With tariffs rocking global markets, Asia has emerged as an alternative for businesses needing to pivot. A huge population, increasing spending power in many countries, and potential for significant future growth are all appealing factors. Entering is not without barriers, though. Asian Insiders Managing Partner Jari Hietala explains why tariffs elsewhere make Asia a safe harbour in these stormy times.
America’s sweeping tariffs have created another new normal which now must be navigated. Companies in Canada, Europe, and other parts of the world are scrambling to make sense of what is happening. Likewise, consumers in Asian countries may now begin looking to alternatives to American imports.
The decision of several Asian countries to embrace free trade agreements (FTAs) is worth highlighting as well. There is a desire from most governments to increase cooperation with global partners. Trade imbalances are sometimes brought up, but it is a complex situation that cannot be boiled down to an equation of goods coming in versus goods going out.
Markets across Asia, large and small, have demand for all types of overseas products. Especially considering the growing awareness of both quality and sustainability among the population. However, entering the region requires a deep understanding of each country. This nuanced approach can be particularly challenging for businesses with limited local experience.
As tariffs come into play, a pivot to Asia is an alternative companies should consider. The region’s potential, coupled with a relatively stable outlook, makes it an attractive prospect. Yet, it is crucial for foreign firms to identify challenges that could make market entry difficult.
What makes Asia appealing?
Businesses must reassess their present and future given the events unfolding. Regardless of what happens in four years’ time, reducing reliance on the American market has become a reality for many firms.
That is where Asia comes into the picture. The region’s population is nearing five billion. Underlying numbers prove this simply isn’t about volume. Research from the Brookings Institute found that Asia will be home to more than two-thirds of the global middle class by 2030. In the next five years alone, 700 million individuals could be added to their ranks.
Additionally, the number of High Net Worth Individuals (HNWIs) has skyrocketed. The region is poised to become the world’s largest wealth hub. It could happen as soon as 2026, according to Knight Frank’s Wealth Report. Unsurprisingly, this has led to a massive uptick in consumer spending. Euromonitor predicts it could surpass USD 30 trillion by the end of the decade.
A few trends are worth pointing out. First is diversity. Asia is, of course, home to a wide variety of cultures, languages, and traditions. There is even diversity in age demographics. Not only are several aging societies located here, but it is projected to contain more than half of the world’s population aged 18-24 in 2040.
Second, consumers across Asia are increasingly interested in sustainability. The extent to which this impacts purchasing decisions varies in each market, but it is something many people now value. Similarly, quality, sought after more today than in the past. These are areas where overseas companies are perceived as being strong.
Sector spotlight
Opportunities are available in a wide range of sectors. These are a few of the most notable.
Automotive
The automotive sector is set to be among the hardest hit by US tariffs. Turning to Asia in the wake of this can alleviate short-term challenges and establish successful long-term partnerships, given the direction the industry is heading.
Demand for internal combustion engine vehicles across the region has lessened in favour of electric vehicles. Projections show EV sales in Asia could grow by as much as 22 percent annually over the next few years, accounting for nearly 40 percent of new car sales in 2028.
Opportunities here are not simply limited to passenger vehicles. Electric two- and three-wheelers, busses, and commercial trucks are all in demand. Some countries are investing in hydrogen fuel cell vehicles (FCV). There are also numerous opportunities in EV and hydrogen infrastructure.
Click here to read our recent article on opportunities currently available in the Asian automotive sector.
Fast Moving Consumer Goods
Consumer goods were among the sectors most affected by US tariffs. Nearly 80 percent of these were slapped with a rate hike of at least 20 percent. As it relates to FMCG, this will make the majority of products much harder to sell in America due to price increases.
Asia can provide an interesting alternative, although companies must still be mindful of price points. Examples of opportunities include both health and well-being products and ready-to-eat food. The shifting lifestyle preferences of consumers in many countries have created an increasing demand for both.
Medical Devices
According to S&P Global Market Intelligence, close to 70 percent of medical devices exported to the United States will be subject to new duties. Asia continues to face a shortage of these, particularly more complex products. As countries actively improve their domestic healthcare through various measures, opportunities in the region may be worth exploring.
Building free trade
Free trade has been a priority for Asia over the past two decades, and this has led to the enactment of several FTAs and cooperation pacts. Several others are currently being negotiated. There is also the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which Japan, Malaysia, Singapore, Brunei, and Vietnam are a part of. Here is a brief overview of the current situation in select markets.
EU – The EU has FTAs in force with Singapore, South Korea, and Vietnam and an economic partnership agreement in place with Japan. Talks on agreements with India, Indonesia, the Philippines, and Thailand remain ongoing.
EFTA – Hong Kong, Indonesia, the Philippines, and Singapore have inked an FTA with the EFTA. A free trade agreement has been signed with Thailand and is awaiting government approval. Similarly, a Trade and Economic Partnership Agreement was reached with India in 2024.
United Kingdom – The UK joined the CPTPP in December 2024. Currently in effect are the Japan–UK Comprehensive Economic Partnership Agreement, and the Singapore–United Kingdom Free Trade Agreement. The latter was expanded by the Digital Economy Agreement. Negotiations with India and South Korea continue. An enhanced trade partnership was signed with Thailand last year, and the two sides are exploring an FTA.
Canada – In addition to being a signatory of the CPTPP, Canada has an FTA with South Korea. Negotiations with ASEAN remain ongoing.
Tariffs make Asia an alternative, but obstacles remain
While the opportunities in Asia are abundant, it is essential to understand the realities of the situation. For example, competition in advanced markets where higher spending power is present can be fierce.
The economic impact tariffs may have on Asia’s economy should be monitored as well. A global slowdown may halt growth. If there is one silver lining, it’s that more than half of the world’s GDP growth took place in Asia between 2015 and 2021, a period of time defined by the China-US Trade War.
There is no universal approach to entering the region. Each country is different. Sometimes, countries have differences within their borders. Entrance is best achieved through a gradual process, starting in markets where goods or services are understood and desirable. Activities can be built up in other locations over time.
This is what makes a partnership with a firm specialising in market entry or expansion so valuable. Take Asian Insiders, for example. Our partners boast a deep local understanding and an extensive in-country network amongst local business leaders, industry experts, and government officials.
Working with us allows overseas companies to not only identify the best markets in Asia for them but also hit the ground running. The ongoing situation surrounding tariffs and global market uncertainty means businesses cannot afford to make the wrong move. Asian Insiders can help mitigate risk and ensure you have the inside track to winning in Asia.
Concerned about tariffs and want to see if Asia can provide an alternative for your business? Take our Readiness Check to see if you’re prepared by clicking here. You can also schedule a no-obligation call with Jari Hietala, Managing Partner: jari.Hietala (at)asianinsiders.com
