Asia Market Entry: What Does it Take? Part 4

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 3 of this article series.

Many companies entering Asia come in with short term interests to test the waters by simply allocating very limited resources and operate with no plan other than to see if there is interest from prospects to buy their products or services. For these companies, they rarely succeed and end up leaving Asia with their tail between their legs.

Entering Asia requires a well thought out committed plan that is built with the help of an individual or a team that understands the dynamics of doing business in Asia. It can never be done in isolation with a planning team that has no experience with Asia at all. A well thought out and curated long-term Asia market entry business plan will contain the following components:

• A product and services strategy that will be localised and catered to Asian business requirements. It may not be fully localised from the onset but the commitment must be made to allocate budget and resources to cater the product and services to Asian needs when the time is right.
• A localised operating budget that will sustain the Asian business for at least 18 to 24 months.
• Tapping into the company’s country government embassy or High Commission in the Asian country of set up to get introduced to local high-level contacts. This is usually a fee-based business development service offered by the government and it’s typically offered at a low affordable price to support their host companies to expand abroad.
• Identify the right sales / business development model to enter Asia. This can be a direct or indirect (or both) business model. Establishing this initial approach correctly will ensure you do not waste valuable financial resources and time performing the wrong type of missionary work to establish your sales pipeline, brand and presence in Asia. An experienced business development professional who understands Asia intimately will be able to provide guidance on the best approach.

Hiring the right experienced and well-connected candidate(s) to establish the regional office. This can be done in one of two ways:

Establish a direct legal business entity in-country and tie the local hires to this entity. Unless there is a large allocated budget, it is normal to initially hire one or two headcount(s) to establish the office from the start. Some companies dispatch an expatriate from headquarters with no depth in Asia experience to start the local operations but his is always ill-advised. Always hire experienced locals when possible.

OR

Hire a highly experienced and very established market entry specialist as a subcontractor and have them execute the Asia market entry business plan. This market entry specialist may be tied to the local company’s Asian business entity or they may be associated with the company’s overseas headquarters (if no local Asian business entity has been set up). This market entry specialist would represent the company as their direct representative to sell to prospects and customers in-region (they carry a direct title with the company’s logo and address).

Finally, establish a level of staff support at headquarters to ensure requests from the new Asian team are answered in a timely manner and time-zone differences are accounted for. Without timely support from headquarters, it will be very difficult for the Asian team to effectively build their business in the early days of Asia market entry. Realistically, the Asian team cannot build and grow the business in isolation from the rest of the world.

Expect to spend at least 6 to 12 months to come up with an Asian business plan before you establish your direct presence in Asia. Make multiple trips there to scope the environment and build up key contacts. Most importantly, in these early days of building up your Asia market entry business plan, you must engage an experienced Asia market entry specialist to guide your planning efforts. Otherwise, your risk for failure will be much higher as a result.

Next up, our last and final article in this series: We will discuss the right budget to make things work in your Asia market entry business plan.