“Forget about plastics. Go East, young man!”

The unstoppable rise of Asia and Asians

Presented by:Leighton Peter PrabhuManaging Partner, Interstice Consulting LLP(Moscow & Singapore) Moscow, 18 March 2014

Asia has the population

... as well as the youth

... which underpins its growthGDP (2012) Population (2012) GDP per capita

(2012)Average annual GDP growth (2001-2012)

USA $15.7 trillion 313.9 million $49,952 1.8%

China $8.3 trillion 1,351 million $6,090 10.2%Japan $6.0 trillion 127.6 million $46,708 0.8%

Germany $3.4 trillion 81.9 million $41,519 1.2%

France $2.6 trillion 65.7 million $39,772 1.1%

UK $2.4 trillion 63.2 million $38,510 1.5%

Brazil $2.3 trillion 198.7 million $11,339 3.3%

Russia $2.0 trillion 143.5 million $14,042 4.8%Italy $2.0 trillion 60.9 million $33,043 0.2%

India $1.8 trillion 1,237 million $1,489 7.1%Canada $1.8 trillion 34.9 million $52,208 1.9%

South Korea $1.1 trillion 50.0 million $22,600 4.0%

Indonesia $878 billion 246.9 million $3,556 5.4%

South Africa $384 billion 51.2 million $7,507 3.5%

Thailand $366 billion 66.8 million $5,474 4.2%

Malaysia $304 billion 29.2 million $10,380 4.8%

Singapore $275 billion 5.3 million $51,713 5.3%

Hong Kong $263 billion 7.2 million $36,799 4.0%

Philippines $250 billion 96.7 million $2,588 4.8%

Source: World Bank

Rapid economic transformation

Large pockets of wealth

SAARC

ASEAN

NORTH ASIA

HDI* world rank Index Population

#10. Japan 0.912 127.6 million

#12. South Korea 0.909 50.0 million

#13. Hong Kong 0.906 7.2 million

#18. Singapore 0.895 5.3 million

#22. Taiwan 0.890 23.3 million

#64. Malaysia 0.769 29.2 million

Russia = #55 (0.788)

*HDI = Human Development Index. A comparative measure of life expectancy, literacy, education,

standards of living, and quality of life.

Source: http://apac2020.thediplomat.com/

Human Development Ranking

Asia is already the most attractive consumer market

“The explosion of Asia’s middle class is stunning. The size of this group currently stands at 500 million and will mushroom to 1.75 billion by 2020 – more than a threefold increase in just seven years.”

“Asia-Pacific is poised to pass North America in 2013 as the world’s leading region for online sales.”

“Chinese consumers now make half of the luxury purchases in all of Asia, and nearly one third of those in Europe.  Globally, one in four purchases of personal luxury goods comes from Chinese consumers.” [surpasses US consumers] 

US tech giants increasingly rely on Asia for growth

•368 million Monthly Active Users in Asia (Q4-2013) = 30% of total MAUs, even though FB is banned in China

•$17.4 billion in sales from Asia in Q4-2013, about 30% of total sales, up 57% from the prior year

•China is the biggest smartphone market in the world•130,000 apps from Chinese developers in Apple’s App Store

•Amazon Marketplace launched in 2013 with over 12 million listings in 15 categories

•Opening a 150,000 sq. ft. fulfillment centre near Bangalore•Indian e-commerce sales reached $16 billion in 2013, up 88% yoy

Although Asia has its own home-grown tech giants

Market cap (Feb-2014)

Apple $469.6 billion

Google $408.5 billion

Facebook $174.4 billion

Amazon $166.3 billion

Samsung Electronics $165.6 billion

Tencent $147.9 billion

Softbank $90.4 billion

eBay $76.1 billion

Baidu $59.8 billion

Twitter $29.9 billion

Naver $25.3 billion

Rakuten $19.2 billion

Lenovo $11.1 billion

upcoming IPO$140 billion?

And $billion+ startups

Astute investors are moving now

ASEAN economic dynamism•According to the IMF, the GDP of

the “ASEAN 5” (Philippines, Indonesia, Malaysia, Thailand and Vietnam) will reach US$2.436 trillion in 2014

•Combined, they will overtake the Four Asian Tigers (Hong Kong, Singapore, South Korea, and Taiwan)

•As recently as 10 years ago, ASEAN 5’s GDP was only half of the Four Asian Tigers

•This is the biggest shift in the Asian economies since China’s GDP overtook Japan 3-4 years ago

Spotlight on Singapore

•Blk71 houses 100-200 startups - “World’s most tightly packed entrepreneurial ecosystem” (The Economist)

•National Research Foundation funds 5:1 top-up grants to accredited incubator firms, up to SGD500,000

•Rent-free co-working space for startups, up to 3 months

•About 800 Internet-based startup companies island-wide

•Venture-capital tech investments in Singapore last year outstripped those in Japan, South Korea and Hong Kong

•15 accredited incubators

In today’s app-centric world, you’re global from day one

Yandex vs. Google: a tale of two outlooks?

Year launched 1997 1998

Employees 4,902 47,756

FY 2013 revenues $1.2 billion* $55.6 billion

% international 5%** 56%

First foreign office Silicon Valley Tokyo

Year 2009 2001

First foreign language(s) introduced Ukrainian (2007), English (2010), Turkish (2011)

French, German, Italian, Swedish, Finnish, Spanish, Portuguese, Dutch, Norwegian, Danish, Chinese, Japanese and Korean

(2000)

Search languages offered now 5 (Russian, Belarussian, Ukrainian, Kazakh, Turkish, English) 150+

Current international officesUkraine, Belarus, Turkey,

Germany, Switzerland, United States

40+ countries

Market capitalization (17-Mar-2014) $9.8 billion $399.2 billion*per 2013 financial statements, with Ruble converted at an exchange rate of 32.73**for the year 2012, represents the share of revenues earned from advertisers based outside of Russia

Is Asia on the radar screen of the new generation?

Thank you

Leighton Peter PrabhuManaging Partner, Interstice Consulting LLP

(Moscow & Singapore)

lsp.prabhu@intersticeconsulting.comTwitter @lsp_prabhu