The COVID-19 Pandemic and Consumer Sentiments in Southeast Asia: New Focal Points

  Despite the on-going COVID-19 pandemic, Southeast Asia remains a promising direction of commercial activity, including its trans-national dimension. Before the pandemic, many multinationals opened their offices and branches in Southeast Asia, relocated their production units there, but most importantly, expected that those countries, located between India and China and developing a single market and a single production base as part of the ASEAN Economic Community, will remain an attractive commercial destination for many years ahead. 
  Those assessments were well substantiated. In Southeast Asia, the middle class was growing. A rapid rise of the mass affluent was another welcome trend. According to Boston Consulting Group, in 2017 the mass affluent in Southeast Asia accounted for 46 million, while by 2010, their number was expected to increase to 125 billion people. In 2017-2030, in Indonesia, Thailand, Vietnam and the Philippines, the growth rate of the mass affluent was expected to be 8%, while that of the middle class for 4%.  
  In the ASEAN member states, the urbanization rate was increasing. In 2010-2020, the share of the urban population rose from 44.6% to 49.5% respectively. This resulted in shifts in consumption sentiments, most importantly, a demand for quick and convenient delivery services. Also, grab-and-go outlets were of particular interest. This was especially relevant to Southeast Asia’s large cities where heavy traffic jams are a common occurrence. 
  Another compounding factor that could lead to making Southeast Asia an attractive area of doing business was a quick digitalization that was expected to further intensify. In 2010-2019, the access to the Internet services in the ASEAN member states increased from 18.7% to 57.0% of the total population. During the same period, the access to mobile phones increased from 87.5% to 139.1% respectively (although the local specificity should be taken into consideration: while Laos saw a decrease from 64.6% to 60.8%, Thailand experienced an increase from 106.6% to 186.2%, while in Myanmar, the figures accounted for a remarkable rise from 1.6% (! – E.K.) to 113.8% respectively). In light of this, the companies that aimed to explore the markets of Southeast Asia had no illusions that they must develop the mobile versions of their websites, as well as make their presence seen in the local search engines and social media, and work with the local celebrities. 
  Of equal, if not greater importance to the afore-mentioned trends was the integration of on-line and off-line channels in the retail sector of the ASEAN member states. Among the examples, of special note is the game Mame!Go which resembles the Game Pokemon Go and aims to searching and catching the magic creatures Mamemons. Then the marketplace Qoo 10 distributes various discounts, privileges etc. according to how many Mamemons a client has caught. 
  Simultaneously, new business models were gaining popularity in Southeast Asia. The on-line shop Pomelo Fashion, a website-aggregator, implemented the M2C/D2C (Manufacture/Direct-to-Customer) strategy. Instead of providing venues for other companies and their clients, Pamelo Fashion created its own brand premised upon product processing and delivery chains from producers to consumers without the shopping retail network. The example of Furla is also representative. In the countries of Southeast Asia, the company launched the service “Made For You”: the clients can develop their own design of handbags, and each of them – as the orders are ready, which lasts from eight to twelve weeks – will be awarded a personalized certificate. 
  Finally yet importantly, the retailtainment, a mixture of retail and entertainment, is Southeast Asia is of special significance. In the shopping malls, entertainment and leisure centers of all sorts, including thematic parks, educational centers for children, sport grounds etc., were operational. The installed digital tracking devices fixed the preferences of the customers, their routes etc. 
  Before the COVID-19 pandemic, brand preferences among the Southeast Asian consumers were twofold. On the one hand, globally recognized brands, including the American or the Japanese cars, the Korean smartphones, cosmetics from the European countries, as well as the service of the company Singapore Airlines, were in demand. On the other hand, simultaneously the Southeast Asian brands were growing in popularity. In 2019, 60% of the Southeast Asian urban affluent preferred the local brands, which was especially relevant to food and beverage products. Another trend worthy of attention was an increase in popularity of Islamic brands, especially in the segments of women\'s clothes, in Malaysia and Indonesia. Those countries planned to become centers of the world Islamic fashion, while the Indonesian company Wardah positioned itself as the main producer of cosmetics for Islamic countries. 
  Those trends were amended on by the COVID-19 pandemic. Although the COVID-19 impact on Southeast Asia has not been as negative as, for instance, on the European countries or the US, nevertheless, the economic, political and social implications are strongly felt. Examples include the suspension of the construction of the trans-border infrastructure, setbacks in the trans-national product supply chains in which companies from the ASEAN states participate, a decrease in tourist arrivals to Southeast Asia.  To date, the situation has not stabilized, and the governments are imposing new restrictive measures. This influences upon consumer sentiments in the ASEAN states. Although it is impossible to cover all the changes, which are not linear and cannot be chronologically organized, nevertheless, the following are the most important.  
  First, the on-line purchases of the essentials have markedly increased with prospects for further rise. As of mid-2020, 83% of ASEAN consumers aimed to purchase online, with the shopping deliveries, as the restrictions were lifted. The consumers tried new apps, including payment services, and aimed to use them after the pandemic stopped. Simultaneously, the ASEAN consumers prioritized value for money, which is explicable due to a decrease in their purchase power. 
  Second, amidst the pandemic the Southeast Asian consumers prefer established brands to market newcomers. At the same time, the consumers expect simultaneously personalization and a value for money. Specifically, individually designed high-quality products are in demand. According to an opinion poll (its results were presented in June 2020), 74% of respondents prioritized new experience, namely, special emotions, over the purchase just for the sake of possession, while 56% stated that a purchase should follow their lifestyle. 
In the B2B sales, the role of influencers and celebrities, mostly from the show business and the fashion world, has increased. In most of the Southeast Asian states, the Asian celebrities are immensely popular. As a result, young women from Southeast Asia consider Japan and South Korea to be more influential centers of the global fashion (mostly, in the segments of women’s clothes and accessories) than France or the United States. 
  Third, as amidst the pandemic people started to take more care of their health, for the Southeast Asian middle class the ecological factors of purchase decisions – ranging from the consumption of ecologically clean products to using ecologically friendly materials – rose to prominence. As of mid-2020, 90% of the Southeast Asian urban residents would like to purchase ecologically friendly goods. 
  In the early 2021, the ASEAN Committee on Consumer Protection launched the Report of ASEAN Consumer Empowerment Index 2020. If continued, which seems likely, this practice will allow monitoring consumer sentiments, as well as preventing abusive activity of companies.  
  The trends discussed above do not suggest that Southeast Asia has decreased in attractiveness as a trans-national business destination. Rather, abundant evidence and multiple considerations support the conclusion that the companies are incentivized to make non-trivial decisions, increase the availability of the offered products, and pay more attention to the macro-factors. In its turn, this increases the relevance of a timely and comprehensive research focusing upon all the macro-factors shaping the development of Southeast Asia as an area of business activity.