1. How to build
Business and Brands
in Asia
- Part I -
Asian Opportunity, Challenges,
Pitfalls, Trends and Key Success
Drivers
Anuj JN
http://sg.linkedin.com/in/anujjnprofile

2. “How to build business and brands in Asia”
Opportunities, Challenges, Pitfalls, Trends and Key Success Drivers
- Especially for leading western brands aiming for growth in Asia -
A perspective talk given by:
Anuj JN, Marketing & Business Development Director - Asia
When: Tues 26th April 8.30am
Where: Gilbert Sauvage
Sign Up: Student K Drive (limited places, please sign up by: Thurs 21st April)
Any questions please email Nonie Mackie - Career Services nonie.mackie@insead.edu

3. …than just population demographics.
1. Quality & Cost of resources
2. Reverse learning for Western markets
3. Blocking new emerging Asian global
players with more flexible models.
There is more to Asia…

4. Country Population
(M)
GDP per
capita (PPP)
(US$)
% popn
below 25 by
2020
Malaysia 25 15,800 42
Singapore 5 60,500 37
Indonesia 246 4,700 40
Hong Kong 7 49,800 20
Taiwan 23 38,200 29
China 1,316 8,500 33
S. Korea 49 32,100 28
Japan 127 35,200 22
Thailand 65 9,500 32
Philippines 90 4,100 45
Vietnam 85 3,400 40
Asia – A Heady Cocktail
• Eclectic mix of developed & developing nations.
• Multitude ethnicity and cultures with fast growth.

6. Think Regionally , Sell Locally….Think Cities and not regions

7. Example China – Distribution Objective
Year 1st-tier 2nd-tier 3rd-tier County TOTAL
Y1
• 100%
• 80 M inhabitants
• 50%
• 60 M
140 M
Y2
• 100%
• 80 M
• 100%
• 120 M
• 30%
• 108 M
• 20%
• 168 M
476 M
Y3
• 100%
• 80 M
• 100%
• 120 M
• 60%
• 216 M
• 40%
• 336 M
752 M
Y4
• 100%
• 80 M
• 100%
• 120 M
• 100%
• 360 M
• 60%
• 504 M
1064 M
Y5
• 100%
• 80 M
• 100%
• 120 M
• 100%
• 360 M
• 100%
• 840 M
1400 M

8. From Far East to Next West…
• Great Diversity - Distances, Differences in
industrial sophistication, Purchasing power and
Consumer behavior are substantial.
• 1/3 of total Populations on the planet. ½ with
India included.
• 124 Cities with Populations of > 1 Mil each.
• Japan is the second largest consumer market
in the world.
• China is the fastest growing economy at the moment.
• Key Characteristics - Ambition, Education, Enterprise,
Determination, High savings and asset creations
• A competitive and dynamic landscape with local and global brands.
• Transitioning from sourcing markets to lucrative consumer markets…

9. Source of Quality Resources
• Natural
– Raw Material rich nations
– Good Manufacturing Base
• Human
– Lo cost labor – Vietnam, Indonesia and China
– White collar workforce – Hi Efficiency and Productivity
– Quality Supplier base – Packaging Postponement at lower cost
• Technological
– Advanced technologies – e.g., Japan Mobile Market
• Japan became P&G's learning center for mobile marketing, and the
company hopes to expand the concept globally.
– Outsourced Technical expertise – e.g., Indian software Development
capabilities

10. Reverse Swing…
• New Competence
– Competence development in demanding,
diverse and dynamic markets which
improves competence in terms of
cost, quality, time and Flexibility.
• Test of Corporate Resilience
– Success in catering to Asian needs
enhance corporate goodwill outside Asia.
• Reigniting Western Markets
– Cutting edge product designs in Japan for vanilla designs in US
markets.

11. Effective Block to Future Threat
• In the land of Sun Tzu
– Know your enemy and know
yourself and you can fight a hundred
battles without disaster.
• Asian Global Companies
– Japanese Kaisha and Keirestu
– Korean Chaebols
– Hua Qiao organizations
• Global Ambition
– Li Ning
– TATA

12. Common Pitfalls of Asian Management…
• Attitudinal adjustment
– Leadership home markets vs Challenger in Asia
– High Handed approach prevents
developing local trust and respect
• Inconsistent Top Management
– Frequent changes in ‘Project Asia’ ownership and strategies
– Signals through senior management appointment
– Lack of understanding and internal education to group teams re:
synergy fit in the value of doing biz in Asia
– Group KPIs are not in line with Asia Management team
• Inflexibility of adapting business models
– Constraints based strategy vs consumer focused strategy
– Asia as a region does not mean its one market
– Underestimating the speed of change in preferences and tastes

13. Common Pitfalls
• Definition of Long term strategic
timeframe
– Disengage from markets at first signs of
negative returns
– Asia as an experiment vs Long term
commitment
• Lack of underestimating Asian competitors and their
competencies
– Financial muscle vs flexibility and local understanding
• Human Resources woes
– Expats heavy and Regional heavy
– Not investing in local talent and intelligence early on
– Not building trust among local employees – Isolated vs engaged -
committed Execution team
• Marketing Myopia
– Treating brand investments as Expense vs asset investment

14. Typical Challenges
• Low Cost local competition
– (Automated vs Hand Assembly)
• Consumer base with modest income and low per
• capita consumption
– GDP 14 T same as US but private. consumption is
50% of GDP vs 72% in US))
• Fragmented distribution channel increases the
cost of coverage
– 5 Million Outlets in India & 32 provinces in China
Carrefour has no central DC)
• Disparate preferences
– (Specific product development needs and preferences)
• Minimal brand loyalties
– Experimentative & global brands have low awareness
• Indirect services to customers
– Old boys networks

15. “Japan is the toughest, most difficult consumer market in the world. If you can beat the
competition here, you can beat them anywhere else in the world ... Japan is a strategic
market for Procter & Gamble” BOB McDonald – President P&G - Japan
• Application of standard success formula –
– Market research, Local affiliation for reach, proven resource
deployment…didn’t work
• Special Challenges –
– Tough Competitors and long standing relationships with wholesalers.
1.5 Million outlets and 17000 wholesalers.
• Constant Learning
– New approaches to distribution – 100 key wholesalers and 5 partners
– New skills in product development – R&D center in Kobe
– New Paradigm – Its planet Japan…
Fidelity to methods that work back home is futile.

16. • The proprietor of KFC and Pizza Hut. KFC.
• Opened its first restaurant on China’s mainland in 1987. Now operates 2,497
in the country (compared with 5,253 in the United States).
• 30 percent of global revenue from China. Sales soared 31 percent last year,
helped the company shrug off the US recession.
• Plans to hit more than 20,000 restaurants in the country.
• KFC in China “can be every bit as big as
McDonald’s in the US.”
• Insight – Customer expect a very wide
variety of offerings and short innovation cycles.
• Action –
– Customization to Chinese palate in menu.
Sells as much Chinese food as Pizzaz.
– Opened ‘East Dawning’ pure Chinese chain
in 2004.
– Launch new items every month.
Success in Asia – YUM China – Key Lessons

17. Asia Strategic Framework
• Vision – Realistic Goals
– Setting rightful KPIs (Profits, Presence, Market Share,
– Defining Time period (e.g., Japanese way)
• Business Model Drivers
– Dualistic approach not sufficient
(Cost or Differentiate)
• Local Competitors giving lo cost and ‘acceptable quality’
• Brand Franchise Building
– Understanding Asian Consumer and differences
• In Groups vs Crave for individualism
– Relevant Positioning and brand building – The Asian Way
• Key Trends
• Capabilities Creation
– Resource acquisition viz Distribution, Network, Market Intel
• Guanxi
• Organizational Model
– Regional vs Local teams ( Entrepreneurial small regional teams vs strengthen local
teams)
– Asian team inclusion and participation in senior management
– Manufacturing in Asia

18. Asian Consumers vs Western Consumer
• Foreign Perception –
– Foreign products and foreign people are better perceived in
Asia
– Global brands vs. local brands, foreign education vs. local
education, and foreign workers vs. local workers.
• Display of Status –
– Importance of displaying your status through outward
appearances of rank and wealth in Asia.
• Not exactly following Maslow’s heirarchy
– Need for self actualization and belonging is replaced with
Status and Affiliation
– People may deprive themselves of food to buy a refrigerator
to enhance their social class
• Low defenses –
– Local consumers develop brand impressions with less
defenses than westerners.
– They place more literal emphasis on the messages that
advertising conveys than those in the west.
• Influence of cultural heritage –
– Strong emotional ethos mired in complex social identity and
myths.

19. Very Asian…
• Concept of ‘Loss of face’ –
– Acting on the basis of these others' expectations and needs,
blurring the distinction between self and others – Linked to
brands usage.
• Need for approval and acceptance–
– Saying ‘Yes; when you mean ‘No’.
• Different conception of individuality –
– More emphasis on the way individuals are connected to the
people around them, fitting in and living in harmony. Vs West
model of individual talents, abilities and personality traits.
• In group Affiliation –
– Group Think. However, the importance of the in-group
doesn’t mean social conformity e.g., LVMH
– What constitutes an in-group in India is quite different from
that in Japan. in India the interdependent self means
enduring loyalty and sense of belonging to a community
defined by caste, language, geographic origin and social
class.
• Power Distance –
– 80 in China vs 60 in SEA vs 55 in the world.

20. Key Success Drivers
• Challenging but unavoidable –
– Asia is not a sideshow but necessary for survival
• Boardroom Decision –
– Building a brand is a corporate strategic issue and
not a short-term tactical activity.
• Glocal Approach -
– Retain their brand identity but localize the
communication, product offerings etc.
– Best of both the worlds – Contextual and
conceptual adaptation
– Cultural sensitivity
– Backed by CEO and KPIs for the whole team
– Mix of local talent in senior management
• Flexibility & Open Mind -
– Willingness to REINVENT keeping the core
values intact
– Decision making process which could be at
variance with core organizational norms and
accepted practices

21. • Focus –
– Transfer of technology, knowledge and build
intelligence
– Building Marketing assets
• Corporate Branding to attract talent
• Consumer branding to build goodwill and
associations
• Distribution network
– Relationships
• Collaborate with Asian brands to gain a
foothold –
– Leverage the resources of the local companies.
– Strong brand equity, financial prowess and the
business acumen of the global brands and the
local networks, established distribution channels
and the strong knowledge of local customers of
the local companies.
– Shanghai Volkswagen Automotive Company was
formed as a result of collaboration between
Shanghai Automotive Industry and Volkswagen.
– In India, the collaboration between Japan’s
Kawasaki and India’s Bajaj to form the highly
successful Kawasaki Bajaj.
Key Success Drivers