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Matthews Asia Funds is a dedicated Asia-only investment specialist in the US.

For one foreign student in Beijing in the 1980s, trying to withdraw US dollars from his own bank account was daunting. He had to bike 15 kilometres to a specific branch of the Bank of China, hidden in a small alleyway near the Forbidden City. And he always took a book, as the wait could take hours. Spending the money was equally challenging, due to the dearth of restaurants, theatres, bookshops or other entertainment in the city.

Like other foreigners with the freedom to travel throughout China, he spent most of his money going places. Beijing citizens, in contrast, had to spend most of their money on life's daily necessities.

One measure of wealth is how much people consume beyond their immediate material needs. In Asia's pre-industrial societies, the wealthy enjoyed the services of sedan chair bearers, rickshaw drivers, household staff, dancers and musicians, and hired guns (or more precisely, swords). Wealth, as exemplified by the consumption of services, was concentrated in the hands of the few - the landed gentry and imperial officials. (Or, as the broad populace might have said, local tyrants and feudal despots.)

The revolutionary movements that swept across Asia in the 19th and 20th centuries - from India to China to Japan and most places in between - crushed this old order. In its place grew a new one, in which strong central governments pursued growth through heavy investment and the mass production of material goods needed to supply the populace with a basic standard of living.

The success of these movements - whether communist, nationalist or royalist in nature - is evident in the growing number of Asians whose basic needs are now satisfied. While poverty is still pervasive in many parts of the continent, notably India, significant segments of the population have experienced a transformation from a life of subsistence to one of consumption beyond everyday needs.

Banks across the region, and even in China, not only offer deposit services, but wealth management. Automatic teller machines have replaced the interminably slow tellers and professional paper shufflers. And restaurants proliferate in China's cities. Modern media, from MP3 players to personal computers and online gaming, are increasingly popular.

Some Asian states have likewise begun transforming, establishing property rights and more formal legal systems. Autocracies changed into modern democracies in Japan, Korea and Taiwan. The basic duties of government - law, defence and the provision of public infrastructure - have largely been met.

Public demand, meanwhile, is turning to services - improved standards of healthcare, education, business support, and media and cultural services. At Matthews, we believe the evolving service sector is poised to experience above-average growth over the next decade. This view has already been borne out in Asia's wealthier societies - Japan, Korea and Taiwan. China, India and Indonesia, while currently less wealthy than the rest of Asia, are growing at rapid rates, and rising incomes are bound to drive the growth of services in those economies as well.

For investors, this raises new opportunities and challenges - many of which are hidden or underappreciated, as the commonly referenced equity indices tracked by most investors more strongly reflect the Asia of the past rather than the Asia of the future.

A generation ago, tourism and leisure were luxuries barely dreamed of in most parts of Asia, partly for economic reasons, but also largely because of geopolitical tension. During the cold war, for example, any first-time traveller from Korea had to attend the Korean Central Intelligence Agency's education session and was instructed not to contact North Koreans outside of Korea. And China's borders were sealed.

With the easing of tensions in the 1990s, Japan led the growth of outbound tourism from Asian countries. In the wake of its economic boom, the number of outbound Japanese travellers tripled from 5 million to 15 million between 1985 and 1995, peaking at 17.8 million in 2000. In Korea, full deregulation of tourism began in 1989 when the government lifted the de facto ban on international travel for non-business purposes, launching the overseas tourism industry.

Another catalyst for tourism and leisure was Korea's controversial adoption of the five-day work week in 2003. Until then, Koreans worked on Saturdays and were notorious for working long hours. After a lengthy debate in the National Assembly over the country�s competitiveness, the five-day rule was passed. Large employers and government-owned companies are now required to observe it, and all employers will have to comply by 2011.

This rule pumped new life into leisure industries in the former "hermit kingdom". Travel agencies and outdoor apparel makers have enjoyed strong, double-digit growth, even as domestic consumption remained relatively stable. Travel has long been popular with the retirement set, but today, people 40 and under account for more than half of Korea's outbound travellers. The majority of Korea's international travel is within Asia, while in the US, San Francisco, Los Angeles and Las Vegas are favourite destinations.

Outside of Korea, one dramatic change to tourism in the region has been in China's relaxed travel restrictions. Like other parts of China's economy, both outbound and inbound travel figures have been growing rapidly. With more discretionary income in their pockets, Chinese consumers are leading the surge in Asians packing their bags.

When most of the customers for Asia's manufactured goods were in Western countries, business services were a somewhat alien concept in the region. Asian companies made the products. Branding, marketing, logistics and distribution of those products were tasks left to their Western counterparts. With domestic consumption on the rise, however, this relationship has changed. As more and more companies, both foreign and domestic, seek to reach the Asian consumer, they will need marketing support, customer relationship management, logistics and other staples of a strong service infrastructure.