Expanding Into Emerging Markets: A Guide
Expanding overseas into emerging markets creates both opportunities and challenges for companies – large and small.
While there are obvious benefits to moving into new lucrative markets, such as boosting the bottom line, increasing market share or even dominating a market, companies need to make sure they consider all the ins and outs of an expansion before trying to go global.
Untapped markets are are often the hardest to penetrate, so although they may present huge moneymaking potential, focusing only on the big buck can often prove costly.
Emerging markets such as the ASEAN group of countries offer genuine growth opportunities for firms, provided they can make the right impression and market their products in a cohesive manner that is consistent and compatible with local culture.
ASEAN (The Association of Southeast Asian Nations):
Thailand, Laos, Vietnam, Indonesia, Malaysia, Philippines, Myanmar (Burma), Cambodia, Brunei and Singapore
Here are five top tips for a successful foreign launch:
Plan, plan and plan some more (and do your research!)
The importance of good planning cannot be overstated. This should cover all aspects of the business, including how to conduct yourself in business meetings (even down to the handshake itself), reading up on local regulations and HR law, and of course establishing whether there will be sufficient demand for your products and services. Companies also have to decide how they are going to measure success and failure in the short and long term. Local cultures also need to be carefully considered, as there is little point in putting together a ‘fail-safe’ plan only to have unmanageable staff turn-over or to receive no business because your sales techniques are incompatible with the touch-points of your target market.
Localize, don’t translate!
Launching a product or service may be tricky process but it's vital you get the branding right if you are to stand any chance of being successful in the long-term. Slogans in English are unlikely to directly translate into other languages and so skilled linguists should be used to make sure the core message is retained. Blunders can leave firms looking amateurish and may cause reputational damage they will struggle to recover from. For example, HSBC was left red faced in 2009 after its slogan 'Assume Nothing' was mistranslated as 'Do Nothing' in various countries, which forced the launch of a $10 million rebranding campaign.
Technology is your friend!
Technology is a massive asset for any company trying to break into an emerging country. Firstly, it helps your firm to budget, plan and manage its finances – provided you have ensured that your system is compatible with the tax system of the target market! Two of the biggest issues that companies will face are language and currency, but technology can also help address this. Enterprise management software allows firms to view the company in ‘real-time’, and to make quick and informed decisions to determine the future direction of the organization. Staying connected with HQ, regional offices and suppliers is also much easier with technology, as conference calls can be held across borders, while instant messaging and email through mobile devices means people can be contacted on the move.
Target the right markets!
Businesses should be matching up products and services with the right target market. To take a rather obvious example; a beef restaurant would be rather unwise to start a franchise in a predominantly Hindu country like India, where the cow is a revered animal. But this logic can also be applied to many service and product sectors, so market research is key. Andy Puzder, chief executive officer of CKE Restaurants, stated the company is focusing its expansion efforts on Brazil, Russia, India, China and Europe. In the past three years, the US-based eatery has increased its restaurant count internationally by 53 per cent, compared to only two percent domestically.
Be prepared for anything!
While a plan does help, nothing will run as smoothly as you had hoped, so businesses need to make sure they are prepared to deal with unexpected costs and unforeseen challenges. This could include power or internet instability, a generally slower pace of life in a business and personal context, not being able to find sufficiently skilled staff, radically different price expectations from your established markets, deals falling through at the last moment, or having to settle contracts in alternative currencies that you have perhaps never heard of – firms have to be prepared to deal with these and other types of issues when trying to establish a presence in a new territory, especially those of emerging and frontier markets.