– by Joeri Gianotten, Partner, AccelerAsia
Growing a business in a new part of the world is an interplay of many factors and an equation with myriad variables. From the international experience of your leadership to cold, hard organisational skills, the efficiency of your business development process is as much art as it is science.
The first part of this two-part blog explored the first five points of interest and action to consider, that can make a substantial difference when expanding a business in Asia. This second part details the final five.
6) Finding the right time to expand
In all frankness, in some cases, it is too early for some companies to come to Asia. It is important to have proven your product or solution in your home market first, and conducted some business outside of your home market first before expanding overseas.
Expanding overseas requires an investment of both time and money, and it’s a lesson sometimes learned painfully. If the headquarters has little time to support the satellite offices, no amount of monetary investment can make up for it.
It is often also important to have a solid customer base of established brands in Europe or the US; early wins show that you can be successful in your home country. That inspires confidence and establishes credibility when your business development staff chip away at new accounts in regions where your logo is an unfamiliar sight.
7) Thinking long term instead of focusing on short-term profits
Your first deal in Asia may not always be the one that is going to generate large profits. It’s more important to make sure that you are not going to lose money, and in exchange, get your customer involved in your marketing activities; publicise the win and create case studies. US companies are typically very good at that, and European companies are a lot better now than they used to be. The first six months are going to cost you money to operate outside your home market — take that time to build a good base with some reference customers.
Companies sometimes forget how long it took them to get their first deal, and after several years say “let’s go to Asia” without realising that in many ways, it’s starting from scratch all over again. What is important for us at AccelerAsia — and this is something we are proud of — is that we are good at managing expectations for our clients. We have to make sure that we are on the same page in terms of growing the business; expectations need to be realistic before starting on an expansion plan.
8) Revenue model and market fit
Technology companies often agree on different kinds of business models with their customers, and one of them is revenue sharing. In the adtech space, for example, when monetizing digital advertising, local demand often depends on having a local team, because programmatic advertising in Indonesia, Thailand, and India, for instance, has relatively low monetization potential.
The case is different if you look at the Philippines, as traffic to Filipino media sites from the US is very important, which you can monetize easily. On the other hand, if you look at all Indonesian digital publishers, hardly any traffic comes from overseas, so if you want to be a player in the Indonesian advertising market you need to work locally. This interplay of language, market size and fit, and content consumption patterns can largely be demystified with enough experience; we have found that the media landscape in Asia is such that local content in combination with the massive volume can lead to very positive long-term prospects.
The thing that matters is: does your business model match the country well? Sometimes, only experience and on-the-ground learning can answer that.
9) Readiness of the ecosystem
India is another interesting and unique case: English-language content attracts overseas traffic that is a lot higher in terms of monetization value compared to overseas traffic consuming Hindi-language content. If you go to any vernacular-language website, most of the advertising you see is in English, because the ecosystem for localized digital ads is absent. You are not monetizing content if your ads don’t address the audience.
Whatever kind of solution you are dealing with, it’s always important to not assume that everything is the same across borders.
For instance, for one of our clients targeting telcos, at first sight, a particular market with over a hundred million mobile users sounded like a very attractive target.
But we noticed that the specific solution simply wasn’t going to work because of lack of awareness among users, who had the misapprehension that the service would cost money even though it was in fact free of charge; spreading awareness and educating users was such an uphill battle that it was simply not worth the effort. In the end, launching the platform in that particular market would not have worked even though all the indicators were positive.
However, the exact same platform proved extremely effective in other markets where the curve on educating users was not as steep, and where the ecosystem was primed for just the sort of solution the platform was offering. The good news is that in Asia, precisely because of its massive diversity and market volume, there’s a very good chance a certain ecosystem is ready for the exact solution you may be offering — the trick to striking gold is knowing which market to target.
10) Positioning and finding the right use case
It’s important to find the right use case for the technology you are selling in any particular market, which may be very different from the ideal or successful use case in the home market.
Sometimes, first movers can be different in different geographies. For instance, one of our clients was very successful in catering to customer onboarding process in the telco and utilities sectors in their home market. In Asia, instead, they have been phenomenally successful right off the bat with insurance companies. The reason for this is that insurance companies are investing heavily in Southeast Asia because there is a race to capture the middle class market with a surging disposable income. The growth of disposable income among the middle class has long stagnated in Europe and the US.
In Europe that use case didn’t exist — but here it does, and once we knew that, we understood how to position the product and which verticals to go after. It is important not to be glued to a specific use case, and be aware and open to opportunities that present themselves.
In the end, growing a business — whether in the home market or overseas — is an inherently complex process, and from our experience, sometimes the exact causes behind success or failure are difficult to pin down. But as long as one gets the basics right, and the above ten points are well-considered and acted on, the chance of success outweighs the possibility of failure by a wide margin. In a rapidly-changing technology landscape, tipping the balance of probabilities in your favour in a methodical manner can go a long way.
Asia is where more than half the world’s population lives; it is also a place full of optimism, innovation, and a hunger for building and using new technologies. If you’re on the outside and thinking of entering the Asian market (if you’re not, you should be), let’s have a chat to see if we can work together.