All business is local. However, all markets are global. Global trade and technology has created opportunities for business to serve an existing market segment over a wider geographical area. …

– page 67, Sustaining High Growth for Long Term Success

The rapidly growing global middle class are experiencing a convergence of lifestyles. This has created a huge demand for similar consumer goods around the world. The implication is that the niche markets that many businesses serve in established locations now also exist in other parts of the world, and present exciting opportunities for companies willing to enter those markets.

The Asian block, consisting of West Asia, Central Asia, South Asia, Southeast Asia (ASEAN) and East Asia, contributes the largest share of the global GDP. Following is the GDP share of the three largest blocks:

Global GDP

1. The Asian Bloc – 33.84% of global GDP
2. The North American Block – 27.95% of global GDP
3. The European Bloc – 21.37% of global GDP

Combined, these 3 blocs generate 83.16% of global GDP.

Asian countries have diverse political and economic systems with varied business cultures, and a “one size fits all” approach to marketing and negotiating business partnerships may not be the best approach when we plan to export from North America to Asia. With that in mind, what steps should you take to negotiate effective partnerships and expand your presence in Asian markets?

Never be afraid to keep your options open in negotiations

The following case illustrates the different factors a North American cereal company identified when negotiating with two Asian businesses in two different countries.

A prospective supermarket chain was willing to purchase cereal products from the cereal company at the agreed price. An issue arose, however, when the supermarket chain asked for credit terms of payment in 90 days instead of 60 days as stated in the cereal company’s “Standard Terms of Contract”.

The supermarket chain had a reputation of making prompt payment on terms it agrees to. Furthermore, they had the ability to purchase an estimated 65% of the cereal company’s production capacity for the Asian market, so they felt their position gave them the necessary leverage to make this request.

The cereal company then had to weigh its negotiating options. Even though the supermarket chain insisted on a 90 day credit period, the local political, economic and social conditions would enable the supermarket chain to get a bank guarantee for payments.

An option for the cereal company was to sell at a higher price to accommodate for the expected delay in payment or to bare the loss from delay in payment as a result of agreeing to extend the payment period to 90 days.

Their alternative was to sell to a distributor in a neighbouring country that agreed to the price and 60 days payment term. However, there were greater political, economic and social uncertainties in this neighbouring country, which resulted in market and currency fluctuations.

Additionally, the distributor was not able to provide a bank guarantee for payments, but the owner of the distributor had a reputation with other North American companies of being true to his word with payments made as agreed.

By simultaneously negotiating with the supermarket chain and the distributor, the cereal company was able to assess the walk-away position with both parties. Having an alternative enabled the negotiator to achieve the best terms possible in negotiations with both parties.

What factors were most important to weigh in getting the best possible agreement?

To get the best agreement possible in Asia, the cereal company’s negotiator evaluated the two alternative businesses (the supermarket chain and the distributor) as well as the countries within which they did business.

As part of that evaluation, the negotiator went through the following steps:

1. Analyze the desired agreement objectively
2. Understand the people in the prospect business
3. Identify the other parties’ true interests in the agreement
4. Explore best alternatives and options before making a decision

To achieve a meeting of minds and agreement, it’s crucial to understand the thinking and values of the owners and operators of the business involved in the negotiations. This includes understanding them in both a social and business environment. Cultural understanding plays a significant part in assessing the prospect of a productive long-term relationship being established.

To decide which of the two alternatives would be best for their needs, the cereal company had to address the questions:

1. How should they value qualitative versus quantitative factors?
2. What if the supermarket chain delayed payment beyond the 90 days payment period?
3. What if the alternative deal with the distributor is then no longer available?

A PEST analysis is your key to understanding important market factors

Additionally, the cereal company had to do a PEST Analysis to assess the political, economic, social and technological factors that would impact its business in the respective countries. This required an assessment of the supermarket chain and the distributor, as well as their competitors within the local business environment in relation to the following factors:

Political analysis: This includes environmental policy, domestic law, international regulations, government policies, funding and grants, local market, pressure groups, conflicts, human rights, etc.

Economic analysis: With this aspect of analysis, the local economy, market trends, global economics, competitors, taxes and tariffs, seasonal market trends, unique industry practices, distribution trends, currency interest and financial exchange rates are all evaluated.

Social analysis: Through this analysis, you’ll understand the lifestyle, demographics, consumer taste, brand perception, fashion trends, retail outlets, and cultural norms in the assessed markets.

Technological analysis: Complete this analysis to understand the impact of competing technology, research and development funding, supporting technology, maturity of technology innovation, production capacity, communications platforms, legal frameworks and intellectual property protection.

Bringing everything together to make your best final decision

The cereal company evaluated all available evidence pertaining to:

1. The values of the owner and operator,
2. The business capacity of the prospects
3. The risk involved from the PEST Analysis.

In the end, they negotiated and concluded an agreement with the supermarket chain based on an analysis and assessment of risk and opportunities arising from establishing this business relationship. While the 90 day period was outside of their usual contract, the risks in the distributor’s market and their inability to secure a bank guarantee meant the supermarket chain provided a safer, more stable partnership with opportunities for growth.

With these steps in mind, you’ll be ready to step into your next negotiation in Asian markets and come out with the deal that will best serve your business needs and goals.

The post Grow your presence in Asian markets by negotiating better deals with your partners appeared first on Trade Ready.

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).

The post Three key considerations to help build your ASEAN entry and growth strategy appeared first on Trade Ready.

Custom-tailor your approach just like a Hong Kong tailor does for a silk suit or dress. They understand how to fit their clothing for a particular person, and you need to do the same for each unique situation.

Avoid imposing personal customs, habits, and business etiquette from your passport country into international business meetings and deals. By doing a little research and preparation, you’ll fit in more easily and find your business dealings go more smoothly.

Consider these 12 tips to prepare for business meetings abroad:

1. Time

Plan to arrive early and stay late. Understand that ‘time-conscious’ Western economies think of time as a limited and cost-related commodity. Western businesses also tend to be more short-term focused than those in the East, for whom quarterly earnings are less a measure of success.

Remember, these are cultures whose history is measured in millennia rather than centuries! Allow plenty of time for discussion, dinner and drinks.

2. Plan a power conversation

Include the higher purpose in the early discussions. Discuss the 30,000 foot view, like the industry’s current and future developments, not just the business at hand.

3. Small talk starts the meeting

Be prepared to begin with small talk about your business counterpart’s country, as well as their customs, history and current popular sports figures. Consider incorporating activities that will be popular and positive experiences for everyone, such as visits to their world heritage sites.

4. Formality shows self-control and self-respect

Body language is as important as the words you speak in Asia – sometimes more so. Remain calm and formal to demonstrate self-control and that you’re worthy of their respect. It is considered improper etiquette to place hands or fingers on yours or anyone else’s head, face or mouth.

5. Prepare a Memorandum of Understanding

Have an MOU prepared in advance so that when both parties agree to move forward, you are ready to start the process. More detailed agreements, including licensing, can be drafted later.

6. The importance of saving face

Saving face, the notion of ensuring behavior does not provoke strong negative emotions in another person or yourself, is critically important and deeply valued in society and business. Ideas should be discussed gently to avoid “throwing anyone under the bus” or anyone losing face, you included.

7. Gift exchange

Coordinate the gift exchange before departure, confirming details with your inside contact.

Small, locally made artisan crafts and gifts from your home region are typically well received. Inexpensive, pre-packaged, non-perishable food-items such as local sweets, regional peppers, maple syrup, and chocolates are also good ideas.

Consider books, bookmarks, golf balls and scarves that may not be available in the destination country. Avoid red ink in books and papers. Be sure to bring extra gifts in case you are introduced to someone you weren’t expecting to meet.

8. Time for silence

Brief your team beforehand about having specific time set aside after the meeting for silence and questions. In Asia, it is impolite to ask questions during a presentation. This is viewed as ‘interrupting’ the speaker. The same dynamic occurs during meetings.

9. Avoid product promotions

Before describing your services or products, be prepared to discuss other, general topics. Wait to be asked for your materials, rather than hand them out.

10. Patience

Constant distractions in many Asian workplaces, including cell phones ringing frequently and animated conversations elsewhere in the building, may cause you to feel distracted.

Remember that other cultures have different ways of working. In Asia, businesspeople are very comfortable with constant interruptions and dispensing with agendas in service of important relationships.

11. Humor caveat

Humor is culture-specific, so something that is funny for someone in one culture may draw blank stares or serious looks from those in another culture. Subtle meaning from North American or European humor can get lost in translation in many Asian cultures, and vice-versa.

If you do tell a joke, know that the interpreter may simply tell those present to laugh because the visitor just told a joke that they can’t understand. Which, in itself is kind of funny, right?

12. Gestures

Avoid expansive, sweeping hand movements. Research offensive country-specific gestures to make sure you don’t unintentionally insult anyone. Most Asian cultures don’t gesture with their hands or point with their index finger. Use an open palm facing upward to indicate direction.

Knowing proper international business meeting etiquette goes a long way in opening up new ventures in Asia and beyond. Creating a welcoming atmosphere that is respectful of different cultures and business practices, rather than trying to force Western ideas on others, will go a long way to inspire trust, establish rapport and build long-term relationships.

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The materials and paints for the walls and ceilings of each room, as well as the lighting and sound system, all utilised the latest in technology. The local engineers overseeing the restoration project confirmed that the technology and craftsmanship used was not available locally. The European craftsmen worked diligently on weekdays to complete their tasks on schedule, and then spent the weekends swimming and rejuvenating at an island beach resort.

Demand is skyrocketing for luxury goods in ASEAN markets

There is an abundance of business opportunities in the rapidly growing ASEAN consumer market which desires the same high quality luxury goods as North Americans.

ASEAN, which stands for the Association of South East Asian Nations, consists of 10 tropical Asia Pacific countries. ASEAN is focused on rapid economic modernisation with brand new highways, rapid rail, seaports, airports and information technologies connecting the region. Investment in infrastructure expansion continues to create opportunities for businesses in the sector. Competitive pricing and budget airlines also make air travel within the ASEAN region more affordable.

The region is on a major international sea route that connects Japan, China and the rest of East Asia with India, the Middle East, Africa and Europe. North America is also a major export destination for many ASEAN manufactured goods.

The middle class in major metropolises such as Singapore, Kuala Lumpur, Bangkok, Jakarta and Manila have firmly embraced the “West coast lifestyle” of North America, while also giving it an added Asian flavour. This affluent ASEAN middle class is willing to pay premium pricing for artisan, organic and all natural products.

For example, you can enjoy Alaskan crab at a Chinese seafood restaurant in Kuala Lumpur, or grilled Pacific salmon with maple syrup at a Singapore fine dining establishment. All of this is complemented with fine wines from Europe, Australia and North America. ASEAN residents also tend to rapidly embrace the latest in technology.

The ASEAN region is a winter getaway destination that draws tourists from well beyond Asia, with people travelling from the Northern and Southern hemispheres all year round. The region also offers retirement schemes for pensioners that attract participants from developed economies.

You need to research the ASEAN consumer market to tap into its opportunities

This is an excellent time to do market research for export opportunities.

Study market opportunities by analysing data from:

1. Research on the ASEAN Region
2. Research on individual ASEAN member countries
3. Research identified business prospects in target countries

Research should utilise evidence based data from primary sources.

From these sources, we learn that ASEAN is made up of Singapore, Malaysia, Thailand, Indonesia, Philippines, Brunei, Vietnam, Cambodia, Laos and Myanmar. Taken together, the ASEAN region is the 3rd largest economy in Asia, with a combined GDP of US$2.6 trillion (2014).

We also learn that the ASEAN Economic Community was established in 2015 with a combined population of over 622 million people, making this a major world market. Foreign Direct Investment (FDI) into the ASEAN region increased to US$136 billion in 2014.

What do I need to know about the individual ASEAN countries?

The ASEAN region is not a homogenous market. Identify the country that offers the best opportunities for initial business. This could then serve as the base for subsequent launches into the other ASEAN countries. Define your export goals and obtain factual information that supports your goals.

Do a comprehensive political, economic, social and technological (PEST) analysis of the ASEAN countries, and determine the market size. Assess the economic and market conditions such as seasonal changes, short as well as long-term trends and growth potential.

Once you have completed those steps, identify actual and potential, local as well as international competitors. Finally, evaluate the possible impact competitors will have on your market share, pricing strategy and profitability.

Discover your best options by researching identified prospects

When it comes to identified prospects, you must evaluate the strengths, weaknesses, opportunities and threats (SWOT) of doing business with them. What are the benefits of doing business with the identified prospects? Assess the ability of any prospects to deliver on promises.

Next, analyse the information and market data to evaluate the business risk. Decide if this justifies doing business in the target country and with the identified prospect. If it does, you’ll need to develop an export plan and market strategy.

Once you do, commence negotiation of an international trade agreement with the identified local prospect, and utilise evidence based data.

You must also include clearly defined goals that are specific, measureable, achievable, realistic and timely with an evaluation and review (SMARTER) process in place.

With these steps completed, you’ll be well on your way to a successful entry into the lucrative ASEAN market of your choosing!

The post The rapidly growing ASEAN consumer market presents opportunities for quality exports appeared first on Trade Ready.

With the ratification of the Canada-Korea Free Trade Agreement and the signing of the Trans-Pacific Partnership, it is imperative that Canadian companies explore opportunities in Asia.

Asia Pacific Foundation of Canada finds B.C. SMEs under-utilize available resources

In 2015, the Asia Pacific Foundation of Canada (APF Canada) conducted a survey of nearly 150 British Columbia small- and medium- sized enterprises (SMEs) doing business abroad. Most exported to Asia, but some exported only to non-Asian markets.

The survey had four key findings:

1. Only half use export promotion services to expand to Asia
2. Business-to-business connections are seen as key
3. Country-level governance is viewed as a challenge
4. Employees with a background in Asia are a bridge to the region

The first key finding, that many B.C. SMEs don’t use any resources to help them export to Asia, is particularly striking. When respondents were asked about services they had used, 20% reported using the services of a Canadian Embassy, 15% used those provided by Export Development Canada (EDC), and 14% used provincial resources.

Twelve percent of respondents used the Trade Commissioner Service, and 10% used Asian-Canadian business associations, such as the Canada China Business Council. However, 48% of B.C. SMEs reported using no services. These findings were comparable with the non-B.C. Canadian SMEs surveyed, with 46% reporting the same.

With relationships serving such a central role in Asian business culture, the networks of organizations like EDC can be incredibly useful. Thus, such under-utilization of export development resources is concerning.

There must be a greater effort by trade promotion organizations, and trade advocates, to enhance awareness of the various services on offer. Small business owners can get one-on-one consulting, networking help, due diligence assistance, financing and much more—but they need to know where to look.

Read the Guidebook to Doing Business in Asia

On May 25^th, 2016, the B.C. Government launched the Guidebook to Doing Business in Asia: An Online Resource for B.C. Businesses. Created by the Asia Pacific Foundation of Canada, and supported by the B.C. Ministry of International Trade, the Guidebook is an online resource containing links to different services SMEs can utilize if they are considering exporting to Asia, or have already started their venture.

Free of charge, the Guidebook to Doing Business in Asia contains resources on market research, financing, business culture, networking and much more.

Though primarily for B.C. businesses, it contains many Canada-wide services which can be of use to business owners across the country.

Asia is growing. It is of increasing importance that Canada’s SMEs pay attention to this dynamic region. Right now, many Canadian SMEs aren’t taking advantage of the services available to them. The Guidebook to Doing Business in Asia can play a role in ensuring that these SMEs know what is out there, from the federal and B.C. governments to the private sector and abroad.

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Some are quick to state that by their very nature, SMEs are too small to penetrate Asia’s diverse and complex markets.

Others would argue that the current governmental policy framework is not offering the right settings to enable SMEs to take full advantage of these lucrative market opportunities in Asia.

And finally, the SMEs themselves, highly intimidated by the scope of business activities in Asia, simply do not know where to start.

In the recently released Building Blocks for a Canada-Asia Strategy, Stewart Beck, the CEO of the Asia Pacific Foundation of Canada, said:

The rise of Asia marks one of the defining shifts of the 21st century. Within five years, Asia will represent 44 percent of the world’s gross domestic product, 54 percent of the global middle class, and will consume $4.8-trillion (U.S.) annually – 42 percent of the world’s total consumption.

The launch of this document on January 28th at the Ottawa Forum is a timely and welcome initiative which, along with British Columbia’s new Raising our Game in Asia trade strategy, will help to increase Canada’s focus on Asia.

It delivers a clear signal to the private sector to take initiative and turn opportunities into successes in this dynamic and diverse region.

The importance of Asia to the future of our economy is unquestionable, especially in the context of Asia’s current shift from an investment-led economy to a consumption and service-driven economy.

Large-scale urbanization, the expansion of the middle-class and sustained economic growth are among the key drivers of future development and wealth in Asia.

This will translate into increasing demand across various industry sectors, such as: power supply and distribution, food production and logistics, and electronics.

But the biggest demand will be in service sectors, including: computer and IT, financial and insurance, engineering, architectural and science, resource and agriculture-related services, health and education services.

These trends should be seen as the ones providing solid opportunities for Canadian businesses.

However, Asian markets are becoming increasingly complicated to access, as governments and businesses all around the world focus on the opportunities in the region.

In order to be successful in Asia, Canadian SMEs will need to find ways to operate in a more competitive environment.

Asia is not all one market and Canadian businesses must not consider it as homogenous. Each country has different cultural traditions, languages, economies and governments.

One approach or market entry strategy is not going to work across each country, or even across different regions within the same country.

Understanding the parameters of various Asian markets from a political, social, economic and technological point of view is key for Canadian SMEs to succeed in this part of the world.

3 ways to help Canadian SMEs tap into Asia

When talking to SME managers, I often hear comments pointing out three key challenges they face when trying to do business beyond our borders, and more specifically in Asia:

• low confidence and lack of international experience
• lack of knowledge and poor analysis of the Asian markets
• lack of long-term commitment

1. Think bigger

The small and medium-sized businesses in Canada at all levels of development have a confidence dilemma. Why?

Because it takes a certain skill set to go from domestic to international operations, and to shift business-changing decisions like expanding internationally from the back of business minds to front and centre.

According to the 2015 report by HSBC and the Conference Board of Canada, Selling to the World: The Keys to International Business Success, the four factors allowing us to determine the company’s readiness to go global – and what HSBC calls “a global competitive advantage”—are:

1. Skilled executives
2. Market knowledge
3. The ability to innovate
4. International networks

Canadian SMEs who master these keys will be the ones capable of creating successful operations in the Asian markets.

While every part of the “global competitive advantage” framework is important, the most crucial component to boost the confidence of a small business is the company’s managers.

Talented executives can understand the challenges of expanding internationally, play an influential role in identifying international opportunities, and boost the company’s international competencies by recruiting experienced international business employees and consultants.

That type of “out of the box” and entrepreneurial vision is a big reason why, for instance, AMP Solar Group, an experienced rooftop solar project developer from Port Credit, Ontario, has done so well.

A couple of years after its incorporation in 2009, the company started a careful process of foreign market selection and has established quality business connections in the United States, the U.K., and expanded its operations to the Asian markets of India, Japan and Thailand.

Expanding to unfamiliar Asian markets was somewhat risky and uncertain for AMP –as noted in the December Business Report of the Globe and Mail by Dave Rogers, AMP’s President and CEO.

However, the company’s managers’ strong belief that the market for renewable energy was about to take off, coupled with their solid partnerships in the U.S. and the U.K., allowed them to make confident inroads in Asia.

2. Create your own global knowledge network

Market analysis is far from easy. This is even truer when the company is facing the challenge of targeting a completely unknown market with a high level of cultural and economic differences.

Unfortunately, too many companies are making business decisions based on just a “snapshot” view of the market, which is often inaccurate.

The pace of change is so rapid in Asia that the company’s plans become obsolete before they are even fully implemented.

A lot of market analysis could be biased and poorly made, which results in failure or misalignment of the company’s international strategy.

The managers of Canadian SMEs who aspire to be successful in Asian markets need to find a way to surround themselves with people who have been already exposed to Asia and its various geographic areas.

It is essential to identify who will be your sources of market information and intelligence. This could include taking full advantage of trade promotion agencies and their various market studies and innovative tools.

It may also mean an expanded network of Canadian and Asian consultants and experts. Having a globally oriented business spirit also includes being willing to get on a plane and be physically present in your new target market in Asia.

Prospective CEOs developing the necessary level of commitment for a given market in Asia should attend international conferences and trade shows and develop local contacts which could include new local hires.

According to Ken Shields, CEO of Conifex Timber, a Vancouver-based forestry products company, travel seems to be a must.

For companies that want to expand to China, he is advising to use trade missions which are an efficient way to make connections and to stay apprised of the country’s economic and financial plans and priorities.

3. Build your presence in the market

To successfully capture the opportunities in Asia, Canadian SMEs need to create foundations for deeper and broader relationships with a given market.

Physical presence and personal contact are viewed as real assets in Asia. Setting up a local office in Asia is the most effective way to conduct business transactions, whether with customers, suppliers or partners. This is also the best way to deal with governmental authorities.

Establishing a long-term presence and making the necessary investments help SMEs prepare for tough times and avoid being left behind. This type of presence is a key factor in dealing with the market volatilities.

It is a well-known fact that when China’s economy overheated in the mid-to late 1990s, some of the Western companies started to pull back and only a few anticipated the staying power that was needed to weather the market storms.

China and other Asian markets will no doubt witness new periods of turbulence in the future, as their economies continue to grow.

A long-term presence is also a key factor in developing the necessary level of connectivity with Asian markets. There is presently a tendency to rely too much on technology to fulfill the need for communications.

However, Asian cultures, diverse as they are, have a particular preference for personal contact to establish trust and good reputation.

Nautel, a Nova-Scotia-based manufacturer of radio broadcast transmitters, became international thanks to its innovative business model using an extensive network of sales partners around the globe.

These sales agents, partners or independent contractors – according to Kevin Rodgers, the company’s President and CEO, “are the people on the ground who can interact directly with clients.”

Nautel has been relying on their sales partners’ knowledge of local language, customs and regulations, and proactively leveraging their strengths, connections and knowledge, in order to expand its business beyond Canada’s borders.

Today, Nautel operates in 177 countries, including many in Asia. The company is still on an expansion path, this time to China, one of the few countries Nautel is not yet in, says Rodgers. Nautel has recently entered into an agreement with a sales partner there.

Entry into Asia’s national or regional markets requires adequate resources on-the-ground to facilitate the company’s transaction-based commerce and selling via multinational value chains.

A lack of in-person presence, investment in local human capital, and long-term commitment to the market, may not be simply sustainable in the Asian context.

Therefore, it is understandable why so many foreign companies, which are our competitors in this part of the world, are busy growing their presence in Asia and planning to position their businesses for success in the Asian business ecosystem.

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