Eastern Allure: Why Asia Is a Promising Market for the Western Investor. Part 2
Is India the New China?
India, however, is a special case. Whenever we talk about countries with large populations, everyone first thinks of China as the world’s most populous country, forgetting India, whose population is just slightly smaller at 1.4 billion people. This is the world’s third-largest consumer market, and it’s surprising that India is mentioned far less when talking about major global trade.
India has set an ambitious goal of becoming one of the world’s leading countries. Modern India is a young country with one of the world’s most rapidly developing economies. That is its advantage over many of the “aging” countries of both West and East.
Many Western companies outsource their manufacturing to India, especially since it has the advantage, borne of being a former British colony, of nearly all of its qualified professionals speaking English.
India has many clones and analogues of Western online stores: massive online supermarkets that are the local equivalent of Amazon (like Flipkart, Snapdeal, ShopClues), payment systems (PayTM, MobiKwik), and food ordering services (Swiggy, UberEats). Essentially everything there is in India is not a local invention, but something that came from somewhere else, either as investment or as an idea, and all of that is tied in with the digital space.
In my opinion, India offers a promising future for both big and mid-size companies.
Which Asian Countries Are Ripe for Promotion
For big companies whose budgets allow for major investment risks, we recommend three regions for initial entry and promotion: China, Hong Kong, and Singapore.
China is a market that is generally closed off to foreigners, but very receptive to new ideas and trends. You can grow very quickly here, but there is always a risk of flaming out just as quickly. Take note that China is by no means a homogeneous market. Even though the country is unified geopolitically, socially, and economically, reality is much messier. Uneven economic growth in various parts of China over the last few years have exacerbated differences in how provinces have developed economically and socially.
For example, different parts of the PRC are vastly different in terms of population, GDP per capita, average income, consumer spending, education and literacy levels, lifestyles, and so on. So it would not be an exaggeration to say that instead of constituting a single, unified market, China is essentially a conglomeration of individual, separately-defined submarkets that differ drastically in terms of demographics, economics, and culture. Something that sells in northern China won’t sell in the south.
Because China is an umbrella term covering hundreds of regional cultures, you have to carefully adapt your product for a given part of the country and take all the nuances into account to avoid possible negative associations.
Until a certain point, the Chinese market was unwilling to accept imports. There were other, competitive offerings in China, which may have been less effective, but cheaper. But now the situation has changed. Since the end of the 20th century, the children of China’s middle class began getting their educations in Europe en masse, taking in European influences and acquiring Western-oriented consumer habits. As the youth returned home, their habits remained.
The particular country of origin is not important to the Chinese; what matters is that it’s an import, not a Chinese product. Due to the large quantities of local counterfeit and low-quality goods, foreign manufactures are assumed to be higher quality, more expensive, and technologically better. But here you have to understand that you can only get into this market if you really prove to the Chinese that your product is more high-tech and economically advantageous for them. The main objective to define for yourself what you are selling and to whom, how to tell consumers about your product and convince them to buy it.
China is the world’s largest consumer market, with almost 1.5 billion people. China’s key feature is online sales, which account for about 20% of all sales. The online market is worth almost $1 billion annually. And it is a very promising market. Powerhouses like Coca-Cola, Starbucks, Intel, Microsoft, Adidas, Swatch, BMW, Swarovski, Pizza Hut, H&M, IKEA, L’Oreal, Unilever, Philips, Prada, and many others have recently entered it.
Hong Kong, where both Chinese and English are spoken, is a very popular entry option. It has a top-notch business environment and a population with high levels of purchasing capacity.
Another attractive location is Singapore. The country hosts a large number of foreign companies: over forty thousand. About 15 thousand of them are major international companies with over 10,000 employees. The corporate sector here is practically limitless. In addition, Singapore’s multinational population has very high purchasing capacity. Developing a business in this country is shows a lot of promise.
The Race to the Top in Asia Starts Now
Overall, countries in the Asian-Pacific Region are currently the world’s fastest-growing market. They represent an extremely favorable combination of large populations, relatively low cost of living and labor, and high Internet penetration.
This market would be ideal if the purchasing capacity of Southeast Asian countries’ populations equaled that of China and Japan, on par with Western countries, and if banking services, online payments, and logistics services were similarly widespread.
But all that will come in the next few years, and then the race to the top will become a key objective even for the world’s biggest companies. This is why entering the markets in these countries is an excellent opportunity to occupy a good starting position, so that you can reap good dividends later.
Not all the countries are equally promising, and they all have their nuances and unforeseen challenges, but the opportunities now opening up outweigh the currently identifiable risks.
Asia is like a giant box of chocolates: everyone can find something to their liking in there.