While China and Japan are the darlings of Asia Pacific, the rest of the region poses a promising growth opportunity. Korea and Singapore are already players on the world stage, but Southeast Asia with its rapid growth is just starting to flex its economic muscles.
SDi took a look at this regional market in its newest report: Asia Pacific Opportunities for Instrumentation: Korea, Taiwan, Southeast Asia, and Oceania. This report covers ten analytical technologies segmented by technique, region, and end market, along with the market conditions and forces at work affecting markets within the region. We found that the market for analytical instrumentation has remained strong in the mid-to-high single-digits over the past few years, with this trend expected to continue. While this market is small compared to its neighbors in China and Japan, the robust growth of the region makes it one of the most attractive places for analytical instrumentation on the globe. Gaining a better understanding of all the market forces in play and how they will shape the region for years to come is integral to making successful business decisions.
Diversity permeates Asia Pacific on every level: economically, politically, and geographically. As a result of this diversity, we’re highlighting five facts to give you a better understanding of the region.
- South Korea is a global leader in semiconductor and electronics production
South Korea has become a center of technological development in the recent years. Though the region faces a population crunch (51.9 million) with a majority soon to reach retirement age, it is well positioned to face the challenge as its main exports will continue to sustain the economy. South Korea’s main exports include semiconductors, electronics, petrochemicals, and automobiles. Our study shows that the semiconductors and electronics industry will be a significant driver for growth in the overall market as well as the fastest growing industry (followed by Pharma/Bio) in the instrumentation market within the Asia Pacific region. Through long-sighted government planning, strong competition, rapid urban development, and support from post-war allies, South Korea emerged from the Korean War in an extremely strong economic position with many companies like LG, Samsung, and Hyundai being founded shortly after the war. Today, these companies are global players in their respective industries, helping to make South Korea a global leader in technological development and the largest economy in the region after China and Japan. Though South Korea contributes 4.6% of its $1.7 trillion GDP towards research and development, the region will see below than average growth, but will continue to be sustained by its dominance in semiconductors. Beyond the instrumentation industry, South Korea enjoys the fastest Internet speeds in the world, both by landline and mobile connections. Compared to the United States’ average of 18.7Mb/s, South Korea enjoys a faster 28.6Mb/s.
- Taiwan has full diplomatic relations with only seventeen nations and will lead growth with South Korea
Taiwan has sat in a precarious international position since the end of the Chinese Civil War in 1949. Formally, Taiwan is known as the Republic of China (ROC), whereas mainland China is known as the People’s Republic of China (PRC). The ROC continued to be recognized as the government of China by the UN and many NATO allies until 1971. Since then, the PRC has maintained a seat on the UN Security Council and claimed sovereignty over the island of Taiwan, while the ROC is a non-voting member of the UN. Many nations have maintained non-diplomatic relations with the ROC, including many of its strongest allies, the US, Japan, and Australia. These relations are not officially diplomatic or political, and unofficial embassies exist among the countries. Official diplomatic ties exist between Haiti, the Solomon Islands, Belize, and other small nations, with little political influence. Despite the lack of formal diplomatic relations with most of the world, the de facto status of Taiwan makes it an independent nation. Despite these political tensions, Taiwan has one of the largest economies in the region, competing with South Korea in its main exports: semiconductors, electronics, petrochemicals, and automobiles. Taiwan provides headquarters to Taiwan Semiconductor Manufacturing Company and United Microelectronics Corporation and the nation has surpassed the US and Japan in the trade. Our research shows that Taiwan spends 3.3% of its $601 million GDP on research and development and will see below than average growth but will be sustained by its main exports, similar to South Korea.
- The Association of Southeast Asian Nations (ASEAN) would be the 7th largest economy if it were one country
ASEAN is a multinational economic and political alliance founded in 1967 by Thailand, the Philippines, Malaysia, Singapore, and Thailand over fears of communist takeovers. ASEAN was later expanded to Brunei, Vietnam, Laos, Myanmar, and Cambodia, covering nearly the entirety of Southeast Asia. In 2015, the ASEAN Economic Community was established to create a single market for free trade of goods, services, and labor across the region, similar to the single market free trade within the European Union. Many of the ASEAN members have experienced rapid economic growth with improvements in standard of living and healthcare access. If ASEAN were a single nation, it would rank third in population, after India, and seventh in GDP, between France and Brazil. Diversity is another hallmark of ASEAN. Indonesia is the world’s largest majority Muslim country, while the Philippines is majority Catholic, and Thailand is majority Buddhist. Major industries also vary, from consumer goods in Cambodia, to oil & gas in Malaysia. From the mountainous jungles in Vietnam to the numerous sandy atolls in Indonesia, ASEAN is one of the most diverse communities in the world. This group of Southeast Asian nations is projected to have the fastest growth in the analytical instrumentation market in the next five years due to its burgeoning pharma/bio sector. Furthermore, the ASEAN’s policies and foreign investments will bolster the pharma/bio sector contributing even more to the region’s growth. While places like Singapore and Taiwan have well established pharma/bio industries, other countries like Thailand and Malaysia look to grow domestic production and research for pharmaceuticals.
- Climate change will be the biggest challenge facing the region heading into the 21st Century
Asia Pacific as a whole is mostly made up of thousands of small islands, with the majority of the population living near coasts and rivers. Should drastic sea level rise occur, the implications for the region would be catastrophic. The effects of climate change can already be seen in Jakarta, Indonesia, where the city is sinking from rising sea levels. The government is currently looking to create a new capital city to avoid the problems of the sinking city. Some estimates predict over 5 million could be displaced from Indonesia alone by sea level rise. The Marshall Islands sit only 6.5 feet above sea level, and plans are in place to raise the land to counteract sea level changes. Major industries to the region like agriculture, fishing, and tourism could take a major hit should temperatures and sea level continue to rise. Low lying river deltas in the region are home the world’s supply of rice, which could become highly unstable should the effects of climate change continue. Considering more than 50% of Asia Pacific’s amalgam GDP comes from food and agriculture, climate change could mean devastating changes. It is important to note, however, that land productivity is increasing with development and adoption of automated farming techniques. Despite being a minor contributor to greenhouse gases, the region will be one of the most affected by climate change.
- Over 10,000 islands are a part of Oceania
The three largest islands in Oceania, are Australia, New Zealand, and Papua New Guinea. Naturally, Australia occupies the largest island within Oceania, and is about the size of the continental United States, and is larger than continental Europe. It is a major world exporter of agricultural products, metals, and mining products and accounts for 85% of Oceania’s GDP. Overall, Oceania’s main exports include metals and mining products, natural gas, and seafood. Atomic spectrometry techniques are often used for metal testing, including gold, lead, and mercury. While Indonesia has a ban on mining exports, Australia is the world’s largest producer of metals & mining products like iron ore, gold, and uranium. It is reasonable that the metals & mining industry will contribute significantly to the growth of atomic spectroscopy within Oceania. Our report shows that the overall market demand for atomic spectrometry is forecasted to grow by 7.2% over the next five years. Outside of the instrumentation industry, Australia is also incredibly diverse in terms of climate and ecology. With tropical forests in the north and arid deserts to the south, nearly 80% of the wildlife can only be found in Australia. The country is also home to the Great Barrier Reef, the largest living structure in the world. Australia and New Zealand are the most developed economies in Oceania, with both scoring highly in human development.
Our analysts found that the the instrumentation market in the Asia-Pacific countries under consideration was $3.1 billion in 2018 and is expected to grow by 6% from 2018 to 2023. Between 2013 and 2018, surface science saw the largest growth within the instrumentation industry due to the steady growth of the semiconductor and electronics industry. In contrast the industry will led by mass spectrometry between 2018-2023 due to the growing pharma/bio presence throughout the Asia Pacific. A combination of an aging population, national policies, and foreign investment will drive growth in the pharma/bio sector which will make this the fastest growing technology segment. Therefore, growth from country to country will vary, but semiconductors & electronics as well as pharma/bio will be the main growth sectors overall. Asia Pacific Opportunities for Instrumentation: Korea, Taiwan, Southeast Asia, and Oceania provides an indepth look at the 10 categories of the analytical instrumentation industry while providing the political and economic context for drivers and obstacles of growth within the region.