The report – compiled by Faridun Dotiwala, a partner in McKinsey’s Mumbai office, and Jatin Pant and Joydeep Sengupta, senior partners in the Singapore office – is based on interviews with business leaders from some of the Asia-Pacific region’s top-performing companies.
The executives all voiced the opinion that the pandemic had presented “unprecedented opportunities” to accelerate business trends that would make the region more self-sufficient and efficient across a range of areas.
The findings in the report, ‘Emerging Stronger, Fitter, Faster: The Rise of the Asian Corporation’, are of particular importance to the UK as it forms new trade relations with the Asia-Pacific region and even harbours ambitions of joining the 11-nation Trans-Pacific Partnership (CPTPP).
Earlier this month, Trade Secretary Liz Truss signed deals with Singapore and Vietnam in what the Department for International Trade in London
described as “the latest step in the UK’s strategy to create a network of trade agreements with dynamic economies far beyond Europe, making the UK a hub for services and digital trade”.
The McKinsey report says that even before the Covid-19 outbreak, Asian companies were among the most technologically advanced, “serving the world’s most digitally savvy consumers”. Now the pandemic is accelerating those dynamics, says McKinsey
Augusto Zobel de Ayala, chairman and CEO of the conglomerate Ayala Corporation
in the Philippines, is quoted as saying: “We are seeing a massive shift to online banking, digital person-to-person payment transfers, e-commerce, (along with) an increase in ‘do it yourself,’ stay-at-home activities and commerce via social-media platforms.”
McKinsey points out that, of course, e-commerce usage has expanded in all countries because of the pandemic but has been particularly noticeable across Asia.
“The shift has been remarkable,” says the report. “In Singapore, DBS Bank
saw consumer use of its digital tools increase by up to 400 per cent. State Bank of India
(SBI), India’s largest bank, added more than 30,000 users per day on its YONO (you only need one) mobile app, which offers services for banking, investments, and trading, as well as a platform for online shopping.
“Seeing the shift, companies in all kinds of industries have accelerated their investment in digital consumer offerings. India’s Tata Motors, for example, digitised the entire end-to-end process of buying a car, from selection to transaction to delivery.”
Peter Harmer, managing director and CEO of Insurance Australia Group
(IAG), says increased investment in digital capabilities is “just the price you pay for entry to the park” as he cites the success of the firm’s consolidated customer-engagement platform, which accounts for about half of all customer interactions.
Asian CEOs say they are starting to see the payoff from investments in artificial intelligence (AI) and machine learning. Jessica Tan, joint CEO of China’s Ping An Group
– a holding conglomerate whose subsidiaries mainly deal with insurance, banking, and financial services – says: “We’re trying to build analytics to help HQ be embedded in the front line, be it in sales, product, or risk management.”
The report says the strategy has allowed the company’s motor-insurance division to reduce its operations team by 32 per cent, while still enjoying 50 per cent growth every year, in effect more than doubling the division’s productivity, says Ms Tan.
The report adds that Samsung SDS
expects to save around three million working hours in 2020 by incorporating robotic process automation into more than 26,000 projects.
Increasingly, technology is enabling Asia to capture and create value. “While Western companies focused on value capture, Asian companies tended to be really focused on scale, size, and market share,” says Kiran Mazumdar-Shaw, the chairperson and founder of Biocon
, the largest biopharmaceutical company in India.
“The Indian pharmaceutical sector has a huge global market share of vaccines and generic drugs — 50 per cent and 20 per cent respectively — but when you look at the value capture, it’s only three percent. We need to know how to move up the value chain.”
Read more news and views from David Sapsted.
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