MACRO ECONOMIC LANDSCAPE & TECHNOLOGY WORLD Asia in an international comparison Matthias Hartmann, CEO GfK SE June 2015 1
World Economy & Growth Challenges 2
Slight acceleration in global economic growth: Asian markets still leading growth overall Change in gross domestic product vs. previous year (in %) Global comparison Global economy Eurozone USA UK 3.5 3.8 1.5 1.6 3.1 3.1 2.7 2.3 2015f 2016f 2015f 2016f 2015f 2016f 2015f 2016f ASEAN 5 Japan China India 5.2 5.3 6.8 6.3 7.5 7.5 1.0 1.2 2015f 2016f 2015f 2016f 2015f 2016f 2015f 2016f Source: IMP Outlook April 2015 3
Top Ten challenges facing the world today Deepening income inequality Lack of leadership Weakening of representative democracy Increasing occurrence of severe weather events Increasing water stress 1 2 3 4 5 6 7 8 9 10 Persistent jobless growth Rising geostrategic competition Rising pollution in the developing world Intensifying nationalism Growing importance of healthcare in the economy "In developed and developing countries alike, the poorest half of the population often controls less than 10% of its wealth" "Air pollution in China contributed to 1.2 million premature deaths in 2010, representing a loss of 25 million years of healthy life" Source: WEF Global Outlook Report 2015 4
Forces likely to shape the world Key Challenges facing each region North America 1 2 3 Increasing inequality Geopolitical shifts Adapting to climate change Latin America Europe 1 2 3 Middle East & North Africa Fostering economic growth and innovation Youth unemployment EU-Russia relations Asia 1 2 3 Geopolitical tensions Structural economic reform Managing urbanization From systematic corruption to the development of skills and education, from geopolitical shifts to youth unemployment, each region faces a unique set of challenges. 1 2 3 Corruption Education and skills development Increasing inequality 1 2 3 Persistent youth unemployment Managing political transitions Societal tensions Sub-Saharan Africa 1 Education and skills development 2 Building sustainable governance systems 3 Delivering hard infrastructure Even when two regions share similar problems, these issues demand specific solutions to meet unique, localized needs. Source: WEF Global Outlook Report 2015 5
The Technology World GfK 2015 Macroeconomic landscape & Technology World June 2015 6
Spending on Consumer Tech Devices has Flattened 2015 global spending will be over-shadowed by the decline in mature product sectors and subdued demand in emerging markets 2010 $920bn Economic recovery 2011 $1,008bn Smartphone, tablet PC & emerging market strength offsets sluggish developed markets +10% -1% 2012 $995bn $ value hit by currency weakness outside North America 2013 $1,017bn Smartphone and tablet growth offsets decline in more mature products +2% +1% 2014 $1,030bn Growth sustained by Smartphone Transition in Emerging Markets 2015 Forecast Emerging market smartphone strength and new product categories, e.g. wearables, smarthome +1% GfK Trends and Forecasting, Global Tech Device Sales Revenue; Volume in USD & Year-on-Year Growth 2015 forecast includes over 70 consumer tech products 7
Emerging Asia is the Leading Region in Tech Spending and likely to grow at a good pace as well Share of Tech Devices Sold in % units % Growth (Value) in 26 25-1 Europe North America Developed Asia Emerging Asia Latin America Middle East/Africa 22 22 10 10 26 27 8 8 8 8 2014 Forecast 2015-3 3 3 0 2015F v 2014 6 Share of Tech Devices by GfK Boutique Retail Sales Revenue in % by Region 8
So what devices are consumers spending on Mobile internet devices still dominate Feature phones Digital Still Photography LCD TVs Desk PCs Laptops Media Tablets Smartphones Smartphones, tablets, and laptops accounted for >50% of global spending in 2014 2011 2012 2013 2014 2015-F Global Sales Value, 2015 estimated, Global consumer tech devices retail sales revenue in USD - top tier products \Mobile internet devices includes over 70 consumer tech products 9
Focusing on the BRIC markets, smartphone sales continue to be healthy 43.1% While India will be the fastest growing market in terms of year-on-year growth in 2015, China smartphone adoption reaching saturation levels India Brazil Russia China 3.8% Total market including 2015 estimation by GfK Trends and Forecasting, growth is for number of device units 10
How about newer product categories? Global sales of wearable devices have dramatically increased over the past couple of years - fitness trackers & watches being most prominent 2014 31m 2015 72m 2016 forecast 114m Impact of Christmas: 40% of wearable device sales in 2014 in France, Germany and the UK were generated in the fourth quarter Total market including 2015 estimation by GfK Trends and Forecasting Christmas stat from GfK point of sales tracking ; Figures are device units Wearables consist of smart watches, wearable headsets, wearable cameras, health and fitness trackers and smart glasses 11
Developing markets will gradually take a greater market share of wearables as they become recognised and price points fall North America, Western Europe and Dev. APAC to contribute >70% of the total wearable demand in 2015 and 2016 Share of Tech Devices Sold in % units 2016 71% North America Western Europe Dev. APAC 13% China 4% Emerging APAC 4% ME & Africa 3% South America Total market including 2015 estimation by GfK Trends and Forecasting, growth is for number of device units 12
This device adoption is changing the way our audiences behave and how they consume content Who is my customer? What media does she use? Why and how does she buy my products? How are people are connecting to the internet today? 65% 60% Use a laptop Use a desktop computer 40% Use a smartphone 19% 70% Use a tablet of people online use more than one device to connect Source: 2013 Roper Reports Worldwide Consumer behaviour and attitudes in 31 markets New solutions like cross media panels offer a unique source of media measurement which are key to capturing these changes 13
Speed of technology innovation is accelerating Businesses are driving innovation as are consumers. 6645 different models of smartphones offered in 2014 in APAC 339% Since 2011 "I look to buy new technology products that can be upgraded or uploaded." 36% of global consumers say: Consumers increasingly seek the ability to upgrade their hardware. Source for APAC smartphone data : GfK s retail sales tracking data, 2011-14 Source for consumer opinion: GfK s consumer trends consumers surveys aged 15 years and over Report covers 25 markets worldwide, 2013 14
Technology Category is Categorized by Innovation INNOVATION Improved Display Quality Retina, 4K, UHD Wearable's Connected Cars Smart homes Augmented Reality 3D printers Drones and 15
But there are challenges for tech brands! BRAND LOYALTY & PRICE EROSION Commodization of Products/Brands Continuous Value Erosion Online Sales & Price discounting Media Fragmentation Declining Loyalty 16
GfK today will be available to help you navigate the changing environment How are the Asian consumers changing? How is the changing landscape effecting the value systems & buyer behaviour?? How will the market forces and new innovations effect us in terms of how we deal with markets & brands?? How are consumers using my, and my competitors brands? Where should we position our brand in the market place?? How do we protect and enhance the value of our brand in this era of commoditization and price erosion?? 17
About GfK GfK is the trusted source of relevant market and consumer information that enables its Tech clients to make smarter decisions. 18