Going for growth: the Asian century

As with all investments, your capital is at risk

Imagine the last 2,000 years of human history compressed into a single day.

Not until around 9.30pm does western civilisation begin to pull ahead as the world’s manufacturing and technology centre. That’s the 1820s and the Industrial Revolution.

But at 10 minutes to midnight, the west’s moment is already over. By 2015, according to the United Nations Industrial Development Organisation, the world’s centre of economic value-added had shifted back East.

The era-defining change has been led, as usual, by China and India, together home to over a third of the global population. The two civilisations have dominated since long before dawn on our figurative day (yes, including the height of the Roman Empire).

For over a decade now, Asia has produced most of the manufacturing output by value: 57 per cent in 2025. Normality is restored.

Seeing western economic leadership as a fleeting historical anomaly gets easier as our triumphalist post-Second World War mindset fades. From its inception, the International Growth Team has been alert to the opportunities of the ‘Asian century’ and its investment managers are closely familiar with its cities, companies and entrepreneurs.

Also its thinkers. Intellectuals such as Kishore Mahbubani make the implications of this ‘Asian century’ framing, first used in the 1980s, easier to understand. The Singaporean diplomat and scholar is a persuasive advocate for the values that built his country and many others in the region: long-term planning, hard work, the prioritisation of social harmony and political stability.

The two factors he highlights that count most for us as investors are:

• Demographics: The Asia Pacific region is home to around 60 per cent of the global population.  It has a large and growing middle class and a young, dynamic workforce. This mass of humanity is significant for sectors such as financial services, consumer goods and luxury, though it is offset in some countries by low birthrates and ageing populations. 
• Technological: Asia has shifted from being the west’s manufacturing hub to an innovation pioneer. Its firms have a persistent lead in chip technology, clean energy, electric vehicles and ecommerce, robotics and infrastructure like high-speed rail. 

Outsider’s edge 

The opportunities of the Asian century have proved pivotal to businesses far from its shores. Many western firms have long been adept at reading the consumer behaviour, industrial dynamics and other characteristics of highly diverse markets.

One firm that has seized this opportunity is cosmetics giant L’Oréal, which established its China operation back in 1997. Now that country represents around a fifth of the French company’s total sales, a proportion expected to increase as the market steadies after the country’s long post-Covid slump.

Amid strengthening local competition for fickle consumers, the group’s feel for customer whims, its ecommerce execution skills and ability to deploy Parisian glamour pulling power, are shown by its regularly topping beauty sales in China’s Singles’ Day, a ferociously competitive online shopping extravaganza.

L’Oréal's strength in Asia also rests on its appeal across price points, from mass market (Maybelline, Garnier) to prestige (Lancôme, YSL Beauty, Armani), covering all rungs of the ladder Asian consumers are climbing. Its upmarket Luxe division is the number one global luxury brand by sales. Meanwhile, the young category of 'dermatological beauty' is a standout grower, especially in North Asia, where it has strong appeal to Gen Z shoppers.  

Beyond China, the company is putting its marketing weight behind India and south-east Asia, fast-growing areas it considers potential profit engines requiring the development of special products. For example, L’Oréal India has launched ‘made for India’ hair care lines, tailored to monsoon humidity and hard water. The firm plans to more than double its India business and expand local manufacturing.

An approach to growth that sets out to balance the diverse regions, channels and categories in which it operates, plus a culture of entrepreneurialism, have helped L’Oréal grow, even when one market stumbles.

Insuring the future 

Far less sexy to consumers, but perhaps more so to investment managers, is life insurance. In the Asian century, the opportunity lies in a vast and fast-growing middle class now seeking financial peace of mind. 

Hong Kong-based AIA is the largest independent publicly listed pan-Asian life insurance group. It is present in 18 markets across the region, mostly Hong Kong and China though with market-leading positions in Thailand, Singapore and Malaysia. Its products include life insurance, accident and health insurance and savings plans. It also offers credit, life and pension services to corporate clients. 

AIA prides itself on strong customer satisfaction, and its army of salespeople, often on motor scooters, penetrates deep into the region’s remote rural corners.

As Asian incomes rise and families think harder about healthcare costs and protecting their future, the most potent new engine of demand for insurance products is mainland China, where the group has been steadily winning approvals to open new branch licenses in more Chinese provinces. The model is simple but powerful: a large, well-trained agency force that sells protection-led products, supported by digital tools and a health system (wellness programmes and access to care) that keeps signed-up customers engaged.

As always, there are risks in a market such as China, where rules change with political directives. We’re confident that the structural drivers of growth remain: a vast protection gap, ageing populations, rising healthcare costs and the shift from cash savings into formal cover. AIA’s ability to sell older-age security to millions of families represents a significant growth opportunity.

Time to enjoy

Beneath financial security in consumers’  ‘hierarchy of needs’ comes leisure. That’s made evident by India's booming travel sector, in which International Growth holding MakeMyTrip has a commanding position.

India’s China-surpassing population of over 1.4 billion, combined with rapid economic development, is creating the world's largest emerging travel market. It’s one illustration of how that country’s growth story is based on services and domestic consumption. 

From flights across India’s expanses, to bus tickets for poor farmers, to luxury hotel packages for the aspirational middle class, the company commands around half of the country's online travel market. Twice as many people download its app as its closest competitors combined. MakeMyTrip has made itself the convenient gateway to Indian leisure time. Through brands including Goibibo (hotels and flight bookings), redBus (bus tickets) and TripMoney (travel fintech), the company has built a sprawling ecosystem designed to fit a multilingually diverse and complex travel market. 

In bus ticketing alone, the redBus platform commands an extraordinary 70 per cent-plus share of online volumes, and is expanding its operations across south-east Asia and South America.

MakeMyTrip's success shows how, in the Asian century, traditional industries – in this case travel agencies – have been leapfrogged. A young, tech-savvy population is embracing digital platforms, whose customer service standards, honed in the fight against competitors, are further enhanced by AI.  

Looking ahead 

Freeing ourselves from the western-centric assumptions that dominate our mindset and discourse can help investors see more clearly where the world’s most profound growth opportunities will arise. By 2050, three of the top five global economies will be Asian, with Indonesia – a country rarely mentioned in western media – set to join China and India. 

This shift in the global centre of gravity brings volatility. For all the momentum of economic and social progress of recent decades, the region remains full of ancient and modern geopolitical grudges, flashpoints of conflict, trade frictions and social and environmental challenges. Efforts towards better data flow between countries and cooperative integration of economies are tentative at best. 

Nevertheless, in the lifetime of International Growth, the ‘Asian century’ has gone from eye-catching headline to stark reality. Western mindsets must keep adjusting to that. For investors, the challenge has turned from spotting the opportunity to ensuring we maintain the on-the-ground market and technological knowledge, plus the imagination and discipline to ride Asia’s ever-increasing growth waves. 

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