Planning for a future expansion into Asian markets? Export expert, Siddharth Shankar, has six pieces of advice to offer
There are big profits to be made for companies looking to expand their products into Asia, but what’s the best way to break into the Asian marketplace? Here are six top tips:
1. Follow demand
Where is there already a market for your product? Heavy industrial products are valued in countries, such as India, China, Thailand and Cambodia, where huge infrastructure construction is needed but where there is a shortfall in the country’s own heavy industry manufacturing. Energy products, relating to both fossil fuels and renewable energy, are very competitive in ASEAN countries. Luxury goods are popular in parts of the Middle East and Japan.
2. Understand your target market
Gaining an in-depth understanding of the local market is the key. This includes understanding local culture, legal restrictions and regulations, language barriers (finding reliable translators if necessary) and setting up a local network of individuals and organisations you’ll need to work with.
3. Don’t sweat the distance
Exporting to Asia is becoming more straightforward. The fast-improving infrastructure in many countries, coupled with cheap warehousing and logistical costs mean it’s more and more feasible to trade there. Lower labour costs also allow western businesses to operate in these markets with less of the risk normally associated with entering a new export market. Adoption of International Financial Reporting Standards (IFRS) and corporate governance codes by many countries across Asia is also making the exporting process easier.
4. One size doesn’t fit all
PR and marketing activity needs to be tailored to the specific region in Asia to which you’re exporting; it isn’t sufficient to target Asia as a whole. To take UK brands as an example, their products’ lineage and heritage can make them attractive to consumers in Asia, in part due to the historical legacy of British colonialism in the region.
However, the key to success is in understanding that each local market is separate and treating it as such. A Korean woman’s shopping habits are completely different to those of her Chinese counterpart, so seeking advice on this from a local partner is key.
5. Smaller brands are gaining traction too
Asian markets are now starting to recognise smaller brands too. Look, for example, at the recent success of UK brands such as Burberry, MG motors, Rolls-Royce and Dyson [the latter of which has even shifted its headquarters to Asia in the past year] in China, India and ASEAN countries.
The reasons behind this are more complex than a mere show of wealth. 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 other purchases might convey that the owner has a certain taste. This mindset comes from the new generation of consumers representing Asia’s middle classes, and it’s key to tap into this as a smaller brand.
6. Don’t go it alone
Many markets in Asia have a tendency to favour their own national organisations over companies from overseas – so it might be an idea to partner up with a local organisation. However, it’s important to 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 exporting and CEO of Tails Trading, a firm helping UK SMEs to export their goods.