Politics drives economic policy and economic policy guides business decisions. Its critically important during geopolitical influenced economic uncertainties that we minimize assumptions and emotional biases to our products and companies and make data driven decisions and choices.

These decisions should be based on facts derived from keen research and analytics and a logical thought process. There is no shortcut, you need to do or contract-out the work.

Focusing on Southeast Asia markets

After living in Singapore and working throughout the Asia Pacific region for more than 20-years, I offer my opinion based on my experience and expertise to help companies navigate the inherent challenges and barriers and  successfully compete and win in the fastest growing region on the planet.

In particular, the ASEAN, Indo-Pacific, or Southeast Asia region has emerged as the global growth engine of the next decade and beyond.

Companies worldwide should be pivoting to the region to take advantage of new and emerging growth opportunities.

Export is crucially important to any growth-minded company. It establishes the first step to entering a new market. As your business scales you can decide upon progressive steps like establishing a local sales office, bonded warehouse, or local manufacturing. In most cases exporting leads to foreign direct investment (FDI) in local manufacturing assets, either greenfield or acquisition.

Southeast Asia is not a homogenous marketplace. Each country is a different ecosystem, with its own vibe and set of preferences, values and norms. New entrants must be capable of understanding and embracing social and cultural diversity.

One-size-fits-all cookie-cutter strategies fail in Southeast Asia, – you need to tailor your approach to each unique market.

Don’t just adapt to Southeast Asia, become a part of it. Take the time to understand the culture, the history, and the emotions behind customer buying behaviors.

Getting started with market research

So where do you start? The first step is to identify, validate and quantify opportunities, and determine your company’s export readiness. The second step is to craft your market(s) entry or go-to-market strategy and business plan – think of strategy as your logic and compass, and your plan the roadmap or process.

The third step is to develop a distribution network capable of reaching your target customers. If you’re selling B2B2C you need channel partners. This article will delve into the first step of evaluating export markets for your business.

Finding the best sources of secondary research

Normally, when I approach a new research assignment, I purchase two industry reports. A typical and focused market survey or industry report will cost between $2,000.00 – $3,000.00 US.

Industry reports are a market assessment tool that provide a comprehensive examination of a particular industry in specific countries.

In my Indonesia example below (figure 1), the company wants to sell its fiber cement exterior finishing products. The total market volume for exterior finishing products is 79 million M², fiber cement products represent 4% of the total market volume. The company’s addressable market in Indonesia is 3.16 million M². I then convert volume into economic value, (volume x wholesale cost per M².) Most reports will provide compounded and annual growth rates and trends.

Other valuable sources for secondary data are Export Development Canada (EDC),  Asia Bank, IMF, government websites, Channel News Asia, and a few of my favorites that require a subscription are Nikkei Asia, Oxford Business Group, Focus Economics. I also use a segment specific project and leads directory when needed – as an example in the Asia Pacific construction segment I use BCI Asia. Secondary research data can cost between $8,000.00 – $10,000.00 US, depending on the scope of the research project.

Presuming we now have loads of secondary data, the data now needs to be translated into quantifiable, meaningful and useful information that can be shared and understood cross-functionally.

Analyze your data using the PESTLE model

One of the most useful analytical tools to evaluate markets is the PESTLE model, (Political, Economic, Social & Cultural, Technology, Legal, and Environmental factors.)

The PESTLE tool has evolved over the years, starting as a PEST analysis more than 20 years ago, then to the SLEPT analysis, and to what is used today the PESTLE analysis. An interesting and important addition is the Environmental factors.

The importance of Environmental factors and compliancy and how this can be leveraged or translated into differentiation and customer value should not be underestimated.

Southeast Asia customers make brand choices based on personal value perceptions and the environmental benefits and impact of your products. In addition to the PESTLE model, I use a weighted scorecard to visually organize and present my findings.

In my abbreviated example below (figure 2) I am only comparing three countries, all countries under consideration must be evaluated. Each main factor will have five to ten sub-factors. Each sub-factor is weighted on importance and given a score, the scores are tallied, then each main factor is calculated. In my example the total score for Singapore main factor political is 36.

We then create a graph chart (figure 3) to visualize our comparative and quantitative analysis. Every company’s analysis will differ due to different metrics or criteria. Each company will also have a threshold, in my example my minimum threshold value is 120, so Indonesia and Singapore would be selected as my target markets for further evaluation.

Further evaluation would come in the form of primary data collection, so get your passport ready, you need to travel to meet the potential customers you intend to sell to.

Get your passport ready for primary research

The best source for primary data collection is “voice of customers” (VOC), and I am a strong supporter of trade shows in the Southeast Asia region. However, trade shows are expensive, and the merit of a trade shows needs to be carefully considered.

In the post-Covid environment trade show costs have increased to pre-Covid levels. Trade show space and booth design cost will vary, I try to cap this cost at $15,000 US. You also need to consider travel expenses, and that cost could be $10,000 per week including airfare.

Considering this, we need to establish clear and attainable goals or outcomes to justify the expense. For me my goals are to:

1. understand the market and customers and begin building relationships
2. interview potential customers
3. identify key competitors, and
4. recruit distribution and channel partners.

I have learned from past experience to add a week post trade show to follow up with contacts and prospects gleaned from the event.

As an example, prior to Vietnam’s economic awakening, we identified Vietnam as a rising economy and attractive market. We attended a relevant trade show and then the following week was filled with business development activities, visiting potential distributors and customers, and we appointed two new distributors.

At this point we have conducted our initial PESTLE analysis through secondary data collection, participated in our first overseas trade show, visited potential customers and channel partners, and we can now amend our PESTLE analysis based on the more comprehensive information gleaned from our overseas trip. Next, we need to assess our capabilities and ensure we are correctly positioned and aligned to capitalize on the opportunities uncovered. Are we export ready?

Evaluating your export readiness

Being export ready is more than a mindset, it’s a commitment of resources and funding to support a successful export endeavor. The export ready self-evaluation process will help define your strategy and plans. FITT’s Feasibility of International Trade course provides thorough and contemporary training on how to assess organizational readiness. Typical questions

• Are you willing to invest in resources, people, time and capital without an immediate return on investment (ROI)?
• Will your pricing strategy enable you to compete profitably?
• Is product customization required to meet specific market or customer needs?
• Are your products compliant to relevant codes or standards?
• A new one for me recently, will your bar-codes scan in overseas markets?
• If exporting to a non-FTA country, what is the duty impact to market pricing and profitability for you and your partners?
• What are your trade terms and conditions, do you need credit insurance?
• Have you established clear, relevant, and attainable goals?
• Do you have senior leadership and cross-functional support?
• Do you have an international freight forwarder?
• Do you have experience with export documentation, do you understand incoterms?

Each company is unique and will have specific questions relevant to their business and chosen markets. Go beyond the superficial qualitative narrative and translate the data into actionable quantitative information.

The next step is to craft your market-entry strategy and business plan. Remember each market is unique, and the Southeast Asia marketplace is not just about products and price-points, it’s about people and relationships founded on symbiotic trust, confidence and collaborative partnerships.

I will share my thoughts on strategy and plans in my next article.

For more valuable tips and concepts follow me on FITT, LinkedIn, or my website.

From my more than 20 years in Asia Pacific experience, I believe the 3 key parts of an effective ASEAN entry strategy are as follows:

1) Strategic planning

2) A sales and marketing strategy

3) A channel design process.

1. Strategic planning

Strategic planning is about identifying and deciding where and how to compete and, more importantly, determining how to win based on keen analytics, facts and logical thought processes. We want to minimize assumptions and biases as best we can to reduce risk exposure.

This all starts with marketplace research and analytics derived from both secondary and primary data. This needs to go well beyond basic and generalized economic data such as GDP. The GDP formulation is simply Consumption + Investment + Government Spending + Net Exports. It doesn’t peel back the onion layers of a market, nor does it tell us where we fit in the GDP formulation.

Companies should include a comprehensive macro-analysis, including social, legal, economic, political and technological factors (known in the marketing world as the SLEPT factors).

In brief summary

Social and cultural factors shape consumer and customer behaviours.

Legal encompasses compliance and IP related issues—obviously, we need to make sure we meet product compliance standards and properly register our trademarks and copyrights.

Politics drive Economic as well as trade and investment policies (which should influence business decisions).

Technology refers to market sophistication, technology adoption and the competitive landscape.

The strategic planning process must also include micro-analysis to help select the best markets based on economic opportunity, the probability of success and ease of entry. Things to consider are market size and addressable market (your target customers), segments, key competitors and potential customers.

I cannot emphasize strongly enough how important it is to vet the SLEPT factors. For example, Singapore and Malaysia are bordering nations and members of ASEAN, but they’re very different in the context of SLEPT factors. What works in Singapore might not work in Malaysia.

Secondary data sources

Regarding secondary data sources, there’s lots of free stuff available online, but paid subscriptions are better. In any event, companies need to review samples and select the best resources for their unique purpose and business needs. Personally, I use multiple sources and cross-reference them to ensure accuracy. Moreover, we need to be able to convert raw data into meaningful information—otherwise, it’s just useless data without direction.

Primary data sources

With regards to primary data sources, at some point, you need to validate secondary data via a reconnaissance mission. You need to be in the marketplace to feel the pulse and vibe of the people you want to sell to.

Trade shows rule in Asia and are restarting. But rather than participating in a mega Asia-Pacific tradeshow in Singapore, consider participating in a country and industry-specific trade show.

For example, if your target country is Vietnam, and you’re selling building materials and supplies, participate in a Hanoi or Ho Chi Minh City construction trade show. The reason being that 100% of the participants will be from the market you want to develop. Plus, intraregional travel to attend trade shows will be somewhat hampered due to the COVID-19 situation.

• As I mentioned, trade shows in Asia are restarting and I’m sure trade show costs will be favourable, as will travel expenses as the markets restart and recover later in the year.

• Participating in the right tradeshow leads to channel partnerships and accesses potential customers. I would suggest you stay a week after the trade show to follow up on gleaned opportunities, and take the time to visit potential and competing distributors.

• Survey the voice of potential customers (VOPC) and determine whether there is there a gap in the market and a market in the gap.  This is a crucial step to aligning product mix, positioning, pricing and your sales and marketing strategy.

• After completing your analysis, you may very well decide to enter one or two markets to start with—but that’s okay. It’s important not to overextend by allowing your ambitions to exceed your capabilities.

2. Sales and marketing strategy

Ultimately, you need to define your differentiated and unique value proposition and execute your strategic plan through an effective sales and marketing strategy.

I recently wrote a Forum for International Trade Training (FITT) article about selling in the ASEAN region. I felt that there were lots of international trade, strategy and marketing articles on how to successfully enter and develop new markets. But there were very few about B2B selling. I think we need to realize that eventually someone, somewhere in a faraway land actually needs to sell something to make it all happen. So selling is important.

Selling in an international marketplace is very different and involves cross-cultural or multicultural selling. What works in a domestic home market is usually very difficult to replicate in an international setting. A marketplace like the ASEAN region is highly fragmented, hyper-competitive and contains many multinationals and a myriad of local producers all competing at varying levels of quality and price points. Companies need to establish themselves as a partner of value and rise above the crowd of competition.

As such, companies should not underestimate the importance of high-calibre salespeople and should invest in the right people, the right selling methodology and process, and also the supporting Customer Relationship Management or CRM technologies. The article I referenced earlier can explain different selling methodologies that you may want to consider. But, speaking from experience, how your salespeople—agents and intermediaries— sell will make the difference between exceptional or mediocre results. Some of the things to keep in mind include the following:

• The ASEAN marketplace is not just about products and price points, it’s about buyers and relationships founded on symbiotic trust, confidence and collaborative partnerships.

• As an example, in the West, salespeople can build relationships as they’re selling. In Asia, relationships come first and usually before the business. Establishing trust, confidence and credibility is important.

• Companies should not take a blanket approach to a trade region like the ASEAN. Each one of the ten countries has its own unique nuances and cultural norms, perceptions of value and buying behaviours.

• When you set-up a distribution, don’t just train them on product knowledge. Support them with training on how to effectively and efficiently sell your products using your sales methodology and process. Then, co-develop the biggest and best customer opportunities.

• Selling cycles are usually longer, especially in complex, high-value B2B selling. They generally involve multiple stakeholders, a hierarchical decision-making process, with decisions being reached by consensus and usually approved at a senior level. So be patient.

Example of a selling methodology and process

With respect to marketing, it can be challenging for any company to unify marketing and sales teams that are operating in different continents. Companies must clearly define individual and shared responsibilities and accountabilities. Marketing and sales, together, should establish and execute the best practices to reach and connect with target prospects, and sales should qualify and convert these prospects into customers. Companies must avoid siloing and misalignments and establish collaboration to rally around a unified and focused goal—which is to sell and help sell.

Technology is playing a huge role in international sales and marketing. The globalization of technology and the ease of connectivity and accessing information has created a global marketplace of sophisticated, tech-savvy and discerning customers. A marketplace like ASEAN is digitally engaged and technology proficient, so integrating digital marketing into your overall marketing strategy is crucial.

Use social media wisely; it’s a valuable tool. But instead of posting a cut and paste product image and call-me-if-you-need-me advert, consider posting a customer experience that mattered and how you made the difference. Then direct that to a landing page featuring the customer gain story, and allow that to evidence how you can help others leading to new conversations.

3. Channel design process 

If you’re selling B2B internationally, you’ll need channel partners to help sell your products. Designing a channel or distribution network is about building an effective integrated multi-channel network that accesses target segments, optimizes customer reach and accelerates market penetration and growth. Channels should be appointed before pursuing customers. It’s also important to recognize that channels own the end-customer relationships, and companies need to tap into these established relationships in order to scale.

Your channel partners should be selected based on their ability to access your target segments and customers, their financial resources to support market entry and growth, and their sales and marketing competencies and learnability to proactively sell your products.

Partnering is reciprocal; channel partners seek products that are innovative and saleable and provide an equitable return on effort and investment. Moreover, they seek partners who are willing to participate and adapt to their unique marketplace and support their needs. From a distributor’s perspective, they’re sharing their treasure trove of customers, and they’re very cautious about doing this. So, building trust is crucial—and this can take some time. With careful planning and use of these methodologies, success with them and within the region is certainly attainable—and lucrative.

There are many international trade, strategy, and marketing articles on how to successfully enter and develop new markets – but someone, somewhere in a far away land actually needs to sell something to make it happen.

The ASEAN region is the most ethnically, religiously and linguistically diverse region on the planet. Moreover the marketplace is hyper-competitive, containing many multinationals and a myriad of local producers all competing at varying levels of quality and price points. The globalisation of technology, connectivity and ease of accessing information has created a marketplace of less differentiated products and more sophisticated and discerning prospects and customers.

The ASEAN marketplace is not about products and price points, it’s about people and relationships founded on symbiotic trust, confidence and collaborative partnerships.

How your salespeople and intermediaries approach selling will make the difference between exceptional or mediocre results.

1) It’s a long game. Focus on building on solid bedrock, the numbers will come over time.

Don’t expect to conquer the marketplace in a day, plan and budget for a one-year incubation period. Yes, you will achieve wins along the way. But meaningful progress and strong financial results will be achieved over time by executing a well-orchestrated entry and development strategy.

Companies should consider a hierarchical five-year timeline approach to establishing and developing their ASEAN businesses:

The first-stage is to enter the ASEAN marketplace by establishing a regional presence through a representative sales office, launching your export business and developing your channel network and target customers.

The second-stage is to establish a trading company to regionalize inventories to better serve your new channel partners and customers as you scale.

The third-stage is to invest (FDI) in local manufacturing to localize supply chains and maximize profitability. Not many companies will invest without first penetrating the market, gaining channel partners and customers and establishing a sustainable growth trajectory. Hence, a successful first-stage is crucial to setting the foundation of building your profitable, scalable ASEAN business.

2) Recruit the best sales leadership and develop the rest

Sales is the oxygen for every business and it is vitally important during the first-stage that you recruit regionally experienced sales leadership with strong business acumen.

They should be capable of pioneering new markets and recruiting and developing the skills and effectiveness of your direct and distribution salespeople. You will need to build out a remote sales force with strong consultative skills, proficient at qualifying and selecting target customers and unlocking and propositioning meaningful customer specific value. Ironically a recent study conducted by Objective Management Group (OMG) revealed Asia ranks highest in percentage of weak salespeople.

OMG – Where can you find the best salespeople study 

This isn’t a slight against Asian salespeople, from my 20 years of experience in Asia, Asian salespeople embrace learning new skills that help them grow and develop into elite salespeople. The situation is more a result of companies relying too heavily on brand equity and overlooking the criticality of the sales role and the opportunity to invest in sales force selection, development and supporting technology.

Traditional sales recruitment practices of contingency or contracted search assignments through local recruitment firms can often prove ineffective. Most adapt generic assessment and evaluation tools to sales roles.

Firstly, recruiting product experts as sales leaders does not generate product enthusiasm or win customers. I’ve seen situations where product experts actually compete with prospects on “who knows more”.

Secondly, hiring sales managers and designating them as sales directors does not create a pathway to accessing the best customer opportunities. And thirdly, poaching salespeople from competitors will not auto-convert customers. Salespeople may persuade a few smaller customers to shift because of their personal relationships. But the larger, critical-to-growth enterprise accounts are loyal to brands and suppliers, and need a compelling reason and material gain to change.

Recruiting salespeople without a sales-centric process is high-risk and a key reason why companies often fail to reach their potential in fast growing markets like the ASEAN. You need a recruitment process that specializes in selecting the best sales talent.

Objective Management Group offers a sales-specific scientific assessment and evaluation service designed to focus on the key characteristics that define successful salespeople. A process that utilizes analytics derived from neary 2-million sales candidate assessments will deliver far better results than traditional recruitment methods.

OMG sales candidate competencies assessment and evaluation tool summary

3) Invest in the right selling methodology, process & supporting CRM

My first international sales management assignment was leading and supporting an Asia Pacific sales force. We did a fabulous job of training salespeople on product features, advantages and benefits.

Where we failed was in developing a selling process, training program and coaching mechanism to help our salespeople sell more efficiently and effectively. Our focus shifted to developing our direct and channel partner selling competencies by creating and implementing a 6D selling methodology with ACT CRM. The results were immediate and impactful in turning around a flagging business unit and achieving record operating income for seven consecutive years.

Fast forward to 2020, there are many new sophisticated selling methodologies (the approach), processes (the steps) and CRM SaaS technologies designed to dramatically improve sales effectiveness and performance.

George Brontén has recently authored an informative paper providing an excellent overview and comparative analysis of the Ten Leading Methodologies including Sandler Training, Strategic Selling, Solution Selling, SPIN Selling, ValueSelling, Customer-Centric Selling, RAIN Sales Training, Baseline Selling, Target Account Selling and The Challenger Sale.

My overall opinion on sales methodologies is that most offer a generalized solution to a problem or standardized fulfilment to a need.

To truly differentiate and rise above your competitors, your salespeople need to adopt a step-by-step sequential milestone centric selling methodology that focuses on unlocking customer specific value.

As an example we collaborated with an enterprise Thailand auto-aftermarket OEM wanting to export into the EU with a new product launch but needing an input product to meet compliance standards. Solving the compliance problem and fulfilling the need was easily achievable but at a hefty price premium creating a risk of cost-price vulnerability. Applying a step-by-step milestone-centric selling methodology revealed the hidden value of a significant economic gain by increasing throughput and reducing capex. This is what your salespeople need to do consistently, unlock and monetize the often less obvious customer specific value.

The selling methodology you choose should be based on marketplace adaptability, business suitability and target customer decision making processes.

It should be integrable with a supporting CRM SaaS platform that enables your salespeople to achieve top performance. The selling methodologies I believe to be most effective for the ASEAN region are Baseline Selling because of its simplicity and shallow learning curve, Inflection Point because of the adaptability to a more complex B2B selling environment and outcome centric selling method, and SalesXtra because of its strategic account development approach and online training resources.

As with selling methodologies there are many CRM SaaS platforms to consider, and selecting the right CRM is an important investment that shouldn’t be taken lightly. Most CRMs are underutilised because they’re perceived as a time wasting and intrusive activity-tracking and data-entry tool designed to placate management reporting with no real benefit to the salesperson.

To solve this problem companies need a CRM that goes beyond traditional functionality and helps your salespeople navigate and optimize your selling process. It should progress opportunities in a timely manner, and more efficiently drive profitable sales growth.

Seek out a Sales Enablement CRM designed to provide your salespeople with an intuitive workflow process that maps out your selling process and guides activities and behaviours that improve selling effectiveness and efficiencies.

A Sales Enablement CRM will identify bottlenecks in your selling process well before they become logjams and spot the areas where salespeople need training and coaching. Moreover a Sales Enablement CRM will calibrate pipelines to achieve sales revenue goals by analyzing trending sales-cycles and win-rates (e.g. salespersons month one target is $100k / .5% win-rate x 2 month sales cycle = $400k minimum pipeline needed to achieve sales revenue goal).

Ex: Membrain Sales Enablement CRM dashboard with Baseline Selling methodology

4) Sales and marketing alignment, think of people as having 2 roles to sell and help sell

Unifying sales and marketing teams that are operating in different continents and functioning separately is challenging at best for any company.

To avoid confusion and misalignment companies must clearly define individual and shared responsibilities and accountabilities. Strategic planning determines where and how to compete and how to win. Marketing and sales together establish and execute the best practices to reach and connect with target prospects, and sales qualifies and converts prospects into customers.

Given the fact that value perceptions and decision making processes vary significantly throughout the ASEAN ten-country marketplace, your sales leadership must possess strong business acumen and effective communications skills. This will avoid organizational fragmentation and misalignments, effectively leading to cross-functional and cross-cultural collaboration to rally around a unified and focused goal – to sell and help sell.

5) Screen to Screen (S2S) Virtual Selling, Fab or Fad?

S2S selling is an alternative to connecting and communicating with prospects and customers accentuated by the Covid19 situation. It is not a new breakthrough way of selling.

If it was, there would be no need for overseas sales offices or trade exhibitions. Moreover, it’s too early to accurately measure its selling and negotiation effectiveness during the absence of personal engagement. In my view, ASEAN social and cultural factors, urgency, opportunity value, brand equity and relationship, terms and conditions of supply agreements and complexity and timeline of the selling process influences the merit of S2S selling.

Despite the fact that ASEAN is digitally engaged and technology proficient it will be challenging for any salesperson to convert high-value prospects into customers through S2S selling alone. In the West salespeople can sell while building trust, confidence and credibility, in ASEAN it’s a precursor to doing business and this takes time and personal engagement.

Although I’m a strong advocate of utilizing social media (with clearly defined and measured objectives) and virtual selling (as part of the selling process), the viability and sustainability of S2S as a primary selling medium post Covid19 environment will be determined by customers.

After all, it’s about how your customers want to buy, not how you want to sell, and the jury is still deliberating.

As a long term resident of Singapore I’ve been a champion of western companies, mainly Canadian, making the strategic choice to capitalize on trade and investment opportunities in the ASEAN region.

The combination of U.S.-China trade frictions, and the recent outbreak of the Coronavirus and subsequent disruption to the Chinese economy and global supply chain give cause to more deeply evaluate Asia market entry and development strategies.

At the time of the first severe infectious disease to emerge in the 21st century, the SARS outbreak in 2003, the Chinese economy looked like this:

• Economy $1,670b
• Trade $851b
• Exports $438b
• Imports $413b
• Balance + $70b
• Inward FDI $53b

Nearly two decades later the numbers had grown to:

• Economy $13,608b
• Trade $5,084b
• Exports $2,494b
• Imports $2,135b
• Balance + $179b
• Inward FDI was $203b

Over the past 17 years, China has soared as Asia’s primary investment, trade and development target. It has rapidly evolved from the low cost, low value global factory floor to a value-added manufacturing nation and primary supply partner of intermediary, consumer and capital goods to many companies across a wide range of global vertical markets.

The COVID-19 outbreak of 2020 should be a red flag of vulnerability to companies that may have an over-concentration and over-dependence on China as a market to sell goods and services and as a single source supply partner.

Regional and global disruption

The COVID-19 virus will adversely affect small to midsize businesses to fortune 200 multinationals alike without prejudice and discretion. SMEs make up more than 90% of the registered companies in China, and most expect to face a cash crisis in three months should the virus continue to choke the Chinese economy.

Apple recently reported it would fail to meet first quarter earning guidance due to “supply constraints” and the dramatic drop in Chinese shoppers during the virus crises. Analysts have estimated Chinese demand for smartphones may drop by half during the first quarter of 2020.

The domestic and global car and equipment industry is another sector that has been affected by disruption to its supply chain. Last week, the heavy equipment manufacturer JCB said it was cutting production in the UK because of a shortage of components from China.

Luxury brands which have previously shown great immunity against financial and economic shocks are also affected.  Forty-five percent of Burberry revenue comes from Chinese consumers and 40% of its retail outlets are closed due to the virus.

Retail big box and modern trade companies are particularly vulnerable to a prolonged supply disruption. Walmart, for example, sources 70% of its merchandise from China. Global stock exchanges are tumbling, countries are adjusting their economic forecasts, and publicly traded companies are revising their first quarter earnings guidance.

The domestic, regional and global impact of the COVID-19 remains uncertain. However, the head of the International Monetary Fund, Kristalina Georgieva, has said

“there could be a cut of about 0.1-0.2 percentage points to global growth”, but stressed there was “much uncertainty about the virus’s economic impact”.

The call to diversify risk, ASEAN trade, development and investment opportunity

Considering U.S.-China trade tensions, the directional uncertainty of tariffs, and the compounding effect of the COVID-19 virus – is it time to pivot to the ASEAN region to diversify manufacturing and develop as an export market.

Although South East Asia accounts for only 10% of global trade, the ASEAN region is emerging as the global growth engine of the next decade and gateway into new intraregional and interregional markets. Trade agreements will more deeply interconnect the ASEAN region with global markets such as:

• ASEAN Member States (AFTA)
• ASEAN Economic Community (AEC)
• ASEAN-Australia-New Zealand FTA (AANZFTA)
• ASEAN-China FTA (ACFTA)
• ASEAN-India FTA (AIFTA)
• ASEAN-Korea FTA (AKFTA)
• ASEAN-Japan Comprehensive Economic Partnership (AJCEP)
• Vietnam-EU (EVFTA)
• Upcoming Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP)
• Proposed Regional Comprehensive Economic Partnership (RCEP)

As geopolitical shifting continues to transform global markets, the ASEAN region is emerging as the main recipient for Asia inward Foreign Direct Investment (FDI), attracting a record ~$151b in 2018 and exceeding China’s ~$139b.

The COVID-19 has accelerated the shifting of manufacturing, and Vietnam and Thailand are the most likely beneficiary countries. Samsung shifted production from China to Vietnam in 2019 and now employs 200k Vietnamese workers and production is at full capacity. Samsung moved their production to Vietnam well before the COVID-19 outbreak for two key reasons, the U.S.-China trade war and declining Chinese market share.

Western companies entering the Asia region need to be cognizant to the fact that social and consumer behaviors are shifting in China.

China’s mass urbanized middle-class consumers and 400 million millennials have become less attracted to western brands in favor of local or Asian brands.

China is ASEAN’s main trading partner and the economic impact of the health crisis is cascading into the region. Malaysia, Singapore and Thailand have downgraded their 2020 economic forecasts. However, growth is still projected in several ASEAN countries due to robust intraregional demand and the continuing U.S.-China trade tensions.

New entrants need to look beyond the immediate crises and envision the region as a market opportunity to sell their products and services, investment opportunity to establish local manufacturing and a future export platform.

By the end of the decade ASEAN’s population is projected to grow from 647 to 710 million with a median age of 33. Household earnings for 125 million people in the region will reach 7,000 US$, and about 30% or 40 million will earn between 18,000 to 68,000 US$.

Over the next decade this growing middle class will spur the need for a wide range of consumer goods and services, creating the next Asia growth wave and new opportunities for multinationals.

The more open and democratic economies will compete to attract new FDI and increase the level of foreign ownership in lucrative sectors such as construction, manufacturing, real estate, finance, and retail. The trade bloc’s geographic location in the confluence of major trade routes will enable companies to utilize their ASEAN-based manufacturing as an export platform to supply new interregional and global consumers as globalization and interconnectivity progress.

This region is the new growth opportunity for many western companies wanting to expand and sell their products and services internationally. However, new entrants must take the time to complete their due diligence to make strategic choices on where and how to compete, and more importantly, how to win based on a pragmatic thought process.

The timeline of a development strategy should factor a mid to longer term three stage hierarchical approach:

• First stage: establishing an export business and distribution partners
• Second stage: investing in regional commercial resources and distribution services to scale-up the business
• Third stage: regional manufacturing investment to sustain competitiveness and scale, maximize profitability, and better serve new ASEAN customers

Pre-development and investment macro analysis has become critically important given the backdrop of the COVID-19 outbreak and disruption to regional and global economies.

Within the context of strategic marketing, companies need to look well beyond basic statistical GDP data and generalized knowledge gained from limited exposure to the region.

The Inclusive Development Index (IDI) has become a far more useful and relevant tool to measure a country’s economic progress in addition to GDP. Other sources of reliable and accurate market intelligence should be analyzed and combined to produce a market specific social, legal, economic, political, and technological analysis (SLEPT Analysis).

Social factors

In general social factors evidence an emerging ASEAN middle class, high population growth rate, favorably changing demographics, increased access to education and a more health and environmentally conscience society.

Legal factors

Country specific legal factors are establishing better regulatory mechanisms, improving intellectual property protection, and gender inclusiveness.

Economic factors

Evident in terms of growth, moreover the ASEAN region is financially integrated globally, credit is accessible, and monetary policies are growth focused.

Political factors

Economic policies influence business decisions, and most economies in the ASEAN region are highly favorable to open regionalism, globalization and FDI that creates employment and contributes to society betterment and economic development. In the context of this article governments need to have transparency and responsiveness contingencies to health crises’ such as the COVID-19, climatic disruptions such as the Australian forest fires of 2019 (arguable dependent on personal perspective), and natural disasters such as the Fukushima earthquake in 2013, and tsunami that hit the coasts of several countries of South and Southeast Asia in December 2004.

Technological factors

The ASEAN region’s rapid infrastructure development, fast-paced adaptation to AI and automation, communications and Fintech example technology and innovation that is rapidly outpacing most western economies.

I’ve applied a simplified example of SLEPT analysis fundamentals, but need to emphasize that this is a crucial analytical process that must be qualitative and rated, completed in sufficient detail, be country specific and relevant to your business.

Moreover the SLEPT analysis is only one part of the strategic marketing process, it must be integrated with country specific micro-environmental analysis, business alignment analysis, risk analysis, and other tools to establish the factual basis from which to decide go / no go / how to go / and if you go, how to succeed.

Your level of regional knowledge and commercial expertise will make a difference. My advice if you have limited knowledge of the ASEAN region, is to find an expert who can help you expedite your entry and development.

The world will survive the COVID-19 epidemic as it did SARS in 2003 and H1N1 in 2009. Chinese factories will return to capacity, supply chains will be restored and markets and economies will recover. China will continue to be an important growth market especially for new technology and a key supply source to many companies across global verticals. As we near the end of the 2020 calendar quarter – companies will assess the quarter and estimate full year impact to their businesses. The perfect storm created by the U.S.-China trade war and compounding COVID-19 virus will effect current and future trade, development and FDI decisions. Your Asia development strategy should include the ASEAN region to capitalize on immediate and emerging growth opportunities and to diversify risk.

Data sources

The Future is Asian, Parag Khanna / Carnegie Endowment for International Peace / WITS / Trading Economics / OECD / Enterprise Singapore / Focus Economics

Trade agreements are great but you still need a breakthrough strategy

By signing the CPTPP agreement, the Canadian government has provided greater access to the Asia-Pacific/ASEAN region and new customer opportunities. However, the CPTPP is not a silver bullet to successfully building your ASEAN export business. While the agreement will result in the reduction of tariffs and non-tariff barriers, these changes will be phased in over a ten-year period.

To rise above the myriad of competitors and succeed in the ASEAN region you will need a well-designed market-centric strategy, elite salespeople, dedicated channel partners and a pathway to the biggest and best customer opportunities. Your level of regional knowledge, experience, and commercial expertise will make the difference between exceptional or mediocre growth, and as such, exporting companies should consider contracting professional help to direct their ASEAN expansion.

Simplify and focus your strategy for the best results

As a strategic marketing and business development professional with two decades of experience building businesses in Asia, I believe a simplified, focused and disciplined approach works best.

A strategy tailored to effectively cover and penetrate ASEAN’s diverse and hugely fragmented market has two key pillars. Firstly, markets and marketing strategy determines where and how to compete, and more importantly how to win based on facts and logic supported by keen analytics. Marketing also plays a key role in unifying and aligning the functional parts of the business into a coherent approach.

Secondly, an effective communications strategy needs to include both digital and personal forms of customer engagement. These efforts then need to be linked to CRM (customer relationship management) and other sales technologies to form a structured, integrated selling methodology

Invest in the best sales leadership and develop the rest

The Asia-Pacific region is intensely competitive. The market contains many multinationals as well as intra-regional rivals, all competing at varying levels of quality and price-points. Moreover, customer buying behaviors and value perceptions differ significantly throughout the region. Sales is the front-line face of your company and vitally important to gaining distribution and customer trust and confidence. Ironically a recent study conducted by Objective Management Group (OMG) revealed the Asia region ranks highest in percentage of weak salespeople

In this context, an elite salesforce needs to become your competitive advantage. Developing one starts with investing in regionally experienced and commercially competent leadership capable of recruiting, coaching and developing the skills and effectiveness of your direct and distribution salespeople. Furthermore, to truly differentiate and rise above your competitors, you must establish a structured, effective, start-to-finish selling process based on set milestones with supporting CRM and sales enablement technology.

Whatever methodology, process and CRM platform you choose, developing your salespeople is essential. Companies selling in the ASEAN region should avoid a few common misconceptions of recruiting salespeople:

1. Recruiting product experts as salespeople does not generate product enthusiasm or win customers. It’s better to hire, train, coach and develop talented salespeople.
2. Poaching salespeople from competitors will not convert customers, as top customers are loyal to brands and local distributors. You may convert a few small scale customers but you need to focus on the biggest and best selling opportunities and these prospects need a compelling reason and material gain to change.
3. Recruiting sales managers and designating them as sales directors does not give you access to more high-quality customers, or improve a manager’s selling skills. It’s better to train your salespeople and promote them once their skills meet the level required by the position.

This model serves as an example, showing the integrated process I developed for Asian markets.

Integrated markets, marketing and selling model

4 criteria to choose the right partners

A well-designed distribution network is essential to optimize customer reach and accelerate growth. Assessing your partners should include the following criteria:

1. Can the partner access your target customers? The right channel partner will have strong customer relationships that you must exploit. Make joint customer visits to gauge their relationships through customers interactions and engagement. Customer visits with favorable responses to new products and brands will elevate your value to the channel.
2. Does the partner have the financial resources to support market entry and growth? Supply-chain interruptions due to unexpected financial limitations will impair growth.
3. Does the partner have sales and marketing resources to proactively sell your products? ASEAN distribution channels are improving their commercial capabilities by establishing business development / product specialists to drive growth of select products to expand customer-share. Partnering with these more sophisticated partners will prioritize your products and accelerate growth.
4. Can you and your potential partner agree on prices that are market competitive and profitable for both parties? Product positioning should be defined in your markets and marketing strategy and refined with partners as you create the communications strategy for specific countries, verticals and target customers. Fair and equitable partner profit begins with accurate product and price positioning. To achieve this, use a value-based pricing model. Determine the price for customers in each market by including a value-add premium and reversing distribution margin, duty and logistics costs to arrive at the distribution exworks cost price. Using a typical cost-plus pricing strategy may extend you beyond the threshold of acceptability and impede growth. You also need to think long-term: price your goods based on what will be best for long-term progressive revenue and profit growth, rather than immediate profit percentages.

Consider the longer-term progressive trajectory:

1. Entering the ASEAN region by launching your export business
2. Establishing a regional presence through a representative office
3. Establishing a trading company to better serve customers gained
4. Foreign direct investment (FDI) to localize supply chain and maximize profitability

Think of the longer-term financial gains – is a flagging $2m start-up business with 50% gross margin more appealing than a $5m scalable business with 43% gross margin?

Value based vs. cost plus pricing model

Choosing customer categories and precision targeting is critical

You must focus on developing the biggest and best opportunities, rather than those on the peripheral. Choosing customer categories and precision targeting the best opportunities is one of the most crucial decisions facing both new entrants and established companies.

The ASEAN region consists of three distinct customer categories with unique buying characteristics; premium, value-added, and price customers. Customer categories should be evaluated and determined in your chosen markets based on strategic intent and alignment. From my experience, the value-added category is rapidly growing. Both premium and price customers migrate into the value-added category seeking products and services that align best with specific needs within the threshold of price acceptability.

Customer categories model

The biggest and best customer prospects need to be determined by precision targeting based on economic value and probability of success modeling. Every business has unique probability of success factors that need to be leveraged as relevant to customer differentiators.

Your probability of success factors could include complex problem solutions, superior products, localized technical support, immediate supply, brand affinity, top-tier channel partners, trade terms, or compliance. Evaluate these regularly, as situations often change and your probability of success can change rapidly.

Based on the chart below, prospects in category 1 (high value, high probability of success) require 80% of your focus and  those in category 2 require the remaining 20% focus. Category 3 (low value, high probability of success) should be developed directly by channel partners, and category 4 (low value, low probability of success) can be ignored. Stay focused on the 80 but stay connected to the 20 as they often pivot, and when they do – you want them to pivot to you!

Precision 80/20 customer prospect focus model

Use digital and personal approaches to reach a wide audience

Digital media is borderless (in most cases) and highly effective in reaching new customer prospects, but your content must be relevant and engaging. Posting social media cut-and-paste product images and inviting opportunities to provide more information or to quote a price is largely ineffective.

Instead, show a quality image of your products in an application, reference the customer to gain credibility, and explain the value proposition and customer gain. Direct customers to your website and connect your prospects with local channel partners. This removes language barriers and more quickly connects buyers with sellers in the same timezone.

Trade shows provide an excellent first contact platform with customer prospects, but you need to be selective. To manage costs, consider country and industry specific trade shows versus larger, interregional or international exhibitions.

As an example, while contracted to help a safety footwear SME expand beyond Singapore, my analytics supported a significant opportunity overlooked in the Manila Philippines construction sector. Participating in the right tradeshow (Worldbex) immediately accessed more than $2.5 million in new business with the two largest construction companies in the Philippines. It’s very unlikely that these prospects would have been discovered during an international or ASEAN regional tradeshow outside of the Philippines.

Research, prepare and be ready to call upon the experts

In international trade, know-how is survival. Take all the steps to ensure you have the knowledge and information you need so that you’re prepared to take advantage of the opportunities while minimizing the risks.

Knowledge of the region and your commercial expertise will make a difference, but an important part of success in trade comes from knowing when to call in the experts.

When it comes to free trade in North America and Asia, the two continents appear to be heading in opposite directions. The U.S. has withdrawn from the TPP, while the implementation of the ASEAN Economic Community (AEC) has accelerated intraregional FDI to record levels.

Canadian businesses should be participating in the ASEAN region’s robust economic growth curve despite the absence of a Canada-ASEAN FTA. I believe the Canadian government is attempting to pivot and reach out to the Asia-Pacific region through the likes of the APEC Business Advisory Council (ABAC) and Canadian International Innovation Program (CIIP).

Canadian companies are also already perceived to be innovative, collaborative and trustworthy in the ten countries comprising ASEAN.

What seems to be missing, however, is a comprehensive plan to achieve an effective market penetration across the diverse, hugely fragmented, yet inter-related ASEAN countries.

On the fast track towards economic interdependence

With a regional GDP of USD $2.5 trillion, ASEAN is the fastest growing region on the planet. After a 4.6% expansion in 2016, GDP forecasts predict 4.9% growth for both 2017 and 2018. Myanmar is expected to be the fastest growing economy in the region, with a prediction for 7.4% growth, followed by the Philippines at 6.6% and Vietnam at 6.2%. Also expected to grow at a moderately quick pace is Indonesia (5.2%), Malaysia (4.9%), Thailand (3.2%) and Singapore (2.4%).

The region is seeing unprecedented construction activity, presenting an excellent growth opportunity for companies selling construction-related products and services. Earlier this year, Marriott announced plans to open 80 new hotels in the APAC region by the end of 2017, bringing 19,000 new rooms to the region. In addition, an astonishing 437 hotels are being built across the ASEAN region, focused mainly in tourist destinations to meet growing demand. Thailand, Malaysia and Indonesia plan to open 81, 79 and 113 properties respectively in each country in the coming years.

New rail lines will make ASEAN travel easier than ever

In addition to commercial construction projects, Private Public Partnership (PPP) mega-infrastructure projects building new rail lines, airports and seaports are on the rise across the region. A new rail project connecting Bangkok with Southern China with an estimated value of USD $5.2 billion has been approved by the Thai government. Its most interesting characteristic is that China will do the design for the project, and Thailand the construction.

Chinese end-to-end control over mega-infrastructure projects is becoming a contentious issue, and serves as a vivid example of China’s One Belt One Road theory becoming a reality at a rapid pace. ASEAN countries are beginning to negotiate that China-financed infrastructure projects contain local engineering, construction and supplier content.

The Singapore to Kuala Lumpur Malaysia multi-billion-dollar high speed rail (HSR) project has been approved and the EPC (engineering, procurement and construction) contracts awarded. The most notable aspect of this project is the high probability of coinciding commercial and residential construction projects emerging in close proximity to the stations. If you provide people with efficient transportation into the cities, new outlying communities will emerge. The areas near the stations will become urbanized, creating additional commercial and residential construction projects.

Other notable mega rail projects in the region include the Hanoi Vietnam metro project valued at USD $15 billion, and Malaysia’s 600 km East Coast Rail Line (ECRL), connecting the capital city of Kuala Lumpur with Malaysia’s east coast states through 23 stations, valued at USD $12 billion.

Major plans for port expansions and FDI projects provide new opportunities

Singapore continues to invest in major infrastructure projects as well. They have just completed T4 – a new passenger terminal building at Changi Airport, and work on the new Tuas mega-container-port has begun.

The multi-billion dollar mega-port investment project includes plans to move and consolidate all port activity to South Tuas by 2027, opening progressively from 2021 until full completion by 2040.

Construction is well underway, with reclamation ongoing for two out of four phases of the development and more than three kilometres of caissons installed. Singapore is also thinking long term, building for an eventual capacity of 65 million TEU’s (standard-sized 20-foot containers) annually, anticipating significant interregional and intraregional trade expansion.

Commercial construction and infrastructure is one growth story, and foreign direct investment (FDI) is another. FDI is entering the region at record levels as interregional and intraregional manufacturing multinationals move from labor intensive and higher cost locations in Asia to ASEAN countries.

Vietnam in particular is reforming and becoming more accessible to foreign investment. Recent years have evidenced steady and increasing FDI there. In 2016, FDI in Vietnam totaled USD $24.4 billion, with 63.7% (USD $15.5 billion) invested in manufacturing and processing capabilities. South Korea is Vietnam’s largest investor and Samsung has three projects currently under construction valued at USD $5.5 billion. The South Korean electronics giant is constructing a new plant in Northern Vietnam that will employ 30,000 workers, and a research and development center in Ho Chi Minh City.

An effective and coherent strategy, not an FTA, is your key to ASEAN market entry

ASEAN is now the fifth largest automotive market, offering new growth opportunities to companies supplying both OEM (original equipment manufacturer) and aftermarket products and services. The ASEAN region produces 4 million cars and trucks each year and sells 10 million motorcycles annually. China progressed from bicycles to motorcycles to cars over a period of 20 years, and ASEAN will similarly advance from motorcycles to cars rapidly over the next decade – especially in the Philippines, Indonesia and Vietnam, in line with economic development and rising incomes.

ASEAN has arrived as the global growth engine of the next decade and beyond.

The absence of a Canada – ASEAN free trade agreement should not prevent SMEs from capitalizing on ASEAN growth opportunities. Furthermore, an FTA is not the silver bullet to establishing and growing your ASEAN business. An effective and coherent commercial strategy is.

Achieving more effective market coverage and penetration across ASEAN’s diverse, hugely fragmented, yet inter-related market is highly challenging and complex for any company. Basic templates or theoretical “cookie-cutter” market-entry formulae often falls short of delivering desired results.

What companies need is a distinctive market-entry and channel design process that caters for key variables which encompass the necessary agility to synchronize individually tailored business, multi-partner, multi-level network strategies with relevant opportunities, regional cultures and competitive scenarios – eliminating the wasted costs of trial-and-error market entry efforts.

Considering the absence of a Canada-ASEAN FTA, the federal and provincial governments might consider a funding strategy to assist Canadian companies with the expense of retaining outsourced specialty ASEAN marketing services. Procuring regional knowledge, experience, and expertise will make a major difference and help companies grow.

Decoding ASEAN markets from Canada can be a daunting task.

I remember my first trip travelling from Vancouver, BC over the Pacific Ocean and reading a stack of “culture shock” novels to prepare myself for my new overseas selling adventure. I remember reading and thinking “My goodness, it can’t be that different from our Canadian culture,” but how accurate these novels turned out to be.

Globalization has made our world smaller and more accessible from all points, but ASEAN markets have many differences. Understanding them and recognizing the need to adapt to overseas markets is vital to gaining access and developing a successful and sustainable ASEAN business.

1. ASEAN is not a homogenous marketplace, your strategy must be market specific

Market analytics should be the driving force of your strategy to ensure that it is driven by a comprehensive understanding of market complexities. Exporting companies must scrutinize relevant social and cultural, legal, economic, political and technological data, along with customer, channel prospect and competitor data, to harvest meaningful information. The information harvested must define the best growth opportunities by economic value and likelihood of success, based on facts and logic rather than assumptions and emotions.

Strategy then becomes about choice, deciding where to compete, how to compete and most importantly, how to win. A correctly executed strategy must connect all the functional and fragmented parts of the business into a coherent and unified approach. Moreover, the strategy must accurately align business resources, capabilities and capacity with target markets, verticals and customers.

If the business decision is to enter and develop multiple ASEAN markets concurrently, then the right analytics for each market must be collected.

ASEAN markets may share the single market concept and motto of “One Vision, One Identity, One Community”, but the markets are diverse. Both value perceptions and buying behaviors differ significantly throughout the region.

As an example, Singapore and Malaysia are bordering nations but must be seen in very different social, cultural, legal, economic, political and technological contexts. Companies entering ASEAN markets need to be cognizant of these intraregional differences and distinctions, as well as how they influence perceptions and shape behaviors about exporting companies, their products and partnerships.

2. Correct product and price positioning

A multi-national corporation (MNC) which manufactures batteries in the FMCG (fast moving consumer goods) segment launched into the ASEAN market, proclaiming that “our batteries last five times longer and are only three times more expensive compared to our local competitors’- we will gain millions of new customers”.

The launch failed because of misaligned product and price positioning. The company misinterpreted value perceptions, and failed to recognize that being three times more expensive was beyond the threshold of customer affordability.

Analyzing, understanding and targeting addressable market segments and customer categories is crucial to product and price positioning. Most ASEAN markets have three-tier customer categories:

1. Premium buyers – Discerning buyers who accept only top-tier brands, offering the highest quality in products with the most features, along with priority services. They are willing to pay the highest level price premium, for example Emirates Airlines first class travel.
2. Value-added buyers – Buyers who expect high quality products and services that meet specific needs. They normally accept products with less features and are willing to pay a price premium based on relevant perceived value, for example business class or economy-plus air travel.
3. Price buyers – Buyers who seek products that are of adequate quality at the best possible price, and have less concern about quality, service levels and consistency, for example economy-class or budget airlines no frills travel.

The best growth and profit opportunity may be to offer existing products or customize and differentiate products or services in the value-added buyer category. Customers in the price-buyer category are burrowing up because of globalization and better choices being made available. Conversely, customers in the premium-buyer category are beginning to seek alternatives that still meet overall needs but offer less features at a lower price-point.

Companies entering ASEAN markets must align features that matter with customers that matter. With respect to price positioning, is it about profit percentage or contributing profit dollars? This is a subjective question and depends on the exporting company’s business culture, growth objectives and longer-term ambitions. As an example, is 50% profit on a $2M business more appealing than 41% profit on a $5M business?

Exporting is normally a first step, to test the waters and begin the business building and market development process. Once a market is developed sufficiently, investment in manufacturing assets often follows. As such, companies frequently accept lower profitability during the entry and development stage with the endgame of optimizing profitability and customer service post-localized manufacturing investment.

My view? It’s about immediately being competitive and quickly gaining market-share while maximizing profitability for both company and channel partners.

I believe price premiums are achievable and sustainable in highly competitive markets. However, value-added features or services must be relevant, meaningful, and priced within the threshold of affordability.

Rather than using a simple cost-plus pricing strategy, consider a market or value-based pricing strategy. Market-based pricing factors in similar competitors, product features, services and value propositions, while value-based pricing factors in relevant product and services features that differentiate and enable price premiums.

Either pricing model must provide sufficient profitability for channel partners considering logistics and import duties. This price becomes the Ex-Works or FOB export-price or channel partner cost-price for a specific market.

3. ASEAN markets are made up of people and relationships, not just products and price

The importance and value of relationships cannot be understated or underestimated. Relationships in ASEAN markets are founded on trust and confidence. Canadian companies are considered to be highly trustworthy within the ASEAN region and this established trust equity can often translate into brand, product and services preference and price premiums.

Building trust with partners or suppliers through customer-centric business conduct and ethical behavior is something that must be experienced and this takes time. Exporting companies must understand the ASEAN culture is to establish intimate affinitive relationships that build the business. Companies that try to take shortcuts and build their businesses on opportunistic sales before establishing relationships often fail to develop a strong, profitable and sustainable ASEAN business.

ASEAN markets offer significant growth opportunities, and with the right strategy that is correctly aligned with markets, channels and customers, Canadian companies can thrive in the ASEAN region. The core ASEAN markets – Philippines, Vietnam, Thailand, Malaysia, Indonesia and Singapore – are rapidly emerging as the global growth engine of the next decade. Emerging markets and globalization is here to stay.

A number of key ASEAN markets, such as Vietnam and the Philippines, are rapidly evolving as lower-cost manufacturing alternatives to China. These evolving markets offer significant new interregional customer opportunities due to rising incomes and urbanization. The ASEAN region’s total population is approximately 45.7% of China’s, but when comparing the top 10 cities of the ASEAN region and China, that number rises to approximately 62.1% of that of China.

Vietnam reported record FDI for 2015 and the country’s General Statistics Office reports 95% year over year (YOY) growth in the first half (H1) of 2016 ($3.839b to $7.5b). By comparison, this is second-place in the ASEAN region to the Philippines in attracting FDI, who reported 103% YOY growth in H1 2016 ($19.76b to $40.15b).

You’ve had encouraging discussions during the exhibition about new opportunities to sell your products in high growth markets, and you may have even had back-channel meetings with prospects over dinner. You return to your home country, continue the discussion on-line and appoint new distribution on an exclusive basis.

A year later, however, you determine the new partnership has failed, export sales are well below expectation, communications to probe why go unanswered, and bilateral enthusiasm weakens. What went wrong, and what do you need to do differently next time to achieve a more successful result?

Your best options to identify new potential partners

Choosing your channel partners, who will help you sell your goods and/or services, is one of the most critical decisions facing new exporting companies entering ASEAN markets. The markets consist of multiple types and layers of channels serving a wide variety of dealer networks and end customers.

Identifying, establishing and developing the best-fit channel partners is essential in gaining market entry and building a successful ASEAN business.

As such, exporting companies should consider acquiring professional services to assist in identifying, appointing, and developing best-fit channel partners.

Firstly, it’s difficult to identify the best-fit and most capable channel partners during an interregional trade exhibition. Travelling to attend and exhibit at interregional trade exhibitions in major ASEAN cities has become very expensive due to the rapid pace of economic development. Moreover, a number of trade exhibitions have scaled back significantly over the past three years.

Most ASEAN top-tier channel prospects have limited marketing budgets and prefer to focus expenses and resources towards their local or host country exhibitions. In most cases, local exhibiting companies enjoy a significant rate reduction over visiting foreign companies.

When attending trade exhibitions, the main priorities of local companies are to gain new customers within their territories and identify new foreign suppliers and partners. As such, a more focused and effective approach is to attend or exhibit at specific trade exhibitions in strategically selected markets.

Trade exhibitions are just one method to expose channel partner prospects. Additional options such as customer referrals, competitor channels, adjacent products suppliers, industry organizations and consulting firms are other options that should be considered.

Keep the end goal in mind at all times

Secondly, when selecting and appointing channel partners, you should consider three priorities:

Do channel prospects have access to your target customers? ASEAN markets are made up of people and relationships, not products. A qualified channel will have strong existing customer relationships that the exporting company must tap into. This can be evidenced by making joint customer visits to gauge the quality of customers and relationships.

Favorable customer visits and responses to new products and brands will only elevate your value to the channel partner prospect.

Do channel prospects have the financial capacity to support the exporting company’s market entry and longer term growth strategy? Often channel partner ambitions outweigh abilities. It’s crucial to ensure channel prospects have the financial capacity to support marketing initiatives to promote new products and brands and scale up inventories and resources as you gain momentum.

Product supply interruptions due to unanticipated financial limitations will inevitably lead to the customers you gained seeking alternative suppliers.

Do channel prospects have the sales resources to proactively sell your products? Sales professionals have a critical role in engaging customers directly to demonstrate customer value and gains, convince skeptical decision makers, justify price, and defend profitability.

ASEAN channels are beginning to adopt best-selling practices by establishing product specialists to drive the growth of priority products. Tapping into channel product specialists will prioritize your products and optimize customer reach.

Partnerships are two-way streets, so make sure you’re adding value

Thirdly, developing meaningful, productive ASEAN channel partnerships and relationships is about understanding, acknowledging and acting upon channel partner needs and priorities.

Channels seek suppliers offering innovative value-added products that are simple to market and worthwhile to sell. They are reinforced by a willingness to regionally adapt and support mutually agreed upon growth initiatives and goals.

Making your products simple to market requires going beyond product training by developing cooperative market and customer relevant marketing                 campaigns.

It’s important to educate and coach channel salespeople on how to sell your products using a consistent, structured professional selling methodology. Leading regular and frequent joint customer visits will establish channel and customer confidence and accelerate growth.

A new product and brand must be worthwhile to sell in terms of generating new revenues and profits. Channel cost price needs to factor the type, intensity and behavior of competitors, acquisition costs such as logistics, and inward duties often overlooked by exporting companies.

Establishing the correct market price and channel cost-price that is able to gain market-share and provide sufficient profit for channel partners is essential in developing ASEAN markets. This will enable you to motivate channel partners to buy-in, actively market, proactively sell and succeed.

Be a leader in the ASEAN growth markets with the right partnership

ASEAN markets offer significant growth opportunities for exporting companies. The ASEAN region is the global growth engine and will be for the next decade, but accessing these markets requires identifying, establishing and developing dedicated, highly motivated channel partners who can reach your target customers.

Tapping into the many top-tier channel prospects available in the ASEAN region is vital to capitalizing on growth opportunities.