A consuming argument

Posted on 25 Sep 2014 by The Manufacturer

TM editor Callum Bentley hosted the recent Directors’ Forum meeting in London. The agenda? The rising Asian middle class and the opportunities for manufacturers.

According to the OECD, the middle class in 2009 included 1.9 billion people, with Europe (664 million), Asia (525 million) and North America (338 million) accounting for the highest number of people belonging to this group. The size of the global middle class is anticipated to increase from 1.8 billion in 2009 to 3.2 billion by 2020 and 4.9 billion by 2030.

The numbers are huge, but within these figures is a fact that means more than any – of these 4.9 billion middle class people in 2030, Asia will represent 66% of the global middle-class population, compared with 28% in 2009.

These figures were represented in a recent report released by Australia’s largest telecommunications company, Telstra, in association with the Commonwealth Scientific and Industrial Research Organisation. The report, Make for Asia, highlighted the opportunities available to manufacturers in a massive, emerging Asian market of middle-class consumers.

The bourgeoning mass middle class in the Asian region is a result of more than 40 years of increased economic prosperity. However with a growing middle class, also comes a proportionate increase in labour costs, and with it obvious repercussions for manufacturers with operations already established in Asia.

With these issues and more in mind, and with a raft of opportunities apparent not only for business-2-consumer manufacturers looking to tap into this growing consumer base eager for quality, non-Chinese made goods, but also for business-2-business manufacturers, TM and Telstra teamed up to pose the Asian question to some of the UK’s top manufacturers.

At a special, one off dinner held in London attended by representatives from companies such as Tata Steel, GE Aviation, Renishaw and more, the night’s discussion focused around four key opportunities for manufacturers outlined in the Make for Asia report:

  • Resource efficient manufacturing
  • Business model innovation
  • Industry collaboration
  • Connected Manufacturing

While the initial report was tailored for Australian manufacturers, Charlie Macdonald, industry executive manufacturing transport and logistics at Telstra, said the challenges were very similar for Australian and UK manufacturers.

“The UK may be further away, but having a land-based route might also be an advantage. This report described Asia as a place to manufacture products to, and not just a place that you relocate manufacturing to. In many ways this is a change in mind set.

“There is a great UK example of manufacturing innovation selling back into Asia in Vertu, the UK mobile phone manufacturer which has consciously exploited the traditional engineering excellence and reputational brand of “Made in the UK” to differentiate and add value.”

Macdonald uses Vertu as an example of a company making the most of one of the more significant factors emerging from the report, and more so from a rapidly growing consumer base – increased discretionary spending.

According to the report, as income rises, Asian consumers are shifting from essential spending on primary goods and services to more discretionary items. Discretionary spending is predicted to grow almost twice as fast as expenditure on essential items. This coupled with a notable difference in many consumers, particularly younger generations, believing that foreign brands are more capable of supplying high quality goods reveals an important market for those willing to grasp the opportunity.

These opportunities are there for UK manufacturers, and already many have well established presences in the Asian region. However, how this massive influx of global middle class consumers affect the UK market, and whether British business makes the most of the prospect is yet to be truly seen.

Further reading

Download the full Make for Asia report at: bit.ly/MakeForAsia


The Manufacturer Directors’ Forum is TM’s networking and knowledge exchange network for senior manufacturing professionals.

Tackling a wide range of topics likely to shape the future of industry, the group encourages manufacturing leaders to prepare their organisations for new trends in competitiveness.

Manufacutrers present at this dinner debate were: GE Aviation, Tata Steel, Renishaw, Element Six, Hayward Tyler, Caparo Steel and Ricardo.

TM extends its thanks to Telstra for sponsoring the event.

To find out more about the Manufacturer Directors’ Forum or to register your interest in attending one of the events, contact us at [email protected] or on 0207 401 6033 and follow us on Twitter @TM_DForum #MfgDirectorsForum