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Business Trends in Asia Pacific for 2006

Editor’s Note: We have another excellent forecast for our 2006 trends series. This time we looked east, to the Philippines, to successful business owner Wilson Ng. Many of us who read Small Business Trends are located in North America and Europe. What little we know of Asia we get from TV and movies — and of course we all know martial arts movies paint a realistic picture, right? The following guest column is sure to open up a fascinating view of the Asia Pacific region.

By Wilson Ng

The Asian Pacific Region continues to be the growth engine in the world. While Western Europe’s growth averaged between 1 to 2 percent for 2005, and North America was said to be good at between 3 to 4 percent, Asian Pacific economies chugged along impressively averaging 5 to 6 percent, though it was slower than it was in 2004.

Korea and Taiwan grew between 3 to 4 percent, Singapore and Thailand around 4 percent, but the three fastest growing were India (6.9 percent), Vietnam (7.6%) and China (9.2%).

In view of continuing high oil prices, and probably also the strong dollar and high interest rate brought about the continuing US deficit which affects the whole world, growth is somewhat conservative for 2006. However, most economies are still expected to deliver still at least 4 percent growth, and will be led by India (6.8%), and China (8.8%).

China is expected to overtake Japan as the third largest trade economy next to US and Germany, but Japan has resurged starting in 2005, and is expected to grow in 2006 owing to growing consumer confidence as well as larger exports to China and the ASEAN region. It is expected to continue its growth of at least 2 percent.

Here are the trends to watch for:

1. Continuing growth of name brands

The initial beneficiaries will be Western brands but all over Asia, more and more companies are investing in branding their products and services to represent quality and prestige.

Companies that have invested in branding, like Acer, Haier, Huawei, and others are starting to look worldwide to establish their brands. More companies are also buying name brands, notably TCL bought Thomson (which owns the RCA Brand), BenQ bought the Siemens cell phone division, and Lenovo famously bought the IBM Personal PC division.

2. Commoditization of other Products and Services

3. Growth of Cultural Diversity

4. Appreciation for the Good Life and Small Indulgences

People are increasingly confident of their ability to become better, but at the same time, are also experiencing lots of stress as economic change also takes its toll on families, and finances, so many services that give little indulgences to make them feel good are popular.

5. China Potentially in for a Hard Landing

Two reasons why this would happen: more and more industries in China are diversifying into real estate as they find it harder and harder to make money in their core business. Second is that a huge amount of the banking loan portfolios are actually for real estate investments. China can experience turbulence if the real estate bubble (which in some cities is starting to be felt) bursts.

6. The Continuing Growth of Tourism

7. Continued growth of BPO Services

8. Growth of Medical and Retirement Tourism

9. The Resurging Importance of Agriculture

10. The Growing Boom of Entrepreneurship

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About the Author: Wilson Ng [1] is the CEO of a 110-person systems integration business in the Philippines, and several other businesses he has founded. He won the 2005 Ernst & Young Entrepreneur of the Year Award for Small Business in the Philippines. Wilson writes a blog on his observations about business, entrepreneurship, life and technology at The Biz Driven Life blog.