According to a new study conducted by Weber Shandwick and KRC Research, growing revenue is the primary reason for Asian companies expanding to new markets – even as pathways to global expansion continue to grow more complicated for Asia-based firms.
The survey asked 218 participants at large companies headquartered in China, India, Japan, South Korea, and Singapore about the growth of the region’s Asia-based companies in the new era. The survey was conducted in September of this year.
Most respondents in the study, titled “Paths to Growth – What’s Next for Asia’s Brands?”, describe their company’s reputation as “less favorable outside Asia than within the region and cybersecurity as the number one challenge across the board,” said the study.
In markets like South Korea, less than 30% of respondents described expansion as a very important approach to offset declining demand in their native market. In Japan, approximately only one in five respondents viewed revenue and profitability as ‘very important’ for expansion.
“It’s still too early to say that Asia has returned to normal since travel to China is still restricted and indoor masking is still required in countries such as South Korea.”
Overall, the study added, “revenue and profitability are still key reasons for expanding outside the APAC region for many markets.”
“We initiated this research because we were genuinely curious about the landscape in the region once the restrictions on businesses related to the pandemic began to lift. It’s the particularities that speak to our changing world. Why do we grow? What do we need? As the world changes at speed, we’re seeing the evolving answers to these fundamental questions” said Ken Hong, EVP, Weber Shandwick Asia Pacific.
“It’s still too early to say that Asia has returned to normal since travel to China is still restricted and indoor masking is still required in countries such as South Korea. As large Asian companies begin to look beyond the pandemic, it’s important to understand what lies on the horizon in 2023 and beyond and our research highlights many opportunities as well as the challenges.”
The study released the following summary:
When taking on the world, Asian brands are most determined to provide a place of strength and safety for their people – with the four most important challenges of respondents understanding customer demand (52%), supply chain issues (50%), sourcing talent (38%), complying with local laws and regulations (45%) and navigating local cultures (51%).
“Talent, complying with regulation, understanding culture of the market and of course, most important[ly], understanding consumer demand for your products and services in the market,” were all significant challenges to a packaging manufacturing executive in India.
A Broad Array of Barriers
Many respondents face an uphill battle negotiating the wide array of complexities in other markets. Nearly all respondents believe their corporate reputations are less positive outside APAC, for example – with 83% reporting that their reputation is more positive within the region. In assessing challenges, respondents rated over 75% of barriers listed to be “very significant” when considering expansion.
“A well-developed logistics system, international logistics channels, and local manpower reserves are all necessary,” said one respondent from the Chinese pharmaceutical industry.
Nearly all respondents said their corporate reputations are less positive outside APAC – 83% felt that their reputation is more positive within the region. The difference in reputation may be slightly less stark in South Korea, where just 13% their reputation is “much more positive” in APAC, compared to an average of 40% who say the same in China, India, and Japan.
Use of Outside Experts
Weber Shandwick and KRC’s research reveals that many Asia-based brands rely on external consultants in undertaking global expansion. Nearly nine in ten respondents (89%) said their company has used outside consultants to help expand to new markets. Managing and building brand reputation in international markets (53%) were among the top uses for outside consultants, along with legal and regulatory compliance (46%).
“We mainly use consultants to know our current situation objectively or to analyze the market, such as defining the market, the current state of competition, or the target,” said one South Korean technology executive.