If you want to your business internationally and break into new markets, Asia should be an option high on your list for consideration, says Siddharth Shankar
With 50 countries, categorised into five major markets – China, the Indian Subcontinent, ASEAN countries, the Middle East (GCC) and East Asia – Asia is currently experiencing rapid economic and population growth. It has the fastest growing middle class in the world, and more billionaires and millionaires than any other continent.
You could probably be forgiven for thinking that the capital city in each of these locations is the best place to launch a new business. But sadly, it is not that simple. Not all capitals work.
To give a European example of what I mean – its notoriously difficult to do business in Rome. It might be the heart of the country’s political and religious institutions, but if you were going to launch a fashion business in Italy you would bypass Rome and head straight for Milan with all its design and fashion credentials and networks.
It’s the same in each of the five major markets in Asia. The capital cities may be the perfect place to build political alliances, but that doesn’t mean they are the best place from which to launch a particular product or brand. Often, looking beyond the capital city and targeting smaller cities and even towns can deliver better results.
You may not have heard of places like Tangshan, and Sanya (pictured), in China – but they are exactly the sort of city worth considering. Their economies are thriving due to huge local wealth or large tourist attractions. Both cities have very effective infrastructure and would deliver excellent results for the launch of brands from certain industries.
Deciding the city from which to launch is not about choosing one of the biggest cities either. Do your research – think about the cultural identity and interests of your target customer and work out where they are most likely to be based. It’s the only way to find the perfect city with the best fit and consumer base for your product.
Before focussing in on which city from which to launch its worth spending some time reflecting on the bigger picture. Each of the five major markets presents exciting growth opportunities for UK businesses. The UK already has a good image in China for trade and education relationships. India has a population almost equal to that of China but a GDP growth rate of almost double China’s. Looking to East Asia, Japan is the world’s third largest economy and already considers the UK an ally, whilst Korea has one of the world’s fastest growing economies.
Meanwhile the ASEAN Region – the Association of South-East Asian Nations, including Singapore, Malaysia, Thailand, Vietnam and Indonesia – has a combined population of 640 million people and an economy worth over $2.8 trillion, with increasingly open internal trade. Of the ten members of ASEAN, four are former British colonies and three of those are members of the Commonwealth. This area is a major trade route for global business.
There are big profits to be made in Asia – so how can international businesses break into the Asian marketplace with their products? Here are six top tips:
Follow demand
Where is there already a market for your product? Heavy industrial products are valued across emerging markets like India, China, Thailand and Cambodia, where huge infrastructure construction is needed and where the country’s own heavy industry manufacturing is relatively weak. Energy products, ranging from traditional fossil industry to all types of renewable energy equipment, are very competitive in ASEAN countries. Luxury goods are, as ever, popular in GCC countries and Japan. The demand for convenient, well-packed food products has spiked in recent years. The appetite for traditional UK beverages like whisky and gin has reached a whole new level in countries like China and India.
Understand your target market
Having an in-depth understanding of the local market is the key. This includes gaining an understanding of local culture, legal restrictions and regulations, language barriers (and finding reliable translators if necessary) and setting up a local network of individuals and organisations you’ll need to work with.
Don’t sweat the distance
Exporting to Asia is becoming more straightforward. The fast-improving infrastructure in many Asian countries, coupled with the cheap warehousing and logistical costs mean it’s more and more feasible to trade there. The lower cost of labour in Asia also allows western businesses to operate in these markets at a reduced cost – minimising the risk normally associated with entering a new export market. Adoption of IFRS and Corporate governance codes by many countries across Asia is also making the process easier.
One size doesn’t fit all
PR and marketing activity needs to be tailored to the specific region in Asia you’re exporting to – it isn’t enough to target Asia as a whole. The lineage and heritage of British goods make them attractive to Asian consumers, so this element can be very important for branding British products for Asia. This is partly due to the fact that around half of Asian countries were previously British colonies. However, the key to success is in understanding each local market is separate and treating it as such. A Korean house wife’s shopping habits are completely different to a Chinese counterpart, so seeking advice on this from a local partner is key.
Smaller brands are gaining traction too
Brands like Burberry, MG motors, Rolls Royce and Dyson are incredibly successful in China, India and ASEAN countries. But Asian markets are now starting to recognize smaller brands too. The reasons behind this are more complex than a mere show of wealth, which is frequently behind purchases of the bigger brands. A big brand product, such as LV or Coach, that people purchase and show to friends and colleagues might demonstrate the owner is rich. But a British brand, even one which is not well known, might be a badge product that conveys that the owner has a certain taste. This is the new generation Asian middle-class consumers’ mind set and its key to tap into this as a smaller brand.
Don’t go it alone
Many markets in Asia have a tendency to favour their own national companies over foreign companies – so it might be an idea to partner up with an Asian company. Make sure you pick a knowledgeable and trustworthy company. Avoid signing up with any partners without carrying out thorough background research and providing clear and enforceable paperwork and responsibilities. The methods of conducting business in Asia are very different, so it’s important to be as clear as possible before you sign on the dotted line.
Siddharth Shankar is a leading expert in trading with Asia and CEO of Tails Trading, an innovative new solution helping UK SMEs to export their goods to Asia. Visit www.tailstrading.com to find out more.
