Key Areas For a Successful and Effective Business in Asia
There’s nothing more satisfying than coming up with a creative idea that you believe will take the world by storm. And for many Australian businesses, a key stepping stone in launching their first foray into foreign territory is Asia. This makes sense — geographically it’s one of the closest markets to our land down under, and the Indonesian and Chinese populations are massive compared to us, with many Asian cities having a greater population density than our entire population. However, the trail back to Australia is littered with Australian roadkill: companies that have gone in underprepared and ill-equipped to penetrate the Asian market. Lessons learnt can be expensive, and in some cases, catastrophic. So, therefore, in this article, we will provide five key areas that are essential to effective and successful business in Asia.
1. Source Reliable Partners
Whether you are heading to Asia to distribute your innovation or to source suppliers, there can be many pitfalls in forming relationships with Asian companies. Like all places in the world, there are the good and the bad. I have seen and heard of companies who found their partners through the internet and while this can be a great place to start your research, understand this: in most cases, Asian companies base their services on “relationships”. And that means hard groundwork! After doing your homework and proceeding with some initial electronic communication, get on an airplane and spend time there; not just once, but be prepared to physically visit your partner on a regular basis.
At Advivo ICP, we spend many hours travelling back and forth to Asia. Over the years we have built strong and trusted relationships with manufacturers, industrial designers, distributors, financial funders, lawyers, and more. The travel is an investment that continues to serve us well.
2. Understand the culture
In Australia, we tend to be relaxed and direct in how we communicate with each other. Many Australians “say it as it is”, and we appreciate that in business. Asian culture can be different. A firm handshake, direct eye contact and strong verbal communication don’t work in all relationships. Building trust with time, respect, and a more subdued verbal communication style tends to work better in Asia — but of course, this is a slow process. Australians sometimes fall into the trap of feeling rushed, due to our short stays in Asia, and therefore can come across as “pushy”. Be prepared to take your time, give yourself plenty of days to negotiate, and start the process focusing on how the relationship will work. Then you can get into business and feel secure in your timeframe.
3. Get good local advice
Building relationships with local representatives is essential. Advivo ICP has some excellent local representatives in law, sourcing agents, and manufacturers that have been forged over time. A good local lawyer, for example, can provide you with insights that would take years to learn, and most likely at a great cost. In a recent case, our local lawyer in Hong Kong gave us some advice that only a local would know, and then proceeded to conduct introductions to people we needed to talk to. This sort of relationship is gold in your quest to do business in Asia. Work hard to find the right local representatives that will act in your interest. While there are many tragic stories, the good ones are there, you just need to find them.
4. Utilise Australian Government resources
Both State and Federal Governments can provide excellent services for those wishing to do business in Asia. Their websites are a great resource of information and most Asian countries have trade services on the ground who can introduce you to people you need to talk to. Maximise these services — they are there to assist Australian businesses succeed in Asia.
5. Be strategic
Many failures of Australian companies entering Asian markets is due to expectations that things will just happen. Sure, the numbers are huge. Penetrating just 1% of the market can result in a medium size business growing at exponential rates. But success stories of this nature are few and far between. In reality, it takes time, requires hard work, and most importantly, it requires strategic thinking.
Important Questions That You Need to Ask
What is the purpose of doing business in Asia for your company? Where specifically? Do we know what the market there wants, needs, and values? How do the taxes work, how do you set up an operation there, how will you employ people, and what is the long term plan around all these questions?
Without asking these questions and many more, you are entering a foreign country with significantly different ways of doing things than you are used to on a whim and a prayer. This attitude is where the roadkill back to Australia comes from.
Prepare To Be Strategic
Be prepared to put in your work in preparing to be strategic in how you will grow business in Asia; this does not have to consume enormous amounts of lead time at all; in fact a good day workshop can result in a solid basis of having a high-level strategic plan in place and therefore laying the foundation of thoughtful actions.
Asia offers so many opportunities. It is a fantastic region for business, whether you are looking for suppliers or seeking to expand into larger markets. Many Australian companies have benefited and grown substantially on the back of entering the Asian market. But be clever and surround yourself with experienced, knowledgeable, and skilled companies/people, both here in Australia and on the ground in Asia.
With some basics in place, the chances of success will increase for you and your investment and allow you the time to build knowledge, experience and the right connections. In Asia, it is very much a matter of who you know, as well as what you know. So if you are looking at opening up your market to Asia, contact us to see how we can help.