McKinsey Future of Asia

“Over the past few years, many media headlines have frequently highlighted debates around decoupling and deglobalization. And events in 2025 actually added further fuel to these discussions, including a once in a century tariff shock. But our view is that, what's happening right now is not necessarily deglobalization, but rather a reconfiguration of global trade network. Even last year, global trade still managed to grow, and I think that's an important signal pointing to reconfiguration, not decoupling.”

“Announced investments from, let's say, western multinationals into China have essentially collapsed. So announced FDI greenfield FDI new projects into China have dropped by about 70%. Whereas at the same time, announced projects within advanced economies have actually increased. And that and projects going into The United States essentially doubled.”

“Let me introduce the way that the these deals are actually getting made is a little bit different. And what's happening is what we call the rise of mega deals. So what do we mean by this? Deals that are worth over $1,000,000,000 So a single project, let's say a single factory or a single line that costs over $1,000,000,000 to make, these we call mega deals. And what we've essentially seen is these mega deals now make up about half of all announced investment values. And this is up. Okay? So it used to be something like 30% before the pandemic. Now we're up to 50%.”

“If you go deeper on China, China has undergone a a notable shift from being a major investee of FDI to a prominent investor of FDI, especially in future shipping industries. So compared to pre COVID level, yes, you know, the the inflows declined, but China actually held up its outbound investment. And those outbound investments are increasingly going to Europe, The Middle East, and and Latin America.”

“India stands out for for its, balancing act, which is very interesting. So FDI inflows into India have grown roughly in line with the other global average. But then what was interesting is how balanced those inflows are. So so about one third of FDI came from North America, another one third from Europe, and another one third from Advanced Asia.”

“What we saw was that there's about a 100 economies for which three multinationals, just three multinationals, drive over half of all investment into the region, into that specific country, which essentially means that, you know, it it just takes one or two projects not going according to plan. And essentially a huge chunk of the the investment potential is lost.”

“In about 65% of, cases, FDI actually led to meaningful improvement in in terms of, export, performances. And those successful cases share three common patterns. Number one is that, you know, these, successful, sector and country, cases in those economies. You know, they actually became well integrated into global or regional value chains, building very strong upstream or downstream, linkages. Second condition is that, they strengthen the, the infrastructure in order to translate FDI into productivity gains. And the third condition is, you know, those economies, you know, they use FDI as seed capital and then catalyzed, domestic investment.”

“If I try to encapsulate it, you know, as folks are digging for gold, they're they're gonna need shovels. So, you know, if you're a provider of shovels, it's a good time to be in business. And what do we mean by this? As these mega projects play out, the attention naturally gets drawn to the project itself. But we always have to think that there's an ecosystem around it of suppliers of inputs that those big projects need. So, for example, a huge semiconductor fab is created somewhere in the world. That's gonna need the chemicals. That's gonna need the machinery. That's gonna frankly need, you know, the catering services for the canteen.”

“if you look at just the incidence of type 2 diabetes in Asia between 1990 and 2020, that's almost 2x in Asia now. So just the number of people who have type 2 diabetes. By the way, interestingly, if you age standardized mortality rates and the incidence of deaths happening due to metabolic diseases, that's pretty much the same. So we are not in the middle of some slow change. We are actually in the middle of a fairly significant metabolic health issue in Asia.”

“Children who are obese and overweight is an even more alarming statistic. And that's been increasing dramatically. Again, according to some statistic, between 2010 and 2020, the childhood obesity rates in Asia have gone up by 100, 120%. This is actually quite a big issue.”

“GLP-1s, to your question, is a pharmaceutical way to handle it. And so what GLP-1s are are essentially drugs which mimic an internal hormone in the body. So when we eat certain substances, most food actually, our intestines secrete GLP-1s, glucagon-like peptides. And they work by having three different effects. So they give one signal which goes to the pancreas and increases insulin secretion, decreases glucagon secretion. Second, GLP-1s decrease the emptying of the stomach. And then third, they actually have an impact on the appetite centers in the brain and hypothalamus and decrease appetite.”

“if you want to put some numbers to it in terms of the economic impact, we've quantified with the McKinsey Health Institute that in Asia alone, this comes down to about a trillion dollars in cost for governments just by obesity. If you take the metabolic syndrome at large and all the consequences that it has for people and families, we're speaking about a potential uplift of two and a half trillion dollars if that were to be properly addressed.”

“Sleep is a big part of metabolic health. If you don't sleep well, by the way, one week of deprived sleep can put you into essentially a diabetic state in terms of sugar management. Diabetes is not only, okay, now I have diabetes, I know medically that's how it works, but impaired glucose metabolism can be the result in three days of poor sleep. Your body would not process glucose the same way.”

“if you take just the traditional ways of thinking, many societies inherently had prevention at the core of medical science. If you take Chinese traditional medicine, Ayurveda in India, many other mechanisms. Even very simple dictums, and I was reading the other day, there's a well-known Japanese dictum. I would say it in Japanese and I'm sure I wouldn't pronounce it right, but it's hara hachi bu, which is essentially stomach 80% full, which is a very simple idea to say, look, keep portion control as you actually think about what you're eating.”

“one example I would love to mention is relatively recent still, but what Abu Dhabi is doing. They have now institutionalized a healthy living unit whose job it is to take care of the cross-functional coordination of initiatives, and I think right now they have over 20 initiatives. They're not just in health care, they're in education, they're in infrastructure, in municipalities, sports, a holistic portfolio of initiative that are evidence-based. And hopefully, the promise is, this is going to be maybe the first place where we manage to sustainably revert the trend.”

“Number one, prevention is better than cure. Number two, it's a very, very personal and individual topic, so people should take responsibility for it. You can listen to all the advice, but I like Pancho's point of, take the time to go on the journey yourself, experience some of the stuff which works for you or not. The best habits are those you can sustain, so try to think about what works for you and what mechanism works best for you.”

“did we find some things that really popped this year that we, for example, added agentic AI? Again, we don't think this is just going to be a one-year thing, but I think all of us have been talking about agents a lot quite recently. And we think we're just starting on that journey and many of our clients are just starting on that journey. So certainly while AI has been with us all the years that we've been studying trends, this year the idea of agents, this idea of foundation models acting in the world, doing things that are more autonomous and more multi-step, that's something that clearly came to the surface here as well.”

“when we think about cloud and edge computing, five or six years ago, we spent a lot of time thinking about it. One thing I'd like to say is those scientists and engineers have not stopped thinking about innovation. For example, as we think about GPU-based clouds, AI-based data centers, there's some really interesting advances in liquid cooling. You might say, well, why is that a hidden gem? Well, when you start to have the number of data center growth that we're anticipating, I believe data centers are growing 30 percent year-on-year. I mean, it's an astounding trend of demand, especially if I just think these AI systems are hungry hippos. They need a lot of compute power. That's really hot.”

“Lareina, I live in San Francisco, and this is a little bit about the way the technology trends feel. You sort of have to look back because things become so normalized so easily. So there are a bunch of autonomous vehicles driving around San Francisco, and it used to be like, wow, that car has no driver, right? And I've told this story before, but our young daughter saw a taxi go by, and I had to explain to her what a taxi was. And she said, oh, that's like a Waymo with a driver.”

“the super app ecosystem nature of Asia. So if you look at China, which has got a large number of super apps, if you look at Korea, which has got a super app, if you look at Indonesia or India with their own versions of super apps, then these are actually driving very significant consumer behavior given the nature of demographics of Asia. The second thing is ultimately AI comes down to, and both Michael and Lareina spoke about this, the chips and the semiconductor stack. Majority of the stack is being built in Asia.”

“this week, I spent doing store visits and distribution. And part of the thing which I found very useful is that, you know, it makes it very easy to connect with people. The live translation capabilities, like if I do this a decade ago, then I would always be accompanied with the translator, now I'm just accompanied with my phone with super cool translation abilities. And I'm able to connect with the nations who don't speak English. And I'm able to understand essentially how the business process is running, with instructions which are all written in Bahasa, as same as in India.”

“if you look at the future of bioengineering, for instance. Now, by the way, that's not just life sciences companies, it's not just pharma and cynical companies. I mean, the amazing thing is when you can program life, you can start to create new materials. And so what does that mean? Everything from apparel, artificial spider silk in order to create fabrics, to agriculture, again, incredibly important all across Asia, for instance, and whether or not it's being able to develop crops that can deal with climate change and or just increase the nutrition and as well as the taste of different crops.”

“For every generation of new frontier technologies, as hard and as fun as it is to talk about the speeds and feeds and all the technology, almost 80% of the challenge is on the organizational side. It is around change management. It is around aligning for digital, for AI. We've talked about rewiring organizations, and it is matching your technology strategy to your corporate strategy. It's having the right talent in place. So the tech stack is important, having the data is important. But then how do you change your incentives? How do you change your culture? How do you change the way you operate?”

“let me take Agent EKIS as an example. It increases complexity in two levels. It increases essentially technical complexity. How do I manage essentially accuracy of a process with multiple agents interacting with each other, each of which is probabilistic and a 1% error may propagate to a 25% error at the end of the process? So how do I organize for this, which is the technical complexity? The second complexity is organizational complexity. We are very excited about agents, but what does the organization structure of the future look like? Like, do we have agents who are acting as employees working together with humans?”

“Don't wait on the sidelines. A lot of times business leaders say, wow, that's really interesting. Maybe I'll watch someone else run that play first, and then I'll be a fast follow. Quite frankly, there have been many technology eras where that is absolutely and has proven out to be the right thing to do. But in this instance, over the last couple of years, really since Chat GPT was released, I don't think you can wait on the sidelines. So you just got to get in the game and run the ball, and you got to compete to win.”

“I came across a biotech entrepreneur from Ireland who basically said, why don't you join me and start this company in India? And I thought, why not? I have nothing to lose, so let me give it a go. I was interested in biotechnology, and I realized that India had no biotech industry. And I thought, wow. I think this is something I need to do for India. And that's how I ventured into biotech and started with making enzymes.”

“The other one is also about making a difference to health care now that I'm on this path of affordable access to life saving medicines. That to me is a very, very important and powerful purpose that I am pursuing because I really believe that, yes, we are doing wonderful things with science and coming up with wonderful new drugs and therapies, but how many people can afford it around the world? I am based in India, which I'm glad I am because I realized how little access patients in India have to new therapies and drugs.”

“Now the VCs are not doing their bit because I was just telling, the government today. I said because our regulatory pathways are so ad hoc and unpredictable. So no VC wants to invest in a good idea or a new idea because they don't know how long it will take to develop that idea and shape that idea and take it to the market. In India, we are stuck at just the early stage of government funding, and we are unable to move the wheel, if you know what I mean. So I think we really need to focus on how do we unleash this innovation potential by bringing about regulatory reforms.”

“First and foremost, I realized that it's easier to develop people when they come fresh from universities and shape their minds rather than try and take very experienced talent from the same sector or the industry because they come with a mindset. They come with a set of this is how we did it there kind of a attitude. And when you're trying to develop a very innovative culture, they find it much more difficult to adapt to what you're trying to do than, say, people who come from universities with an open mind.”

“I think it's really that problem solving culture, Gautam. If you give up a problem to an ordinary person with who doesn't come from great credentials, but you give them something which they can crack, something they can solve, they become far more confident. They have a sense of achievement, and then they take on bigger and bigger problems. That's what makes them extraordinary, finally.”

“Then the biggest risk I took was I said Mylan said, why don't we form a JV? And I said, no. I don't like JVs. Let me buy you out. And that was the biggest risk I took. I said, let me buy you out. And I made the biggest acquisition in Indian pharmaceutical history because nobody has acquired anything for $3,300,000,000. And today, we are already seeing that we are in a position to very comfortably pay down that acquisition debt that we have embarked on.”

“First and foremost, I really think, Gautam, everything is about short term. We all keep talking about long term, but we don't know what is in store in the long term. We just don't know how this business will look in ten years' time. So I keep focusing on five years and say, look. Let's be the best at what we can do over five years. And as we approach the end of that five year period, we'll know what the next five years is going to look like.”

“But I found for the first time, there was a researcher at Sloan Kettering who's using AI to look at tumor morphology in scans before and after treatment and then using AI to see who responded well, who did not respond well. And if now a person comes with this to this, scan with the where you know what the tumor morphology is like, you can actually decide what treatment that patient should get. Now these are the uses of AI which I find fascinating. Not just, oh, I can read out your scan in five minutes and give it to you.”

“I believe that the wealth that you create is not for yourself. You have to also share it with communities, with society, in whichever way you want to. That's your obligation, your prerogative. But don't just hoard that wealth for yourself. I think that wealth goes much further when you spread it in big societal impact.”