In part I of our “Market Expansion” SERIES we talked about challenges that European SMEs face while establishing sales in Asian markets using distributors, such as choosing the right distributor/agent, lack of direct customer contact, limited business development, lack of in-house knowledge building, communication issues, scarcity of own resources, etc.

What are the typical key success factors for companies in Asia?

In this part II we discuss how European SMEs can overcome the challenges: what are the typical key success factors for SMEs in Asia?

SMEs successfully growing sales in Asia share many of the following key success factors: they apply a proactive approach to sales channels, they have a local presence with “feet on the ground”, they are strong in innovation and brand – with local adaption, and they are agile (long term focus).

Proactive approach to sales channels

The first factor may sound basic, but is often overlooked; make sure to do proper homework also when choosing an indirect go-to-market sales channel. A bad or passive choice of agent or distributor can prove costly. A strategic selection and thorough evaluation of the potential partner is essential, including review of the industry, the definition of customer access and regional presence, stakeholder mapping and evaluation of track record.

Key success factors for companies in Asia

Other factors such as corporate culture fit, communication skills, competing for product portfolio are also important. Choosing your partner proactively and doing a thorough analysis of the capabilities and corporate fit before becoming long-term partners is crucial.

A bad distributor choice can lead to both financial risk, lost time to market, and in the worst case a hard exit from the market.

Local presence with feet on the ground

Developing local networks is key in many Asian markets. The networks can be accessed with own staff or via “White label” resources, i.e. local staff on the ground working for the European SME on a contract basis. White label staff can support in managing one or more partners, but also directly engage in sales, business development, and technical support.

Leverage positioning of innovation and brand – with local adaption

Many successful companies in Asia carefully balance their positioning across two ends of the same spectrum: localizing the offer while keeping the European brand image. To be able to relate to and gain the confidence of local customers, it is essential to recognize the difference of each Asia market and tailor key messages accordingly. Demonstrating cultural sensitivity, tact, and understanding of the market gap builds trust and respect.

At the same time, the European brand often brings a positive perception in Asian markets. Connected with values of innovation, sustainability, and quality, which can be a strong differentiating factor fro the competition.

Be agile, long term focused

As relationships are important in growing businesses in Asia, stakeholders lookout for signs of commitment to the market, comparing suppliers’ sincerity and capabilities. Local presence and responsiveness (consistent follow up, meetings in person, etc.) are among the aspects to think about when approaching an Asian market. In order to stay agile and not take unnecessary risks, many companies in Asia initially choose a virtual presence (local address, local website, etc.) as well as virtual employees via White label setup.

That is a way to accelerate local sales but still have the opportunity to scale down or adjust to market changes in a flexible way. A white label resource setup reduces risk, as the company is not stuck with fixe recurring costs. This leads to a more agile go-to-market strategy that can be adapted along the way according to market response.

Companies in Asia taking a holistic approach towards the market not only ensure the sustainability of the business in the long term, but the approach will also win the trust of the customers early on.

International companies operating in Asia increasingly differentiate themselves by showing their commitment to the local market, such as carrying out corporate social responsibility programs that contribute to the community, job creation, and other value add.

If you like to know more about market expansion into Asia an implementing the four key-success factors, please contact us

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