CAPTURING ASIAN OPPORTUNITY FOR EU BUSINESSES

Customer Value

Asian consumer tastes and preferences differ by country and by demographic, culture and income group. Commercial customers’ requirements also vary across Asia with the level of economic development, the pace of industry growth and the commercial and regulatory context. The economies of regional scale and networks often advantage firms that service multiple markets. EU firms need to find a balance between customization of their products or services and regional scale.

Local Differences, Regional Advantages

There can be no pan-Asian approach to customers and clients for EU businesses. Culture, economics, demographics and business practices differ widely across the region. Asian customers and clients value regional scale. Intra-Asian trade is spurring the growth of multinational companies and regional businesses, which are creating sophisticated networks as they expand across the region. In aviation, logistics, technology and other industries, Asian customers are demanding regional networks and scale.

Customer Value Proposition

Success in Asia demands a local customer value proposition that is backed by a regional offer or provided at low cost thanks to regional scale. To achieve this, and gain a thorough understanding of their Asian customers, EU firms need to develop a three stage customer value proposition: identification, localisation and regionalisation.

EU firms need to build a customer value proposition by identifying existing Asian customers and develop local products while retaining the advantage of regional capability.

Building Relationships

Capturing the opportunity in competitive, relationship-centric Asia is not easy. EU firms need to prioritize geographies and relationships while deploying and protecting intellectual property right and expertise.

Competitive Markets and Trust

Intense competition from local and international interests in Asian markets can result in an arms race for price, quality, acquisitions and customers. Many local firms offer products and services competitive with those of EU businesses. In Asia, relationships and trust are at the centre of doing business. Local clients and customers must be certain that a foreign firm will not exit the market at the earliest sign of difficulty. Local clients must be assured that EU firms understand the local business environment. Business relationships cannot be conjured from a single visit or acquisition. Asian suppliers and stakeholders require a high level of consistency, reciprocity, courtesy and commitment from foreign firms. An EU firm entering an Asian market must work to earn the trust it will need to succeed.

Market Selection

Careful selection of markets is a key to success. EU firms need to use their existing customer bases, relationships and research to identify the best markets to enter. Once beachhead is established, successful firms generally begin a methodical expansion both in-country and across the region.

Relationship Building

Successful firms grow on the back of strong relationships, whether through joint ventures, local agents or direct ownership. These relationships encompass all stakeholders, customers, partners and government.

Intellectual Property

Successful firms grow into Asia through the careful deployment of their expertise and intellectual property.

Operating Model

There are two key aspects of successful operating models in Asia’s diverse, rapidly changing markets: Localisation and Agility.  EU companies are continually challenged by diverse customer groups, developing consumer tastes and strong local competitors that often have lower cost bases. Macroeconomic shocks are likely to remain part of the fabric of the region.

Local Staff and Asian Literacy

Successful EU firms in Asia adapt to local markets and build local teams. They hire and mentor local staff, and are literate in Asian society, politics, economics and cultures.

Agility

Successful firms have innovative operating models, developed through on-the-ground experience, capable of adapting to dynamic market conditions. In Asia, EU firms need to build advantage through agility: they need to experiment and adapt. There is not one winning business strategy. Successful firms adopt structures, leadership, cultures and systems that suit the external environment. While committed to a shared purpose, they embrace uncertainty, chart new courses and encourage experimentation. They incorporate uncertainty into planning and enshrine flexibility in their operating models.

Conclusion

There are two policy areas of importance for EU competitiveness in Asia: complementary services and political and economic diplomacy. Government controls many complementary services that affect EU businesses. These exist across tourism, public infrastructure and regulatory structures for services. Enhanced diplomacy is also vital. Greater and more consistent government commitment to building important commercial relationships would complement EU firms’ own efforts to build businesses in the region. People to people contacts above and beyond formal diplomatic relations are of great importance

Success is not guaranteed. Yet EU firms can succeed in Asia. They face a choice. They can take risks engaging with Asia, or they can ignore the region and focus on their domestic market.