Important tips that will help you storm the Asian market
Just before you run to the Asian market with an emphasis on Japan here are some important tips
In recent years we have seen great interest from various Asian countries and start-ups who are beginning to take Asian markets as part of their global strategy, but just before investing resources on the Asian and Japanese markets in particular, what do you really know about Asia?
According to the UN, there are 48 countries on the Asian continent (including Israel) along with countries such as Russia, Kazakhstan and Turkey, which are also part of the European continent.
It is also possible to examine and divide the continent of Asia by 5 regions:
· East Asia - for example Japan, China, Korea
· Southeast Asia - Thailand, Philippines, Vietnam
· South Asia - for example India, Sri Lanka
· Central Asia - For example Kazakhstan, Afghanistan
· West Asia, which is very familiar to us, including Israel, Egypt and its neighbors
If we set aside Central and Western Asia because this is not the part we usually mean when we are targeting the Asian market in general and as Israelis we have a deep understanding of these regions, and therefore the focus will be on the three additional markets that although we Israelis look like one big Asian market. These are countries with very different characteristics and sometimes even past residencies that affect their relations with third parties (such as Israel) who work with them.
If we take a close look at the Asian countries spoken closely and not in general, and despite the physiological similarities (at least according to Westerners), we can see a profound difference between the cultures, the working methods of the organizations, the form of communication, customs, language and almost everything.
This means that start-ups looking at penetration into these markets, whether it's a product, a service, or a technology, will need to identify the right country for their product / service / technology.
Most of the product / service in that country has developed from the need of that specific country, and therefore even if the product / service of that start-up company that has succeeded in one Asian country, let's say China, it cannot be automatically assumed to succeed in neighboring Japan. If we expand the subject and say that the start-up company has a technological product with technological capability that surpasses any existing technology and can be a dominant product in the US it cannot be assumed that the same product will succeed in Japan. Of course, it cannot be assumed in the same example that Schlieffen has better technology than the US or another country, but the difference is that the difference in the need of the Japanese market (for example), like the taste of Japanese customers, and the demand for the quality of that product is substantially different.
So here are some important tips for Israeli start-ups who think about which market to start:
1. Market size
As you approach the size of the market, do not look at the macro numbers of that market. Many companies make the common error of population size as a major factor in penetration. Taking the example of Indonesia and the Philippines, and the company's product is a mobile application or selling products over the Internet, the first trap will be to use the population and penetration rate that the company expects based on past data from other countries. This figure will not give much meaning because there are said to be 100 million people or even 200 million people, the question in these countries will be, how many existing smartphone users can pay for the service / product of the company? Or, how many can actually use existing bandwidth in a country for consistent browsing?
Or if we look at the country's relative GDP, this figure will be wrong in the opposite way, since countries like Indonesia and the Philippines will have a low or low ARPU user population. But for users in big cities like Manila or Jakarta, you'll find that actual restaurants are much more expensive than those in developed countries, and the consumption level in those cities is massive. In the end you will need to examine the same data in your eyes and legs for every potential market you want to penetrate.
It is best not to disregard the laws and regulations of the target country that you wish to penetrate, despite the feasibility of breakthrough technology and business models in their field.
Foreign direct investment law (FDI), regulation, industry, IP, labor and employment laws, privacy, consumer protection, contract law, corporate law, etc. are different from one Asian country to another, and even if the interpretation of that country is different completely. In addition, each country has a large number of "gray" areas and there is a high risk of entering those gray areas that should consider the significance of the risk and the consequences of entering those areas.
In many Southeast Asian countries there are negative "black" lists that will prevent the establishment of companies in those areas that are under the control of a foreign / Israeli company. If we take Japan for example, there are multiple regulations and approvals unknown to foreign companies, with implications for the plurality coming from the Code of Conduct and not necessarily from interpretations of this court or judge. Along with this there are also cultural laws "Kanshu-ho" which are built from certain customs formed from 1,000 years of history in Japan.
3. Uncertain balance of forces
Along with the same cultural laws, there are many unique balances of power for every Asian country.
Family businesses, a group of companies (Keiretsu), government, political forces and many that cannot be read or understood from textbooks. Worst of all, in some countries if you do not run on the same invisible balances of power, the company is liable to lose its business and even its reputation. You have to understand and learn very well the implications of those forces.
All of these may give an indication that it is really difficult to grow and expand across Asia. At the same time, since Hi-Tech and the Stratosphere world are also playing fast growth, it is unrealistic to spend 3-5 years in one country alone.
Asian countries have developed a very unique ecosystem over history, business relationships and politics. Therefore, relationships, knowledge, a deep understanding of customs, regulation, and a realistic perception of the market is critical to doing business in Asia, and we must remember that there are indeed ways to leverage the internal relations in Asia.
If we return to Japan, one of the largest economies in Asia and the world, the opportunity to overcome the same difficulties will give the same technology / product / service entry to vast regions and countries in Asia relatively in a short time and for several reasons such as the extensive infrastructure of Japanese industry in Southeast Asia, Known for the high quality of its products and services offered to Japanese customers and other international customers.
This means that if the product / service / technology is successfully expanded into Japan along with the right approach and the appropriate partner, that product / service / technology will have a Quality Seal.
The "Quality Seal" will then be used to leverage the rapid penetration of other markets in Asia, particularly in Southeast Asia. And it can even be said that some countries even prefer to use the same stamp and "face" Japanese penetration into the market like Thailand, Taiwan and even Muslim countries like Indonesia and Malaysia are growing.