Asia market entry strategy
Designing a winning market entry strategy is one of the first steps to building a business presence in Asia, but it can be challenging.
It involves systematically weighing up all the options, choosing right mode of entry to match business objectives and road testing and perfecting your plan.
Asialink Business Manager of Partnerships and Development, Nicholas Henderson, spent more than 17 years in China assisting major brands to break into the market or grow their presence.
This included working with iconic furniture brand IKEA to establish its first two stores in Shanghai and Beijing, and assisting organisations ranging from Alibaba Group to Bank of Shanghai, Daimler Benz, CITIC Private Equity, Mengniu, Yintai Group, the Shanghai government, and others.
"Having a considered, well-researched and detailed market entry strategy is essential if you want to establish and build a sustainable presence in any Asian market," he says.
Before launching a product or service in Asia, here are several practical insights to help new ventures take root and flourish.
Assess the opportunities
Henderson suggests taking time to understand the commercial market, industry structure and regulatory environment, as well as the competitor landscape.
"There is a lot of talk these days about the 'Asian opportunity' but it is important to carefully analyse how this relates to your business – Put your target market under the microscope to study their habits, wants and needs, and de-pack the opportunities in relation to the country, market and risks and volatilities."
"Of the companies I worked with in China, the businesses that took this approach were more successful in refining their value proposition and understanding how to localize their product or service offering," he says.
One-size does not fit all
Just like buying a new car, it's important to choose the perfect fit for your requirements.
"There is no single business structure that holds the key to unlocking opportunities in Asia's diverse markets," Henderson says.
"Multiple modes of entry are available and the one you choose should fundamentally be supported by your company's business objectives.
"Knowing what you'd like to achieve in a particular market will help determine the entry vehicles that can help take you there," Henderson says.
For example, in a complex and dynamic market like China, multiple entry channels and alternative business models are available. Australian companies can choose sales channel or other strategic partnerships or to establish a representative offices, a wholly foreign owned enterprises, or a joint ventures (of which there are two types – equity joint ventures and cooperative or contractual joint ventures).
In Korea, an Australian business may set up an entity in the form of a subsidiary, a joint stock company (incorporated by one or more promoters), or a limited liability company.
"These traditional market entry options are of course increasingly complemented by new market entry options and ways of selling a product or service, such as e-commerce and online sales," Henderson adds.
Test and perfect your plan
Once a business has identified its preferred model, adequately testing your assumptions can help ensure that the model works and will be compatible with local laws, accounting, tax and other commercial requirements.
"Even if you are expanding or adapting an existing business strategy, the strategy will still need tweaking to take account of the intricacies and diversity in specific Asian markets," Henderson says.
The success story of The Honeycombers, an Australian-run online lifestyle information hub, demonstrates understanding and focussing on a clear market, bigger things can follow.
The Honeycombers found a clear demographic to market to, then built on this experience to expand into other markets in the region. The company started in Singapore with a low-cost setup, involving a virtual office and a small staff, reducing the risk inherent in any new enterprise. It was then able to scale up over time and expand into Jakarta and Bali.
Get the mechanics right (implementation)
"It also comes down to getting the mechanics and implementation right," Henderson says.
He suggests:
- Creating a long-term plan for implementing your market entry strategy that effectively harnesses your organisation's resources
- Identifying key timelines and milestones for business development
- Taking a phased approach
- Assembling a winning project management team