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I have been in the region for the past week, in Singapore to see the team and attend the Bloomberg New Economy Forum then in Tokyo to see our office and our clients. Here are a few observations:

1. Singapore In the Ascendant—This is now clearly the capital of Asia. The housing market is on fire, in part because wealthy people from across the region are calling it home. The harbor is crammed full of freighters, some as floating oil storage waiting for higher prices, others on the way to Europe or the U.S. with goods from Asian factories. Unilever held its global board meeting in Singapore this week as a means of showcasing its growth markets in India and Southeast Asia. The Changi airport is jammed as the region emerges from COVID.
2. The Mass-Class Divide in Japan—A little known statistic that was revealed yesterday when I spoke at the GLOBIS Business School in Tokyo, 40 percent of Japanese workers are part-timers, a development from the crisis of 30 years ago, implying that they have no social benefits or safety net. The ¼«ÀÖÊÓƵ Trust Barometer finds a record gap of 21 points between the affluent and lower income attitudes towards the four institutions of Media, Government, NGOs and Business. In fact, the gap is largest for Business, a record 28 points.
3. Power Moving South—China has been the story for the past two decades. Now the action is in Southeast Asia, notably Indonesia, Vietnam and Malaysia, with a rising middle class and a young population giving a demographic dividend. The big horse to be counted on for significant growth is India. Korean and Japanese companies are changing their supply chains to deemphasize China, a decision that is at once based on cost (Chinese wage escalation) as well as geopolitical risk.
4. Sustainability as Competitive Advantage—Japan is a leader on sustainable energy, including burning ammonia as fuel. Manufacturers are pressuring government for low cost and reliable energy. Japan is funding green ammonia projects in the Middle East and a vast green supply chain across the Asian region. And nuclear energy is back on the plate for the country, a decade after Fukushima.
5. Friend-shoring—Asian companies are looking to source in or partner with friendly nations. The Japanese Government is going to subsidize American or European companies that invest in semiconductor manufacturing in Japan; a $9 billion subsidy fund has been established. The Japanese economics minister also said that Japan would honor export restrictions on technology goods to China.
6. Japanese Companies Exit Russia—Half of the public companies that had been in Russia are now out. The latest to go is Dentsu, selling its operations to local management last week.
7. Tokyo Exodus—People are moving out of the capital and into the suburbs to save on rent, despite a two-hour train ride for some. Citizens are expecting a rise in food and energy costs though inflation has been kept to three percent through government edict. There is strong resistance to higher prices, but this can’t be sustained as margins get squeezed.
8. Some Consumers Continue to Spend Despite Impending Recession—Consumers were in high end retailers, buying not just looking. Price points are higher than in the U.S. by 25 percent.
9. Views of the U.S.—America sees itself as a benevolent leader of the world. The rest of the world sees a U.S. bent on de-coupling from China, with new inbound investment from Europe and the U.S. down by over half. The U.S. is also more aggressive in diplomacy, trying to make Asian countries choose sides, China or America.
10. ESG—We must consider the starting point of Asian companies in looking at ESG rankings. The focus to date has been on environment. The next phase will see a focus on the S, in particular on gender pay gaps and ending slave labor.

It has been three years since I have been to Asia due to COVID travel bans. The game has changed profoundly in that period. The Chinese have lost momentum, though they remain the only nation with a complete supply chain replete with steel, chemicals, plastics, excellent logistics and a giant consumer market. India is the new challenger, hungry for manufacturing, top class in technology but lacking a national rail and highway system and with challenging state/federal relations (one executive told me it is cheaper to ship a product from Calcutta to London than Calcutta to Mumbai due to state taxes). Singapore is the brain of the region, a combination of London and Zurich, with high standard of living and superb professional class. Japan is the sleeping giant, with the lowest trust of its population in institutions, a relic of Fukushima, but with incredible potential in sustainability and technology. As I walked around the Meiji Shrine this morning, pausing to watch a marriage procession, I was touched by the reverence for tradition, the commitment to preservation of natural beauty and the centrality of family.

Richard ¼«ÀÖÊÓƵ is CEO.