APAC tech maturity will rise rapidly in 2025: Forrester Research

In 2025, APAC business leaders will meet strong demand for localized solutions from both regulators and customers. A potent combination of strong technical capabilities, growing technology spending, and local tech providers stepping up with region-focused solutions will help. 

GenAI will prove a great global leveler as APAC firms invest heavily in data, insights, automation, AI, and security. In parallel, the region’s customers will continue to evolve and ask more of their brands, demanding that brands both protect their privacy and provide personalized experiences. Forrester predicts that, in 2025:

* 60% of APAC firms will localize AI with regionally-trained language models
Regional factors, including diverse customer needs, strict regulation, and linguistic complexity, will drive AI leaders in APAC to reshape their innovation strategies. Forrester predicts that 60% of firms and governments in major markets like China, India, Indonesia, Japan, and South Korea will implement locally-developed large language models (LLMs) alongside global models to address critical needs in domains like financial inclusion, government services, education, and healthcare. 

In contrast to their US counterparts, which rely heavily on public cloud for AI, 90% of the large enterprises in the Greater China region will adopt private cloud as part of a hybrid strategy for AI infrastructure. Geopolitical tensions, particularly between China and the US, will accelerate the shift toward regional AI investments, with China and ASEAN nations recalibrating their AI focus. 

Local AI chipsets will play a growing role in this ecosystem, powering more than 5% of all AI computing in China by the end of the year, marking a significant step in the region’s push toward technology self-sufficiency.

* 20% of B2B brands will use synthetic audience data to boost engagement 
In Forrester’s Marketing Survey, 2024, B2B marketers in APAC most often cite obtaining customer data in indirect channels as a challenge to implementing marketing programs and campaigns. The inability to collect and analyze buyer data hinders marketers’ ability to optimize engagement strategies and marketing program performance. 

While firms have been racing to develop first-party data capabilities and datasets, navigating privacy laws across multiple countries produces costly and complex data management and usage environments. 

Synthetic audience data offers a solution by generating statistically similar data that mimics seed datasets, enabling brands to build lookalike audiences faster and at a potentially lower cost than direct collection. Crucially, synthetic data is not subject to the same stringent privacy regulations as true audience data, making it an ideal tool for firms operating across markets with different data protection laws.

* A common APAC AI legislative framework will remain a distant dream
Unlike the EU’s unified and comprehensive approach to AI legislation, APAC has a fragmented landscape of AI guidelines and legal frameworks. Although many countries share core principles — protecting citizens from harm caused by AI; ensuring data privacy, security, and traceability; and balancing AI-driven innovation with ethical safeguards — the ways that they implement those principles differ significantly. 

Singapore has established a mature set of national guidelines and tools that promote responsible AI use, while supporting innovation. In contrast, China has enacted specific laws that target algorithmic misconduct, such as deepfakes, and India relies on existing criminal laws for the same. 

Efforts to create a regional framework, such as 2024’s ASEAN Guide on AI Governance and Ethics, are steps in the right direction. However, these initiatives are nascent and do not yet signal broader convergence, so APAC firms must monitor and invest in compliance on a country-by-country basis as AI adoption continues to grow.

* One in five APAC firms will make measurement of digital performance a top priority 
In Forrester’s Digital Business Strategy Survey, 2024, only 40% of APAC digital strategy business decision-makers said that their firm uses KPIs to measure the success of digital efforts. Despite strong digital budgets for 2025, many APAC firms lack the capabilities to link customer, product, operational, and performance metrics to financial KPIs that reflect growth. 

To address this gap, leading APAC firms will invest in measurement intelligence technologies that capture, analyze, and connect digital customer interactions and operational data to enterprise financial outcomes. These firms will set up cross-functional task forces that include marketing, customer experience, digital, tech, data, and analytics to collaborate with strategy teams on optimizing measurement practices. 

But, digital leaders must beware: While many enterprise software vendors will promote genAI-powered dashboard and reporting capabilities as quick fixes, most will fall short. Vendors often underestimate the complexity of collecting, integrating, analyzing, and contextualizing data across multiple platforms and functions at large organizations.

* One-quarter of consumer brands will land in a price war and struggle to maintain loyalty
As economic growth slows in some parts of APAC, rising inflation and price sensitivity among consumers shape the competitive landscape. 

Forrester’s 2024 data shows that 40% of online adults in Singapore and 32% in Australia say that they tried a new brand because it was cheaper than another. Price wars are happening across APAC, from groceries in Australia to SUVs in India. In China, Apple, Starbucks, and Tesla are forced to offer discounts to compete with local brands despite expressing no interest in price wars. 

With the region’s economic growth projected to slow modestly to 4.3% in 2025, more firms will adopt competitive pricing strategies as they strive to maintain market share in a slower-growing economy. To win and retain customers, brands should commit to going beyond low-price approaches to deliver more dimensions of value.

Summary
In 2025, AI-driven business initiatives will continue to force firms in Asia Pacific to improve their technology maturity. As firms come out of the trance induced by GenAI in 2024, they will be hit hard by region-specific realities in the form of tougher AI and data privacy regulations, limited data and analytics maturity, and rapidly evolving customer demands. 

Leading firms will continue to take a hard look at their digital investments and monitor and invest in improving their performance through focused data and AI investments.

Source: Forrester Research, USA & Australia.