Market Entry Strategies
What is the best way to enter markets in Asia? It is a question that we, at Trinity Bridge Asia, are often asked. Given the undoubted complexities of the region as a whole and of individual territories, our answer is often ‘it depends’. The answer lies in a rigorous examination of the local market characteristics assessed through the lens of the risk appetite of the organisation.
Trinity Bridge recommends that as a starting point it is necessary to do your homework through a structured qualitative and quantitative research project to evaluate the following elements:
Specific characteristics and ‘nuances’ of each market to be researched include:
- Market dynamics
- Demographic and wealth profiles of the specific target market,
- Consumer preferences including price sensitivities or ability to pay
- The structure of the market including the competitive landscape
- The extent to which localisation of a product or service will be needed
- Relevant regulatory considerations including any restrictions on foreign direct investment or ownership, trade issues and taxation
- Logistical and labour considerations
- Legal system and protections, especially in the area of intellectual property protection
The risk overlay will be case specific but frequently includes the extent to which an organisation wishes to retain direct control the brand and intellectual property, the potential of capital to be deployed and most critically the extent to which growth in Asia is central to the overall vision and business strategy.
While the resulting strategies are always business specific, the Trinity Bridge experience is that, as illustrated in the following diagram, there are five common strategies that businesses have used to successfully build business in Asia. They are: (1) distribution using a third-party; (2) the use of an outsourced “sales-only” agent to handle a sub-set of the sales process (lead generation, client servicing, etc.) (3) where key intellectual property is licensed or franchised to another party; (4) a full-blown equity joint venture or partnership and (5) an investment in or acquisition of a potential competitor in Asia.
These approaches are not necessarily mutually exclusive and, in some cases, more than one will apply over time as the organisation’s knowledge and experience of Asia increases. In all cases however they will be tailored to reflect the nuances of each market as identified in the initial research. While success in Asia can never be guaranteed, it can never happen without the right level of local insight. In the short run this can be acquired but in the long term it must be earned.
For more information on market entry strategies for Asia please contact Rob Agnew, Partner and Co-founder of Trinity Bridge Asia ([email protected] or +852 6113 3158).