Happy Chinese New Year to all my friends and followers! There’s no question it’s a big holiday for leisure and entertainment. Last year, retail and dining expenditures for the Lunar New Year came in at 754 billion yuan ($US115 billion), according to China’s Ministry of Commerce. This is substantially higher than spending for the US Thanksgiving holiday and “black Friday,” the biggest shopping day of the year in the United States. As many families and friends not only in China but also elsewhere in Asia celebrate the holiday with food, festivities and travel getaways, it belies the misconception some Westerners still have that manufacturing and low-wage exports are the main economic drivers of emerging markets.
In fact, domestic demand is generally the bigger economic driver in emerging Asia and also in some other regions—and could help insulate some of these countries from external shocks. This shift toward a more domestic orientation has been going on in China in particular for quite some time, fueled by improved education, rising wages and higher productivity. Other emerging-market countries have seen a similar shift, with entertainment and leisure activities benefiting, along with areas of conspicuous consumption.
For quite some time, movies produced in the United States (Hollywood) have depended upon international sales when revenue at home has been disappointing. Today, China, India and other countries in and outside of Asia are beginning to compete. The “Bollywood” name has become globally recognizable with an annual output of more than 1,000 films, which is double that of Hollywood,1although Bollywood’s revenues are much lower and only about 15% of which come from international sales.2 The low cost of producing animation in India and other Asian countries has added another dimension to the film industry that could spur further growth. While the focus here is on Asia, these trends are occurring in other emerging markets too—we’ve seen the rise of “Nollywood,” Nigeria’s booming film industry.
While India may be the most prominent in Asia’s film industry, there are other countries to watch in this space. Indonesia’s President Joko Widodo recently removed a ban on foreign investment in films, so the formerly stagnant Indonesian industry seems likely to sprout. Indonesia—the world’s fourth-largest country by population—has relatively few cinemas and therefore is an attractive market.
The market for fine art is also growing in Asia. Today, the market for art is larger in China than the United Sates, with all the major auction houses such as Christie’s and Sotheby’s (in addition to China’s homegrown auction houses) attracting multimillion-dollar prices for both Western and Asian art.
Pet ownership and related consumption is also becoming more popular in Asia. Once banned, China now has more than 100 million registered pets,3 most of which are dogs and cats but also includes other animals such as rabbits, fish and long-living tortoises—maybe the hope is that their longevity will rub off on their owners! Some households are spending in excess of US$1,000 per year on their pets,4not only for food, but also for toys and grooming.