Globalization today looks very different from a decade ago. As we move in a multipolar era, power is increasingly dispersed, alliances are shifting and geopolitics are central considerations in business strategy. Regional trade blocks, supply chain recalibrations and strategic competition between major economies aren’t future trends — they define today’s reality.

In this context, Asia-Pacific’s globalization journey has entered a bold new era. The region is no longer competing on legacy strengths alone. While globalization remains a winning play, scale and cost efficiency are no longer sufficient.

Organizations in this region can move from being emerging players to global leaders by leveraging five key advantages. Two of these are rooted in legacy – cost and resources – while the other three enable leapfrogging – innovation, culture and capital and risk.

Cost remains the foundation of the region’s manufacturing strength. APAC accounts for over 75% of the world’s manufacturing labour force. While labour costs are rising, they remain about 80% lower than in the West. The workforce in APAC continues to gain experience and expertise. Large domestic markets allow APAC companies to buy in bulk, optimize resources and cut costs. As the landscape evolves, India and Vietnam are expanding their roles by leveraging cost advantages, while Japan, South Korea and China refine operations to sustain their edge.

For example, India’s Aurobindo Pharma has leveraged cost advantages and operational scale to become a major global supplier of generic medicines, including in key markets like the US and Europe. Positioning itself as a “pharma factory to the world,” Aurobindo has invested heavily in backward integration — producing its own active pharmaceutical ingredients — to reduce external dependency and enhance cost efficiency.

Resources have long made APAC vital to global markets. The region accounts for 18% of primary resource exports in 2020 and 52% of nonferrous metal exports in 2023. The region leads in critical materials. Australia is the top producer of lithium and iron ore, Indonesia of nickel and palm oil and China of aluminum, tin, lead and rare earths. Simultaneously, APAC companies are gaining greater control of global supply chains and deepening international partnerships – further strengthening their competitive edge.

One such example is Golden Agri-Resources, part of Indonesia’s Sinar Mas conglomerate. It has built a leading, responsibly managed agricultural enterprise through vertical integration that enables global supply. India’s Hindalco, meanwhile, is the world’s largest aluminium company by revenue. Its overseas subsidiary Novelis, which makes flat-rolled products, operates 52 manufacturing units in 10 countries. Their access to four leased coal mines and 27 bauxite mines reduces costs and boosts supply-chain efficiency.

Innovation in APAC is driven by rising R&D investment and growing patent activity. R&D spending in South Korea, Japan and China exceeds that of Europe as a share of GDP. Japan and South Korea, longtime leaders in electronics and automotives, are now joined by China and India. Similarly, there is expanding innovation in AI, fintech, medtech and green technologies. Higher education fuels this growth, with 75,000 new STEM PhDs graduating each year in China. Singapore supports workforce upskilling through its $1 billion annual SkillsFuture programme, with 37% of the population participating so far.

Taiwan Semiconductor Manufacturing Company (TSMC), with $90 billion in revenues, has secured market dominance by investing over $5 billion a year in R&D. Its innovation has pushed technological frontiers, reducing chip nodes from 7 nanometers to 3, a crucial competitive advantage.

Culture is becoming a powerful asset, as companies draw on heritage to drive global demand for entertainment, luxury goods, cuisine, beauty and more. K-pop, anime, Bollywood and Asian beauty products all have global appeal. According to UNESCO, APAC’s cultural exports grew 3.5x from 2004 to 2019. This is more than twice the growth seen in the West.

Muji, the global lifestyle brand from Japan’s Ryohin Keikaku, generated over $4 billion in revenue in 2023. Its minimalist aesthetics, shaped by designer Ikko Tanaka and rooted in Japanese cultural values, has fueled global expansion. South Korea’s Hybe, which manages leading K-pop bands, has built Weverse, a global fan platform that offers exclusive content and interactions. Its recent acquisition of US-based Ithaca Holdings further amplifies K-pop’s global cultural appeal.

Capital and risk perspectives in APAC have evolved from a domestic lens to a broader global outlook, fueled by increased capital availability and greater risk appetite. Once primarily led by Japan, cross-border investment is now widespread across the region with a lot of investment targeting midsized companies in emerging markets. APAC’s share of global greenfield FDI rose from 24% (2004-2012) to 31% (2013-2022) and its share in emerging markets grew from 32% to 42% in the same period.

Japan’s Daikin Industries has been a part of this global expansion. With a footprint in Japan, China, Southeast Asia, India, Europe and the USA, it is leveraging capital strength and high risk tolerance to grow its air conditioning business. India’s TVS Motor, likewise, has entered emerging markets in Africa, Latin America and Southeast Asia, addressing the distinct mobility needs of underserved customer segments.

As technological disruption and geopolitical shifts reshape markets, APAC organizations that leverage their advantages are adapting, leading and partnering with others to shape the next era of global commerce.

Organizations must adapt to local markets, maintain a competitive edge in technology, navigate a changing climate, embrace ESG principles and develop agile operating models. Leadership in this new era requires geopolitical muscle — the ability to anticipate change, plan for different scenarios and proactively manage risks. These are daunting challenges. For those that embrace them, however, the next decade offers an unprecedented opportunity to not only participate in globalization but to define it.