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.
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, definition of customer access and regional presence, stakeholder mapping and evaluation of track record. Other factors such as corporate culture fit, communication skills, competing 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 choice of distributor 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 companies successful 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 positiv 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 look out 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 risk, many companies initially choose a virtual presence (local address, local website etc.) as well as virtual employees via White labe 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 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 contributes 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
- How are you able to effectively source products from Asia? What is the importance of using sourcing agents?
- How can European SMEs overcome the challenges they face while establishing sales in Asian markets using distributors? What are the typical key success factors for SMEs in Asia?
- What challenges do European SMEs face while establishing sales in Asian markets? The limitations of the distributor-driven market expansion into Asia.
- Start-Ups in Asia vs. Europe: differences between start-up scenarios analyzed from the perspectives of a select group of industry experts from Germany and Malaysia
- Expanding your business to ASEAN /East Asia? But which country is best suited to establish your Asian office, factory, etc.?