Entering any new foreign market can be challenging for businesses given the quick rate of change and extremely competitive environment found around the globe today. It can be even tougher if you are trying to enter a market belonging to an altogether different culture, for example a Western business launching in Asia.
Entering Asian markets may require a very different approach or a change from the tactics which have worked for your business in the past. After all, you will be dealing with an entirely different demographic, new competitors, and an unfamiliar regulatory regime. For the best chance of success, you need to have a coherent launch strategy for your business.
This quick guide offers some tips to help you develop an effective entry strategy for your business.
1. Research thoroughly
Thorough market research and in-depth analysis of your new competitors will be crucial to understanding the opportunities and challenges of your new market and how your business should handle them.
There is a lot that your research will need to cover, including the potential market size, the rate of growth, what customers want, who your competition are and how they position themselves, and any new regulations you have to comply with or standards you have to meet.
To find all this out, you may need to carry out surveys, interviews, and focus groups, as well as look at research conducted and published by others. However, many companies have also had success drawing on the expertise of professional corporate services in Asia or outsourcing research to firms already located on the continent.
2. Choose the right mode of entry
Although boosting sales is the goal of expanding into a new market, this does not necessarily mean selling the same product in the same way as you do back home. There are a number of different approaches to consider.
One option involves setting up a new branch of your company – or buying a large chunk of an existing one – in the new country. This is known as foreign direct investment. Generally, this is the least reversible choice and thus requires the most research. However, it gives you the greatest degree of control.
Licensing, on the other hand, means you let an independent manufacturer in the new country make and sell products on your behalf. This has the advantage of costing less, but you relinquish some control of the manufacturing quality.
Another popular option is exporting. This lets you retain control over manufacturing quality, but means that you have to handle logistics and trust your partner in the other country to keep up demand.
3. Be patient
Many Asian markets can be bureaucratic and slow moving when it comes to setting up new businesses and obtaining licences and permits. There may be many challenges in the short term, so any new business needs to make sure that it enters with a long-term perspective and the patience to let their strategy pan out.
Conclusion
Asia contains several markets which are not only large, but growing. However, like all opportunities they entail risks and challenges too. Careful research, an effective entry strategy and a good deal of patience are the keys to reaping Asia’s rewards.