Eight Reasons Why Entrepreneurial American Companies Should Sell in Asia
The demographic trends for the next 50 years are clear, undeniable, and point to Asia’s emergence as the primary source of new capital, customers, competitors, suppliers and service providers in almost every industry in the 21st century. Companies that succeed in Asia today will dominate competitors that do not by leveraging Asia’s efficiencies, skill supply, capital sources and rapidly growing markets.
Along with the growth in Asia’s capacity for production, the capability and desire for consumption by both Asian enterprises and people has skyrocketed. The only thing that has not kept pace is infrastructure, including physical, technical, and legal infrastructure. This disconnect has encouraged a leap frogging effect through which consumers are accelerating through or completely skipping development stages experienced in the West.
This creates immediate opportunities and longer term challenges for emerging growth technology companies in the US and Europe. Asia’s appetite for advanced technology products and services is higher than it has ever been. That’s the immediate opportunity. The long term challenge is that the adoption and development of technology solutions in Asia will drive the pace of product evolution. Asian consumers will demand and Asian vendors will develop new products and solutions at an incredible pace. Technology companies from the West that are not active in the Asia market will miss the coming product trends and get blindsided by overnight Asian competitors.
Just as the product managers at Gillette or any other FMCG manufacturer must ask themselves how they will prosper in the Wal-Mart dominated US consumer channel, American entrepreneurs must also ask themselves how they will prosper in the Asian century. Like it or not, the world has changed. You can choose whether to leverage Asia’s momentum or be crushed by it. Our firm’s mission is to enable clients to leverage it.
These are some of the benefits we believe emerging growth companies can achieve by entering Asian markets early in their development:
1. Selling early in Asia helps increase shareholder value. For many American technology companies, Asia offers the largest potential for revenue growth outside of the US, and, in some cases, larger even than the domestic US opportunity. The media overflows with articles and statistics about the growth of Asian markets, and investors are keen to participate in this growth. When going for IPO or additional funding, a strong Asia story can greatly enhance the company’s valuation.
2. Selling early in Asia can actually also make you more efficient in other markets. If you have an established base of customers, partners, and technical resources in Asia, you can use those resources to procure parts, services, and skills time and cost effectively. We have worked with companies that were late to invest in Asia and when their customers and competitors drove them to Asia, they were doing implementations in Indonesia with consultants flown in from San Francisco. If they had invested earlier, they could do Asian jobs with Asian resources and then those same resources could be used in a pinch for jobs outside of Asian markets.
3. Selling early in Asia helps you build world class products. If your competitive advantage is quality and your products sell well in Japan, you can sell them anywhere. If your competitive advantage is prices, your products sell well in India or China, you can sell them anywhere. If your products and services are good enough to compete against Asian competitors in Asian markets, you will be in much better shape to compete against them in your home market.
4. Selling early in Asia actually helps you sell more in America. In some product classes, an American multinational won’t standardize on your product if they can’t use it globally, and Asia is an increasingly strategic region for every American multinational. Even if the American customer doesn’t require your product or service outside the US, if they see you have well known customers or partners in Asia, you will be perceived as a mature, advanced, world-class provider and not a just a local vendor.
5. Selling in Asia can get you government financing. There are both federal and state programs across the nation that offer local entrepreneurial companies financing for expansion overseas. There are even some governments in Asia which will provide direct investment in your company, subsidized rent and subsidized payroll if you establish their country as your Asia Pacific HQ. Does federal government offer you financial incentives and assistance to set up shop in America? No. Will Singapore, Hong Kong, Japan, Korea and Australia? Yes.
6. Selling in Asia gets you noticed. Can you send out a press release when you sell to a customer across the street? Yes, but it won’t get much press. If you sell to a company in Beijing, Dubai, Tokyo or Bombay, your local press will be much more compelled to tell the story.
7. Selling early in Asia gets you better talent. Both young graduates as well as experienced professionals with global vision want to work with companies that offer global opportunities and exposure.
8. Selling early in Asia helps you grow under the radar. In the IT industry, for example, Blue Coat is an American company that realized from day one the market segment they wanted to serve was crowded in the US and neglected in Asia Pacific and other foreign markets. They grew FIRST overseas where the cost of business, customer expectations, and level of competition were all lower than the US. They built revenues, perfected product capabilities, developed brand and market presence and THEN made their push in the US.
Those are some of the reasons entrepreneurial American companies should sell in Asia earlier in their lifecycle than was the case 10 or 15 years ago. All of that is the good news. The bad news is that, in general, American entrepreneurs and their companies are woefully unprepared for success outside the United States.
As Sun Tzu pointed out in The Art of War, our strengths are our weaknesses. For as long as any American entrepreneur has been alive, America has been the strongest, richest, most protected, most secure, and most predictable market on Earth. One language. One legal system. One currency. How much simpler can it be? Utopia!
Until it all changes and you find yourself in a battle you haven’t been trained to win. The very fact you are reading this document demonstrates that you realize our world has changed and that you can’t build the company you want to build without succeeding outside of the United States. The absolute necessity of succeeding outside their own national market is nothing new to entrepreneurs in other countries. How many Dutch entrepreneurs do you think have a Holland-only view of the world? Entrepreneurs from almost every other country in the world had world markets in mind the very day they conceived of their business.
Asian Century Solutions (ACS)
Asian Century Solutions (ACS) is a Singapore-based company that enables clients to assess, launch and grow their business in 18 countries across Asia Pacific, including Japan, China, India, Indonesia, Singapore, Australia, Philippines, Vietnam and other Asia Pacific markets. ACS helps clients generate revenue - and develop Asia market knowledge, perspectives, and relationships - BEFORE making HR, infrastructure and other long term business investments in Asia.