As our entrepreneur’s businesses come under heat of recession and slow down, it’s time to explore unexplored new markets for expansion, diversification and investment. Geographic expansion is the buzz word that needs to be seriously considered by entrepreneurs who want to be relevant in the market place. Complacency in this matter, could mean falling out of the market in few years.
As NRI entrepreneurs, begin to explore African market, with all its hidden exoticness; there is yet another market that is more relevant. The growing Asian giant economy. It’s huge, its growing and it’s becoming less globally integrated and more regionally integrated. And this opens up many opportunities.
Asia is Big & Growing
Just to understand how big the Asian economy is, we can explore some numbers from the paper published by McKinsey Global Institute. For instance, the GDP of Asia has grown from 32% to 42% within a period of 2000 to 2017. And it is expected to reach 52% by 2040. As this happens, it is interesting to note that GDP of Europe, North American has been falling.
Not just that, at consumption level, Asian market is to consume 39% of the total global consumption by 2040. These numbers show immense opportunities not just for production or manufacturing but also for services, R&D and host of other.
That is, Asia is more promising the established present markets. And as entrepreneurs, it is important that we operate in growing opportunities rather than saturated markets.
Shift From “Globalisation” To “Regionalising”
Another positive findings is that, there is a growing shift from globalising (more inclined towards western cultures and products) to “regionalising”. Regionalising is about costumers preferring products and services that pertain to the asian region. Be it new products, services, mobile apps, tourism, food etc. This has resulted in more intra-region trade happening, and this opens up good opportunity for the entrepreneurs in the region.
To understand this better, it’s in interesting to find that 60% of goods traded in Asian countries was within the region itself. This is also the case, in Investments (71%) and FDIs (59%). And interestingly 74% of the travellers travel within the region. And because of this global recessions and crisis, may not affect the Asian economies in a major way.
I wish to make a special note on the tourism part. In Kerala, when it comes to foreign tourists, we see mainly Europeans and the Arabs. Asian tourists are not that common. This means, there is a new shift and boom happening in Asian tourism market that our Kerala tourism is missing out. Hope this write up would be an eye opener to the tourism operators to start marketing Kerala as an opportunity to the Asian market and have a good piece of that growing 71% travellers.
Asia Economy Is Diverse, Yet Similar
Understanding the Asian market is important before making a market entry or investment. Each country has different cultures, different laws, different priorities. And Each country is at a different economic level. McKinsey paper, divides the Asian market in 4;
– Advanced Asia: Countries that constitutes those with highest GDP (UDS 30,000 to USD 60,000), and are highly urbanised, like Australia, Japan, New Zealand, Singapore and South Korea)
China: China is a classification on its own. It is the world’s second largest economy. It acts as the anchor economy for the rest of Asia.
– Emerging Asia: These are diverse countries and economies but are highly connected economies. These includes countries such as Bhutan, Brunei, Cambodia, Indonesia, Laos, Malaysia, Mongolia, Myanmar, Nepal, Philippines, Thailand and Vietnam
– Frontier Asia and India: These are economies that have had historically lower intra-regional integration, and broader range of trading relationships. For example in 2017, Europe, Middle East, Africa and North America accounted for 45% of these economies imports, 66% of the exports, 53% of the FDI inflows, and 53% of the FDI outflows. This classification includes India, Afghanistan, Bangladesh, Fiji, Kazakistan, Kyrgyzstan, Maldives, Pakistan, Sri Lanka, Tajikistan, Turkmenistan and Uzbekistan
Steps to Enter The Asian Market
First, learn about the economic opportunities. It is important to understand that customers in each of these economies will have different tastes and preferences. You will be able to understand that with a single visit to a local supermarket, where perhaps half of the products will be unfamiliar to you or the economy you come from. The best way to start is to visit trade exhibitions in each of these countries. Exhibitions, help you to see what is on offer, who are providing it, and get more information about the economy and the products from the exhibitors.
Second, learn more. Visit each of the countries you wish to consider and walk through the streets, visit shops, and see what is being sold and how it is being sold. This is a great education and can spark many ideas
Third, interact with local business community. The possibility of an Indian association is very high in almost all countries. Visit them and talk to them. Their local knowledge and experience will go a long way. Also visit local chambers of commerce and Govt ministries that promote trade, FDI and economic activities.
Fourth, better to have reliable local partners, who will invest and be part of management. This will help a long in avoiding unnecessary mistakes
Fifth, be culturally relevant to customers. It is not enough to think about Loas market from an Indian perspective. Your product might have good demand and acceptability in India or Middle East, but it may not be on the country that you wish to target. May be, the product is relevant, but it will need to be packaged, branded, marketed and sold in a way that appeals to the local people.
Sixth, be culturally relevant to management. Operating in a foreign country will require having workforce and management that consists of largely local population. It is important to have a management system that appreciates and flows well with their culture. Else the business is bound to have management issues.
Seventh, proper risk analysis has to be done before embarking on a business venture, preferably a detailed PESTLE analysis. It is important to know, what all risks can come up, and also how to mitigate it when it comes up. Usually risk analysis will be done by a local business consulting firm. But there is a risk of the local business consulting firm, not recognising some elements as risk, which can be a risk factor to us, due to cultural issues. Hence it is always ideal to hire two business consulting firms while doing market research or risk analysis in a foreign country- one a local consulting firms that understands the market better, another an Indian consulting firm that understands the client better from a cultural perspective.
Conclusion
Asia is big, growing and attractive market for entrepreneurs and investors. Visionary entrepreneurs have to explore and expand in these markets.
