From Facebook friends to tomorrow’s leaders: Understanding the impact of demographic change in Asia

26 May 2015

Generational change in Asian leadership, combined with demographic shifts and the growth in connectivity are presenting new opportunities to Australian businesses willing to build relationships that deepen understanding of regional differences.

Current Asian leaders, born in the 1950s and 60s, are beginning to hand over to a new generation schooled in the early years of internet advance.

Asia’s shifting demographics

There are profound demographic differences between countries in Asia. Sustained low birth rates in nations like Japan and China has seen the median age rise and populations become increasingly ‘grey’.

However, other countries like Indonesia are continuing to experience strong population growth and have a much younger age profile. For these countries, it will be their digitally savvy, young people who will drive economic growth.

In China, the demographic impact of its one-child policy, introduced in 1982, is now clearly playing out. Already one in five Shanghai residents, some three million people, is a senior. That ratio is forecast to rise to one in three by 2020.

Chinese pensioners will be the world’s second largest population after India by 2040, numbering around 400 million people[1]. This ‘greying’ of the population presents its own economic growth challenges as the proportion of working age people declines.

Southeast Asia’s youth advantage

Travel across the region from China to Indonesia and the demographic differences are stark. Indonesia, with 250 million people today, is expected to add another 100 million by the end of this century. It’s a population dominated by adolescents and young people.

The Southeast Asian region more broadly has some strong demographic advantages. A median age of 27 means its people are young compared to China’s median age of 35. Australia’s median is almost a decade older: at 37. The average of Europeans is 42.

It’s easier to grow an economy quickly when its people are still young and mobile.  Southeast Asia, more than almost any other region, maintains this advantage.

The online generation shaping Asia’s future

Across our region, people are also increasingly connected.

The intersection of youth and lower technology costs has accelerated the connectivity trend, evident in the social networking craze gripping the region.

Facebook has literally become a way of life across Southeast Asia. Bangkok can already lay claim to having the highest penetration of Facebook users in the world.

In Indonesia, 63 million people will access Facebook in 2015 using their mobile phone, which, at around 90 percent, is the highest percentage of mobile logins of anywhere on earth.

Even in Myanmar, there is a huge market for new online experiences. Falling communication costs has made mobile internet technology available to tens of millions more people who, just a few years ago, couldn’t get their hands on an uncensored newspaper. And for this emergent generation, adapting to continual innovation is second nature.

Young people are leap-frogging earlier generations with their mastery of more efficient, and often cheaper, ways of doing business. There are game-changers in dating, in commerce and in education services.

WeChat, a mobile text and voice messaging communication service developed by Tencent in China, has 438 million active users; with 70 million outside of China. It is used as a replacement for many of the services traditionally provided by western banks. 

These kinds of changes show no signs of easing off, and will likely only gather momentum as the old guard retires and moves on.

It will be the new generation of leaders – the offspring of China’s ‘one-child’ policy, Bangladesh’s female empowerment, Thailand’s tech boom and Myanmar’s political liberalisation – who will be entrusted with ensuring that Asia is a secure and prosperous region that remains good for business.

Generational change brings new opportunities and Australia can make the most of it by developing the right knowledge and networks, and through leadership.

[1] See here.

The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.

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Andrew Lumsden

Partner. Sydney
+61 2 9210 6385