This post won’t cover the kind of frequent mistakes in international expansion that I covered here, but will focus more on criteria which are more specific to Asia.
Of course, as with any other market entry, then you need to do your research and ensure that it conforms to your total international strategy, however with these Asia market entry mistakes I’ll be looking at topics which apply generally to some extent across the region, whilst acknowledging that this is a huge area and extremely diverse.
You can’t generalise about Asia, but for the purpose of this post I’m going to group some errors. The errors can be generalised to some extent although the solutions and remedies have to be specific to each of the individual countries 😂.
There is a 2nd part to this post as well, which you can find here: Asia Frequent Market Entry Mistakes Part 2
Frequent Mistakes in International Expansion 1: Don’t assume that it will be easy
There seemed to be this expectation in many quarters, especially pre-pandemic, that because many Asian markets are extremely large, that they will be easy to enter and gain market share in.
This is far from being true. Of course, a large market with rapid growth is an attractive target, however it’s also where all of your competition will be heading as well.
That doesn’t mean that you shouldn’t try to export there, but it does mean that you have to be prepared for a tough battle to win consumers’ custom and loyalty for your products.
Make sure that you come armed with patience, resources (energy, money, team) and a great strategy in order to set yourself up for success.
Typical Asia Market Entry Mistakes number 2 – underestimating the time a project will take
This is a biggie with all kinds of export projects, but especially for Asia where you need to consider factors such as:
🌏 highly relational cultures meaning you need to build those relationships before you really gain traction with your project. It can feel like you’re not actually making progress, because you spent most of your time with small talk and eating, but actually this is building the strong foundation your business will need to succeed
🌏 different standards may require product redevelopment or adjustment. As we all know this kind of redevelopment can take a lot of time, especially in Europe or the US, where there may be resistance from the production team that the amendments are necessary or justifiable
🌏 often complex registration procedures. This can be a real headache as it often feels like the timeline is completely out of your control. Also, foreign authorities often don’t take as much for granted or on trust as perhaps is the case in the EU, so you need to really ensure you document each little detail
🌏 looooong supply chains from wherever you’re based – it doesn’t matter if you are in the Americas, Europe, Africa or Australia, it’s a long way into your chosen Asian markets. Also many of those markets are themselves physically huge, meaning that the domestic supply chain can also be really long.
🌏 sometimes more complicated infrastructure meaning your route to market may also take longer than usual. As I mentioned above, some of the Asian markets are so huge that their internal supply chains are really long – & that doesn’t only apply to India and China but also for example to Vietnam. Or Indonesia & the Philippines both have rather complex infrastructure requirements due to the large number of islands, some of which are better accessible than others
This is a topic that I’ve been asked about quite a lot recently, and most companies with little experience in Asia are getting it drastically wrong. You also can’t assume that everything will always work perfectly so plan for the worst and hope for the best.
As a rule of thumb, for a timeline, I’d recommend you to double the amount of time you expect (if it’s your first time entering an Asian market) and add around 10% to arrive at the number of months.
Frequent Mistakes in International Expansion 3: Not taking enough time to build relationships
You can’t generalise about “Asia”…
No, but there are some points which are “generally” true compared to a “generalised” view of Europeans or Americans 😂
…& yes, I’m aware of all the irony in that amount of generalisation!
Number 3 of my market entry errors is not taking enough time to build relationships. Business is always done between people, so if you can’t bear to have dinner with someone, they’re probably not the best partner for you in the long term.
Asian cultures are generally (cringe, there’s that word again) higher context than Europe or North America meaning that without a strong relational foundation your project isn’t going to progress very fast.
Whether you’re in Turkey or Japan, you’ll be more successful in your business if you take the time to connect with the people properly before moving onto the transaction you want to do.
It can be hard to explain to your management if you are visiting a country and feel like you spent 85% of your first few visits eating or drinking tea or even in a karaoke bar. I know, I’ve been there, but believe me it pays off later.
Try it and let me know how it goes.
Typical Asia Market Entry Mistakes 4: don’t be arrogant
bear with me here as I know that sounds a bit odd…
I see companies again and again who assume that because they are from the UK, USA or Germany that they are “Something better” than anything that can be produced locally. This is an attitude that a potential business partner will feel…
Even if your potential local partner talks trash about local products, you shouldn’t assume that you will have an easy time of it (remember your electronics come from China or Vietnam, your running shoes from Cambodia or Bangladesh so it’s not like those countries can’t produce high quality products…). There is a definite difference made between “brands” and “production” here.
– firstly, arrogance isn’t attractive (it’s not the same as self-confidence in your products either) & you don’t want to put a potential partner off. It’s also one thing for a local to talk badly about local brands, something else if you do it when he doesn’t really know you (think of it as being comparable to talking badly about someone’s brother…might be acceptable if you’ve known each other forever, but you wouldn’t do it on purpose with a stranger).
– secondly, many Asian countries have much stricter controls and different standards to the US or EU.
Not necessarily better, but different.
…and more stringently controlled (in the EU many things run on trust and spot checks for example, whereas in Asia there are often more checks & this can catch companies out…). For example if you want to export meat products to most Asian markets, you will need to have an in-person audit by the authorities of that particular country. It’s not enough to have the necessary permits from your domestic authorities.
I’ve seen European companies fail Asian audits (especially for South Korea and China) because they assumed that they didn’t need to pay too much attention because their German or UK quality was better than the Asian competition – & then bad practice mistakes got picked up upon and penalised.
Just don’t be that arrogant company that gets a bad reputation amongst Asian partners. Yes, be proud of your quality but don’t be arrogant about it. Does the market that you are targeting even NEED the superior level of quality that you can offer? Assuming (oh, the irony)…that it is even perceived as superior by the market in question
Frequent Mistakes in International Expansion 5: Not Learning About the Culture
One of the quickest ways to shoot yourself in the foot if you want to enter the Asian markets?
…don’t bother learning about the culture.
There’s no need to learn about poetry and art (although I’m sure it would be appreciated), but you need to know how to be polite and respectful as well as how to conduct business. It’s probably THE most frequent error I see companies making and also often the most cringeworthy to observe.
How can you expect to be successful, if you don’t understand how your counterpart negotiates and reacts in business situations?
Have you ever witnessed someone just “assuming” that behaving exactly as they would at home is enough to get them where they want to be in their export business?
Especially in Asia, it’s essential to understand that attitudes towards hierarchies, cultural norms around giving feedback and criticism or their outlook on failure can really be diametrically opposite to those of your own culture. For instance, for me as a Brit the Dutch approach to really being extremely direct with feedback, including negative feedback, can seem excessive to the point of rudeness and my cultural approach is far closer to the Netherlands than either Myanmar or especially Japan.
There are differences across Asia as well, it’s certainly not a homogenous region culturally although of course there are certain similarities.
Asia Market Entry Mistakes 6: Not Learning to Understand and Practice the Concept of Giving and Saving Face
“Face”… often talked about, even more often trampled all over – often unintentionally.
ALL cultures have some concept of face – nobody likes being made to look or feel stupid, but in Asian cultures this is even more important. It may not feel so obvious in a more westernised market such as Singapore (if you contrast with Japan) but it’s still a topic you need to be aware of.
Cultural differences mean that a European or North American may not realise when an Asian is actually saying “no” because the negative is couched in such a way that nobody loses face. Chances are that the words used will be vague or non-committal, or may even seem like agreement, but may actually only mean “I heard and understood what you said”.
If a European loses his temper because he feels that the Vietnamese or Chinese partners are being obtuse, then he will have lost face in that relationship and will have to take the time to build up his standing again in order for business to run smoothly.
I once saw a German guy reduce the assistant of one of my Chinese partners to tears, because she dared to speak up and contradict him (in a way he wasn’t used to from a Chinese young staff member) in a meeting. It was a complete overreaction on his part to a politely worded but firm “sorry no, you’ve misunderstood the situation”
As the right hand of the CEO in China though, she blocked and delayed all of his more difficult requests for months afterwards as she was so upset at being forced to lose face in that way.
I’m not condoning anyone’s behaviour here, just saying: if you want to be successful in Asia, you have to learn about the concept of face and PRACTICE giving and saving face as it’s really easy to “put your foot in your mouth”…
You need to keep calm and stay patient as well as learning how to use more indirect language yourself. If your counterpart is telling you that a decision can only be made in a couple of months time, or they need to confer with their boss or business partner then chances are this is a way to say no politely so that neither side loses face.
Back in 2012, Angela Merkel asked Chinese Premier Wen if China was prepared to help contribute to the efforts to support Greece during their debt crisis & received a very Chinese “no” response.
It’s really important to not make people feel that they have been pushed into a corner or humiliated in some way or made to look stupid and that’s not always easy to achieve when you come from a culture which is used to being more direct.
Frequent Mistakes in International Expansion 7: Failing to Protect Your IP
PLEASE register your trademarks, patents and any other relevant intellectual property before starting activities in the market. (I can help if you are unsure where to turn to for support on this).
Intellectual property protection is important in any market, but it is especially important in the Asian market where intellectual property violations are common. It is important to take steps to protect intellectual property and to be aware of the risks involved in entering the market.
Most Asian markets (NOT just China) have a “first to file” system where you may have to file locally (not just internationally), so if some enterprising individual has registered your brand name they can effectively sit on it & hold you to ransom for the rights.
Yes, you can sell without having registered your brand and it will save you a few hundred euros BUT you’re leaving yourself fully open to
😡 the person who registered your brand name or logo using it in a way that damages your reputation
😡 being sued by that company for violating “their” IP rights
Also, if you can’t demonstrate your rights to the brand name, you might also not be able to sell on certain reputable online marketplaces: Tmall and Lazarda are both quite strict on this for example.
My first experience with IP fraud was in Pakistan back in the mid 90s (yes I’m that old), where our products were being faked by a cousin of our Thai distributor, but we luckily had the rights properly registered so were able to take steps.
Even if you registered all of your IP you have no 100% guarantee that problems won’t arise, but at least you will be able to take appropriate measures to remedy the situation.
Avoid these errors to give yourself the best chances of success
Talking about the mistakes that companies make sometimes make it seem like everything with Asia is so negative or difficult, and yes, for sure the markets are extremely challenging.
The other side of the coin though, is that if you have the right strategy and partners that the region can be extremely lucrative with huge potential for sales. Do your market research up front so that you know exactly what to expect in whichever Asian market you’ve chosen to dip your toes into the water.
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If you enjoyed this post, you might find these posts about intercultural topics and business culture interesting:
- Cultural Differences US and Japan: sales communication in East Asia
- Business Etiquette in Vietnam
- A review of The Culture Map by Erin Meyer
- China Challenges: Understanding Chinese Business culture
- Israeli Business Culture
- How to Succeed as an Expat
- Building Company Culture in Global Teams
- Time is Time, Right? Here’s why that isn’t true
- Build Strong Business Relationships to Drive Growth
- Asia Frequent Market Entry Mistakes Part 2
- Vivian Manasse: Can Intercultural Intelligence Skills be learnt?
- Year of the Rabbit: characteristics and what is your benmingnian year?
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