OPINION: “You’re the Chair in Business in Asia. Are there particular countries that you cover?”
This question was raised during one of my first seminars as the Chair in Business in Asia at Victoria University of Wellington.
I was prepared for it. The politically correct answer was to say, “Yes, I cover them all.”
But of course, realistically it is hard to convince anyone that I can cover off 48 countries.
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So, I responded by saying that there’s some sort of pecking order that I work on—based on a country’s role in the global economy and the interests and demands of New Zealand organisations.
Like me, many of New Zealand’s organisations find Asia daunting.
That’s because Asia is really big, and diverse. It is home to half of the world’s top 20 most populous countries.
Just picture the crowds of people at any arrival hall at the airports in Beijing, Shanghai, Mumbai and Jakarta. Comparatively, Auckland and Wellington airports afford more space to think and breathe.
While on the topic of comparisons, it makes sense for New Zealand organisations to think of how the local market shapes up compared with nations.
Our market is similar in size to that of many Asian cities!
With a population of 4.8 million, New Zealand is smaller than 50 cities across the globe, with Shanghai (China) and Karachi (Pakistan) being a whopping 5.1 and 4.9 times larger, respectively.
One way is to think about market entry is to direct international efforts towards one or two cities in a single country.
Country differences will always be there.
We cannot assume that Australia is a better location for New Zealand companies than Asian markets, just because it is geographically nearer. New Zealand companies have encountered their fair share of unpleasant experiences in Australia.
Equally, we cannot assume that New Zealand companies will have easier access to the Indian market because the business language in India is English. A common language does not bridge differences in mindsets between New Zealand companies and their Indian counterparts.
On top of that, when dealing with developing markets in Asia, success in one city won’t necessarily equate to success in another city in the same country.
We are helped by the fact that some Asian markets have created free trade zones to encourage foreign participation, for example China, India, Malaysia and the Philippines.
Further, clustering of cities is also becoming common. For example, Jingjinji is an economic region surrounding Beijing, Tianjin, and Hebei, with Tianjin as a free trade zone that facilitates engagements in Beijing and Hebei as well.
Clustering makes sense as other studies have found that a firm can reduce its costs by two-thirds if it focuses on clusters as opposed to going for whole markets.
Participating in Asian markets requires a great deal of commitment, and companies simply won’t succeed in trying to make a quick buck or relying on short-term thinking.
Asian markets have spending power but also bring with them strong competition.
If a market does not work out after a couple of years, a switch may not be a good idea. Patience is needed.
Not only is switching markets costly, a new market can actually be more challenging than an existing one.
Despite some commonalities among Asian markets, delving deeper into their competitive landscapes will usually highlight that some of your previous learnings are not always applicable in other markets.
Opportunities are abundant in Asia, especially for New Zealand’s products and services, but finding the right market is a priority when it comes to engaging in and with Asia.
Siah Hwee Ang is the BNZ chair in Business in Asia at Victoria University of Wellington.