Millennial moment: Coming of age of the world’s big spenders

Digital age: Millennials are tech-savvy as their roots are steeped in the Internet and mobile.

WHO are the Millennials?

I count them as persons born between 1981 and 1996.

So, they come of age today at between 22 and 37 years old. Sure, they follow hot on the heels of Generation X (the previous generation, born: 1965-1980) and the “Baby Boomers (born: 1944-1962).” I consider this as the “Millennial moment,” marking their arrival as the dominant generation of the post-financial crisis era.

Millennials are big news – and with good reason: it is an exclusive club of about 2.0 billion people, accounting for nearly 25% of the world’s population. Indeed, they comprise the world’s most numerous generation. A dominant cohort of the post-financial crisis, with spending power today to match.

Most of the Millennials are in Asia. They vastly outnumber those in Europe and US combined. Millennials today total 400 million in China, more than five times in US; India has a further 410 million.

By 2020, Pew Research projects them to make up in excess of one-third of the global workforce. This is a unique consumer generation, whose life choices, earning abilities, and future outlook have been shaped by the 2007/08 recession.

While Millennials are only now becoming the largest generation in the US, globally, they first outnumbered Baby Boomers 26 years ago, and became the world’s most populous generation two years later, overtaking Gen X.

Doubtless, they will define and shape the direction of the global economy in the years ahead. Their coming of age represents not only a generational shift, but also one of ethnicity, diversity and nationality. About 43% of US Millennials are non-white. Asian Millennials are much more diverse.


Based on sheer numbers alone, the “Millennial moment” is (i) undoubtedly, more a story of developing nations, than the advertising stereotypes of affluent urban youth prevalent in Western media. Nearly nine in every 10 Millennials live in emerging economies. Chinese Millennials alone outnumber the entire population of the US.

(ii) The proportion in country populations varies considerably. Iran has the highest proportion at 32%. In Malaysia, it’s 29% and in China, 25%. In advanced economies, the proportion of Millennials is much lower, because of the combined effect of low birth and death rates.

(iii) While Millennials are on the cusp of outnumbering both Boomers and Gen X in the US, this is not the case in many other advanced economies. Millennials comprise 17% of the population in Japan, 18% in Spain, and in Italy, just below 17%.

(iv) In their 20s, they are nearly three times more likely to live in cities than their counterparts 30 years ago.

(v) Millennials are the most urbanised cohort of young adults ever. Young people have always had a propensity to live in cities. This effect is most noticeable in developing countries, where levels of urbanisation are generally lower – just over 50% of Millennials live in urban areas – but have increased rapidly over the past 30 years.

(vi) UK and China illustrate the divergence in urbanisation. From 1990 to 2010, more than 250 million people moved from the countryside to China’s cities. This mass migration had a huge impact on the lives of China’s Millennial generation: by their early 20s, Chinese Millennials are now nearly three times more likely to live in cities than their counterparts from 30 years ago. Over the same period in the UK, levels of urban living among the young have increased just three percentage points.

(vii) In the US, they are more likely to live at home than previous generations. But this is not the case elsewhere and may reflect US-specific factors, such as high levels of student indebtedness (which rose from US$300bil in 2004 to US$1.4 trillion in 2018). The average age of leaving home in the 28 EU countries has barely changed since 2002, and now stands at 27 years.

(viii) Attitudes on marriage are also changing – in US, compared with the Baby Boomers in 1984, marriage rates among Millennials have fallen by 65% for those aged 20-24, and by 50% for 25-29. In China, among those in their 20s, the rate is down 33% between 1982 and 2010.

(ix) Women in US, UK and China are all having fewer children and later in life – mean childbearing age globally is 27.85 years.

(x) By 2020, Millennials are forecast to make up 35% of the global workforce. They reached the same figure in the US two years ago, at the same time becoming the largest generation in the workforce. Young people are more likely to also prioritise job security above almost all else. Overall, UK Millennials are moving jobs less frequently than Gen X at the same age. The same is true in the US, where the length of job tenures have slightly increased, compared with Gen X.

(xi) Their shopping behaviour is also different from their parents, changing the retail landscape. And, (xii) Mistrust of big brands, with a preference for local products and go native; their affinity with technology are forcing change. Indeed, Millennials big spenders are expected to shake up the corporate world. Yet, they have not been very entrepreneurial.

Latest US data show that fewer than 4% of 30-year-olds say they are self-employed, against 5.4% of Gen X and 6.7% of Baby Boomers. Reason: aversion to risk. Also, fear of failure.

It is difficult to have a precise estimate of the total income of Millennials compared with other generations. Still, forecasts I have seen estimate their total spending power “to be greater than that of any other generation”. This spending will drastically change the global economy.

Millennials are coming of age at a time when households are formed, babies are born and money is spent on not just going out but also on settling down. As to be expected, their spending will reflect the depth to which technology is integrated into their lives and habits. It is worth noting that their oldest at 14 were teenagers at the time of Netscape’s IPO in 1995, as the Internet became a mass medium.

And, their youngest was 11 when the Apple iPhone was introduced in 2007. Their roots are steeped in the Internet and mobile. Grew up with the FAANGs: Facebook, Apple, Amazon, Nescape and Google. So, they are used to communicate not only online but buy online as well. That’s why big companies have scrambled to adjust to their tastes. They like small brands, local brands. Yes, they tend to go local, natural, original, organic and non-GMO.

New driving force

In US and Europe, however, many Millennials are getting disenchanted as they mature. Although they are well educated (many are graduates), their outlook remains pessimistic, largely as an accident of history. Older Millennials entered the workforce in mid-2000s, and many lost jobs after the 2007/08 crisis. They were also caught by rapid inflation in house prices as interest rates fell and remained low.

The milestones of leaving home, getting a job, marrying and having children are all delayed. It has spawned widespread distrust, both in organisations and individuals. A Pew study in 2014 found that only 19% of Millennials believed that others could be trusted, compared with 40% of Baby Boomers and 31% of Gen Xers. Millennials’ faith in institutions is extremely low. They are incredibly skeptical of governments and big corporations. Overall, they really feel insecure. They just don’t want to be part of the circle of production and consumption that enriches the elite 1%.

On the other hand, many Millennials have a different outlook, as they shrug “yolo” (i.e. you only live once) as they hop in an Uber (instead of the bus), eat smashed avocado on toast, and plan their next mini-break. Low-cost flying, Airbnb and Grab have made such services more affordable, benefitting Millennials and older generations alike.

Asia’s Millennials, the biggest generation of all, share many attributes with those in the West, but not their insecurity. They are confident of living better lives than their parents, particularly in China, where Baby Boomers lived in the midst of Maoism and the cultural revolution of the 1960s and 1970s. Even among the “tiger” economies that achieved rapid growth, families often saved all that they could.

Millennials in China, however, behave rather differently. They are more optimistic about the future and more willing to spend. McKinsey, the consultancy, describes young Chinese adults as “confident, independent minded, and determined to display it through consumption.”

This is having a profound effect on patterns of consumption. Emerging economies are home to 80% of Millennials. World Bank estimates that Chinese Millennials’ income will overtake US by 2035. Many are surprised by the degree to which Asia’s luxury consumers are joined by Millennials in the West. So much so the luxury industry is today tilted towards Asia. It reflects the taste of Millennials’ buying power – after all, their collective annual income is estimated by World Bank to exceed US$4 trillion by 2030.

Favourite gadgets

Like it or not, Trump’s looming tariffs on some of the hottest gadgets (mostly made in China) of the tech-savvy young (especially in US) are already beginning to bite. These range from e-cigarettes and vaporisers to e-scooters and “smart home” devices (like smart thermostats, Internet-connected LED lights) to disk drives, battery packs and navigation devices. These products’ biggest customers are Millennials and Gen Z (born: 1997-2012) since they all absorb tech-products faster.

Tariffs are passed on and their impact is going to affect mostly those who innovate. Already, gadget start-ups in Silicon Valley and in similar areas of Shenzhen and Shanghai are going to be adversely affected. Indeed, struggling start-ups run the risk of going under. Of concern is what’s still to come.

A second wave is expected to hit more precisely on companies in the IT space. Their impact will touch more products that directly affect consumers, especially Millennials, and bring about job losses. IT industry’s longstanding reliance on Chinese manufacturing would make it difficult to find alternatives. Extra duties on electronic components and parts would also make it more expensive to build products in US. In all, tech-savvy US and Chinese Millennials, in my view, are just being caught in the crossfire.

Millennial heirs

Accenture, the consultancy, estimates there will be a transfer of at least US$30 trillion in wealth from US Baby Boomers to Millennials during the next three decades. The move started with parental loans to young adults to buy homes, and will continue through death and inheritance.

My Harvard mentor Kenneth Galbraith wrote of the heirs of billionaire Vanderbilt that they “dispensed their wealth for frequent and unparalleled self-gratification, and very often did it with downright stupidity”. That stupidity seems to have been inherited by their children; and in Asia, the daughters of the chairman of Korean Air. Their bad, immature behaviour led eventually to the family losing the airline.

I should say it is difficult to curb the instinct to keep business in the family. Sure, it’s “very natural” for the son to take over Vivendi (French media group) that his father controls. It is equally natural for the son of David de Rothschild and of Wee Cho Yeow to take control of the family bank. It appears natural; but is it wise?

The Korean Air incident is but one bad example of the pitfalls of entitlement among Millennial heirs. The rarity of a founder’s children being fully qualified for the top job is what leads to most US family companies being put into the hands of professional executives after the founder’s death.

But although companies overseen by families (including many in Asia) often outperform those with a separation between investors and managers, the verdict on the next generation CEOs is brutal. “When descendants serve as CEOs, firm value is destroyed,” concluded one study of US Fortune 500 companies. There are, of course, many exceptions especially in Asia. What must scions do to beat the odds?

What then are we to do?

Over the past 25 years, I have served on the boards of a wide range of large family-controlled listed companies in Asean. All of them are highly successful, so far. To further expand and build dreams, the next generation of Millennials will have to work in the AI and robotics space. To really succeed they will need, in my view, a changed mindset; a different experience and a steadfast dedication to lead their companies.

As I see it, Millennials will need to (i) be humble – to be hardworking and being (and stay) quiet; (ii) be prepared to commit to excellence, working their way up within the family business – learning through a phase of being a subordinate will stand them in good stead. Their parents’ creative skills at risk taking will be hard to match. But external expertise can bring valuable experience and build self-respect; and (iii) be confident of their own strengths – competence adds to continuity.

Insiders and outsiders offer differing strengths – the latter has the skills and detachment to manage efficiently, but their loyalty will always be questioned. Not easy to combine both qualities – that’s why Chinese tradition has it that few family businesses are likely to endure to the third generation.

But when the Millennial heir has both, that’s powerful. Indeed, inheriting is easy. Managing it effectively is tough.

Former banker, Harvard-educated economist and British Chartered Scientist, Tan Sri Lin See-Yan is the author of The Global Economy in Turbulent Times (Wiley, 2015) and Turbulence in Trying Times (Pearson, 2017). Feedback is most welcome.

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