Asia Market Entry: What Does it Take? Part 3

Entering the Asia-Pacific (APAC) market as a non-APAC company comes with a variety of unique challenges. In this five-part series, Peter Hum, Managing Director of StrateValue Pte Ltd outlines some of the key elements to be aware of when establishing a direct presence in the APAC region. Hum, who lives in Singapore, has nearly two decades of experience effectively entering American companies into Asia. Drawing on his years of expertise, Hum has compiled this series of best practices to help businesses who wish to expand into APAC. Read on to learn about the people, patience, and relationships that are necessary to launch a successful entry into the APAC marketplace. Read Part 2 of this article series.

One of the biggest mistakes many companies make when entering the Asian marketplace is to gauge their timeline for success based on that of their home country. In doing so, they end up being severely disappointed when they don’t see the results they envisioned and deem this region as being “too difficult” after only 12 to 18 months.

Succeeding in Asia Pacific requires patience. Lots of it.

But doesn’t every market require patience as you perform the missionary work of setting up a direct presence and building a sales pipeline in an unknown market on the other side of the world?

Certainly.

Then what makes Asia any different from regional markets such as North America or Europe?

In one word: ‘Relationships’.

Asia is all about relationships. Relationships take time to cultivate. It could take several formal and informal meetings between seller and buyer to establish a rapport before there is enough trust or comfort level to move a sales cycle forward. It is this relationship cultivation that requires patience when setting up expectations to manage and drive results in a business opportunity.

Enterprise sales cycles in Asia will typically take 30% to 50% longer than those in the company’s home country.

Consumer sales cycles in Asia will typically take 10% – 15% longer than those in the company’s home country.

Entering the Asian market requires money and time to establish and invest in customer relationships. In fact, many companies are surprised at the extra incidental travel and entertainment expenses needed to build relationships in Asia. Expect to budget 20% to 30% more than your original figure in travel and entertainment expenses when building your Asian market entry plan for the region.

Any company looking to enter Asia should establish an operational budget for 24 months with enough working capital to last them for at least 12 to 18 months.

• For enterprise related products which have longer sales cycles, expect to only achieve initial revenue results after the first 9 to 12 months of the 24 months of market entry.
• For consumer-oriented products, expect to only achieve initial revenue results after the first 6 to 9 months of the 24 months of market entry.
  Setting adequate business timeline expectations to achieve success is critical when performing Asia market entry. Typical market entry success when performed properly will see companies ramp up in their regional operations after 18 to 24 months. It will be at this point where they move out of market entry status to becoming fully a operationalised regional business with a direct long term presence in Asia Pacific.

Speak to an Asian market entry specialist or make frequent visits to the region to build up a regional contact base that can help you to build a realistic and achievable market entry plan.

In the end, your preparedness will ensure you have the right patience level to drive successful business results in Asia for the long term.

Next up, we’ll talk about setting up the right long term strategy to succeed in Asia.