and learn to realign ourselves with what is ahead of us and how to win differently.