There is a lot of discussion amongst the media, business and government about the need to “go to Asia”, however it is often difficult for business owners and executives to know what is realistic and achievable when exploring Asian markets, and even more difficult to know which market to focus your attention, time and financial resources. Every day there are articles in the news media about the importance of Asia to the Australian economy, and regularly stories of the huge potential for Australian products in Asia. All of this is very true, however, its important to ask the question:
Where is the best market opportunity for my company, my product/service mix, and what is a reasonable timeline for achieving results?
Another way to look at this question would be to ask:
Where are the low hanging fruit in Asia, where my company might be able to generate short-term revenues and profits from which to grow into further markets in Asia?
Many small and medium sized companies are squeezed for time and financial resources, with which to make strategic decisions about which markets in Asia are the best fit for their company and product/service mix. As a consequence, business leaders are often guided by key indicators such as: mainstream media, fellow businesses who have had success, and importantly where there is government support or encouragement for exploring a particular market (ie. China, India, Singapore or Japan). The problem with many of these indicators are that they may not reflect the market conditions relevant to the product mix with which you have to offer.
The media are mostly focused upon good or bad news stories and so don’t always report on the run of the mill opportunities and failures that confront businesses in Asia on a daily basis. Similarly many of the success stories have been working hard in these Asian markets for many years, and have overcome many of the pitfalls and mistakes that confront every business operating in new markets. Rarely are the tales of hard luck, false leads, un-retrieved sunk costs, and dead ends discussed in the media, however if you ask every successful business in Asia, they will regale you of their stories of failures and misadventure. Its “part and parcel” of doing business in unfamiliar markets.
Similarly there is a role for government to play in supporting and encouraging business to explore market opportunities in Asia. Asia is home to more than 3 billion people and is the fastest emerging consumer market in the world. Governments support and encourage businesses to explore export opportunities because exports create and support jobs. So if government can help encourage you to develop export markets then your business might grow beyond the domestic market constraints into expanding markets, requiring you to employ more people, ultimately supporting the domestic economy. The caution business leaders need to heed is that governments are not specialists in your business, they don’t specifically look to the viability of your product mix in a particular market, and can in many instances overlook practical business factors which might mean that there is lower opportunity for your company and product/service mix in one market over another.
Its therefore important that any business looking to explore market opportunities in Asia think about the range of factors that will impact on your success. There are a number of factors that can impact upon your likely success and competitiveness in a specific market including:
- Competitive pressures both within your home market, but also in new international markets,
- Price segment may be substantially different to your home market
- Tariff rates might place a price burden upon product
- The regulatory environment might make it practically impossible to export your product to a market, despite there being large insatiable demand
- Other non-tariff barriers that for a range of reasons make it practically impossible to enter the market in the short term
- Logistics or transportation costs might make your product uncompetitive
- The number of competitors in a market
- Distribution channels available
- The number of consumers with capacity to pay for your product
- Cultural factors which may or may not favour your product
Its important to remember that markets in Asia are diverse, and in some countries there is market diversity throughout, which might make one region or city attractive, and another region or city within the same country unattractive. Good examples of this include China and India, where each region, province, and city can have markedly different characteristics from distribution channels, capacity to pay, and regulatory factors. These challenges mean that it is critically important for any business looking to explore opportunities in Asia to understand what they are getting into, what they want to achieve, and potentially how they think they can enter the market.
I have witnessed firsthand the benefits of taking a strategic approach to international market selection and take a macro or broad view of international markets, not solely focusing on one market, which may not necessarily be the highest priority market for each region, product or service category. If you want to take the low hanging fruit, and create a Strategically analysis and assess the opportunities for your company, products and services in Asia, select markets based upon this analysis and develop a market entry strategy to realise the opportunities. If you do this, you will be best placed to realise the opportunities rapidly emerging throughout Asia.