market intelligence for asia pacificgia geographies white paper 3/2011 market intelligence for asia...

GIA Geographies White Paper 3/2011 Market Intelligence for Asia Pacific 1

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Asia Pacific holds a wealth of opportu-

nities for different industries - from out-

sourcing production to take advantage

of lower costs, to reaching out to new

target customers. However, diversity at

both regional and local level poses a

significant challenge to navigating the

markets, and to defining a successful

growth strategy. When assessing mar-

ket opportunities or planning strategies

for Asia Pacific, reliable market intel-

ligence must be brought into play to en-

sure this diversity is taken into account.

Business strategies must be tailored to

each sector and country according to

local market characteristics.

EXECUTIVE SUMMARYAsia Pacific is an area including Southeast Asia, East Asia, South Asia, and Australasia. Due to its size and geographical position, as well as its diverse governments, history and culture, Asia Pacific’s development has been uneven both across the region and within countries. For example, in 2010 China registered a total GDP of US$5,745 billion (estimated) and Japan US$5,391; however, average GDP per capita in China was a mere US$4,283, compared with US$42,325 in Japan – ten times higher.

The challenge for Market Intelligence (MI) practitioners and strategic deci-sion makers is to stay on top of market differences and the rapid changes to which they are subject, and ultimately to identify where the real oppor-tunities lie within their targeted markets in the region.

This Global Intelligence Alliance (GIA) White Paper outlines the inher-ent challenges in conducting and using MI in Asia Pacific, based on the combined expertise of our team in the region. It also offers some possible solutions to overcoming these challenges.

We begin with an overview of the key countries, then take a look at some of the opportunities associated with each country, and conclude with MI best practices for Asia Pacific. Three case studies provide further insight into these best practices, and demonstrate the unique environments that can be found across Asia Pacific.

Market Intelligence for Asia Pacific

GIA Geographies White Paper 3/2011


The term “Market Intelligence” used in this paper refers to an understanding of the present and future business environment by using the intelligence process to provide decision-making support. Terms such as competitor analysis, technology analysis or customer insight will be used under the overarching term “Market Intelligence”. “Market Intelligence” should be seen as synonymous with concepts such as Competi-tive Intelligence and Business Intelligence.

TABLE OF CONTENTSEXECUTIVE SUMMARY �� 11� INTRODUCTION��32� OVERVIEW OF EAST ASIA ��43� OVERVIEW OF SOUTH ASIA ��64� OVERVIEW OF SOUTHEAST ASIA ��85� OVERVIEW OF AUSTRALASIA ��116� CHALLENGES IN CONDUCTING MARKET INTELLIGENCE IN ASIA PACIFIC �� 127� RECOMMENDED SOLUTIONS �� 158� BUSINESS CASES �� 179� CONCLUSIONS �� 1910� ABOUT GIA ASIA PACIFIC �� 19

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1� INTRODUCTION

There are different ways to divide Asia Pacific. This GIA Geographies White Paper defines its re-gions based on physical boundaries and common market references. It provides an overview of Southeast Asia, East Asia, Australasia and South Asia, highlighting the challenges of conducting Market Intelligence in the area, and providing practical solutions.

Asia Pacific comprises Southeast Asia (largely the ASEAN nations of Brunei, Cambodia, Indone-sia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam); East Asia (China, Hong Kong, Macau, Japan, South Korea and Taiwan); Australasia (Australia, New Zealand, and Papua New Guinea); and South Asia (Bangladesh, Bhutan, India, The Maldives, Nepal, Pakistan and Sri Lanka).

Each region varies greatly in geographic coverage, ethnic diversity, climate, culture, governmen-tal regulation and levels of wealth. Market intelligence conducted in Asia Pacific often focuses on individual countries rather than regions, as countries are grouped according to physical proximity rather than market characteristics.

East Asia

Southeast Asia

South Asia

Australasia and Oceania

Exhibit 1� Overview of Asia Pacific

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2� OVERVIEW OF EAST ASIA

2�1 IntroductionEast Asia is sometimes referred to in business and economic terms as including the countries in Southeast Asia. However, GIA defines East Asia as the People’s Republic of China (PRC) together with its Special Administrative Regions of Hong Kong and Macau, plus Japan, North and South Korea, Taiwan and Mongolia. In total, East Asia covers 28 percent of the Asian continent, and has more than 1.5 billion inhabitants. It is one of the world’s most populated places, with a popula-tion density of 133 people per square kilometer - three times the world’s average of 45/km2.

2�2 Strategic positionIn the 1990s, the term ‘the four Asian tigers’ was coined to describe the economies of Singa-pore, Hong Kong, Taiwan and South Korea. These countries industrialized rapidly between the 1960s and 1990s, and maintained exceptionally high growth rates which resulted in their becoming advanced, high-income economies by the 21st century. This economic success, com-bined with the rise of China, has given East Asia a dynamism previously unimaginable.

Exhibit 2� Overview of East Asia

JapanPRC

South Korea

North Korea

Taiwan

Hong Kong

Mongolia

Table 1� Economic indicators in East Asia.

GDPGDP

GROWTH RATE

POPULATION GDP/CAPITA IMPORT EXPORT

Country / Regions (US$ bn) % ‘000 (US$) (US$ mn) (US$ mn)

China 5,745 10.5 1,336,718 4,283 1,307,000 1,506,000

Hong Kong SAR 2267 6 7,123 31,799 431,400 388,600

Taiwan 427 9.3 23,071 18,304 251,400 274,600

Japan 5,391 2.8 127,476 42,325 636,800 765,200

South Korea 986 6 48,755 20,165 417,900 466,300

Sources: IMF World Economic Outlook, October 2010 : GDP, 2010 est. GDP per Capita 2010 est., CIA World Fact Book : population :Jul 2011 est., import & export : 2010 est.

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East Asia contains both developed countries such as Japan, and developing countries such as China, with a large discrepancy in GDP per capita between the two extremes. These two coun-tries are the world’s second and third largest economies. While most countries in the region experienced negative GDP growth rates in 2009, China topped its target of 8% growth to achieve 9.1%. Despite their potential combined economic power, political alliance between China, Japan and South Korea is relatively weak, and these three major Asian countries have been unable to forge the kind of alliance that would bring to bear their combined economic strength and strate-gic importance as a force in the global economy.

The diversity of East Asia’s economic composition can be seen in the following country profiles:

China: China is seen as the “world’s factory” with the largest labour force in the world (814 mil-lion). Foreign investments started flooded in after the open door policy started in 1978 as com-panies took advantage of the cheap labour force, and have accelerated over the past decade. It is the world’s second largest exporting country, with textile, electrical and other machinery being the major export commodities. Recently, the government vowed to continue reforming the economy, and emphasized the need to increase domestic consumption to make China less dependent on exports for GDP growth in the future. China will invest around seven trillion RMB (about 1 trillion US$) on infrastructure during its 12th Five-Year Plan which runs from 2011 to

2015. Domestic consumption is increasing, and in 2010 China became the fifth-largest market for consumer spending after the US, Japan, the UK and Germany.

Hong Kong SAR: Hong Kong is a Special Administrative Region of China which has a free market economy which depends heavily on the finance sector and international trade. The service sec-tor now represents 92% of GDP. With its strategic geographic location, Hong Kong is one of the major transportation hubs in the region. Many products made in mainland China are distributed and exported via Hong Kong.

South Korea: South Korea’s economy mainly depends on exports of advanced manufactured goods, with huge conglomerates (chaebol) such as Samsung and LG dominating the economy and the local market.

Japan: Japan is the third largest economy in the world. In 2009, 76% of GDP came from the service sector. It is strong in motor vehicle technology, electronic equipment and chemicals. However, Japan has been in recession since 2008, and government debt was estimated to have reached 192% of GDP in 2009.

Despite these differences, East Asia is the major generator of GDP growth in Asia Pacific, and offers many business opportunities. In order to succeed, however, investors need to understand the differing market dynamics, and to develop a focused entry strategy. Market intelligence is therefore a necessity, albeit a challenging one due to the complexity of the region, its different languages, and its lack of reliable published information sources.


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3� OVERVIEW OF SOUTH ASIA

3�1 IntroductionSouth Asia comprises Bangladesh, Bhutan, India, The Maldives, Nepal, Pakistan and Sri Lanka. More than 1.2 billion people live in South Asia, and the GDP per capita ranges from US$ 536 to US$ 2,042.

With the rise of India in recent decades, South Asia as a viable market has gained the world’s at-tention. Most countries in the region have shown positive growth following the global financial crisis.

PakistanIndia

Nepal

Bhutan

Bangladesh

Sri LankaThe Maldives

Exhibit 3� Overview of South Asia

Table 2� Economic indicators in South Asia.

GDPGDP

GROWTH RATE



India 1,430 9.7 1,189,172 1,176 327,000 201,000

Bangladesh 105 5.8 158,571 640.8 21,340 16,240

Bhutan 1.4 6.8 708 2,042 533 (2008 est.) 513 (2008 est.)

The Maldives 1.4 3.4 395 4,478 967 (2009 est.) 163 (2009 est.)

Nepal 15 3 29,392 536 5,260 849

Pakistan 175 4.8 187,343 1,049 32,710 20,290

Sri Lanka 48 7 21,284 2,365 11,600 7,908

Sources: IMF World Economic Outlook, October 2010 : GDP, 2010 est. GDP/Capita 2010 est. ,CIA World Fact Book : population : Jul 2011 est., import & export : 2010 est.


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3�2 Strategic positionSouth Asia is one of the poorest regions on earth. It has the lowest GDP per capita in the Asia Pacific region, with an economy largely based on agriculture.

Economically, India is the most important country in South Asia, attracting substantial invest-ments from the West, and with a GDP reaching US$1,430 billion in 2010. India is also the gateway to South Asia – as a participant in the Trans-Asia Railway, Indian Railways will construct a 350km link between Jiribam in the north-east of the country and Moreh in Myanmar.

India: India plays a vital role in Asia Pacific. With its strong growth in GDP in the last decade, it serves as a motor to drive the Asia Pacific recovery from global recession. India is developing into an open-market economy after adopting a liberalization policy in 1991. The economic liber-alization of the 1990s provided a good base for India to accelerate the country’s growth, which has averaged more than 7% annually since 1997.

India is the world’s second most populous country with 1.17bn inhabitants. Its labour force of 467 million people is the second largest in the world. This vast human resource, with English speaking capabilities, successfully attracts investments from the West. The Indian economy is largely made up of service and industrial sectors, accounting for 55% and 29% of GDP respec-tively. India is also well-known as the biggest outsourcing centre for Information Technology and BPO services, though it is now being challenged by other countries in this respect.

Although the country is experiencing strong economic growth, basic infrastructure remains poor. Power shortages, roads of inadequate quality, and capacity shortages in India’s ports are restricting the country’s growth. Foreign investments are therefore welcomed to improve the situation, providing a major opportunity for foreign infrastructure companies to enter the market.

Another major opportunity is the domestic demand for consumer durables and automobiles, now a major driver of the recent growth in GDP, as exports have fallen since the start of the global financial crisis.


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4� OVERVIEW OF SOUTHEAST ASIA

4�1 IntroductionSoutheast Asia is made up of ten countries: Cambodia, Laos, Myanmar, Thailand and Vietnam in the north; Brunei, Malaysia, Singapore and Indonesia in the centre; and the Philippines in the east.

Malaysia, Singapore and, to some extent, Indonesia share a common history, however, eco-nomically, these countries are very diverse. Singapore had the highest GDP per capita in 2010 with US$ 42,653, and Cambodia the lowest with US$ 795.

The nations in the north of the region also differ considerably in many respects, including physi-cal geography, politics, economy and culture. Myanmar has been plagued by political conflict between the ruling military government and the opposition party, resulting in considerable economic alienation from possible inward investment. Thailand and Vietnam attract the most foreign interest: Thailand has played down recent civil protests for fear of deterring foreign investors, and Vietnam’s economy has been one of the region’s fastest growing in recent years. In contrast, Laos and Cambodia have relatively low levels of economic development and are not yet attracting significant foreign investment.

In the east, the Philippines are heavily reliant on remittances from nationals working overseas, and the country is now the world’s third highest remittance-recipient after India and Mexico. However, the Philippines also have a business process outsourcing industry that rivals many other countries’ in growth in this sector.

Exhibit 4� Overview of Southeast Asia

Philippines

Thailand

VietnamMyanmar

Laos

Cambodia Malaysia

IndonesiaSingapore

Brunei


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4�2 Strategic positionMost Southeast Asian countries are members of ASEAN (Association of South East Asian Na-tions). This was founded in the 1960s to concentrate on nation building and economic develop-ment in the face of communism and the mistrust of external powers. Throughout the late 1970s, ASEAN embarked on a programme of economic cooperation, following the Bali Summit of 1976.

In 1990, Malaysia proposed the creation of an East Asia Economic Caucus composed of members of ASEAN as well as China, Japan, and South Korea. Malaysia’s intention was to counterbalance the growing influence of the United States in the Asia Pacific Economic Cooperation (APEC) grouping as well as in the Asian region as a whole. The proposal failed, however, because of strong opposition from Japan and the United States.

In 1992, the Common Effective Preferential Tariff scheme (CEPT) was signed to phase out tariffs, and to increase the region’s competitive advantage as a production base for the world market. Thereafter, CEPT acted as the framework for ASEAN free trade. After the East Asian Financial Crisis of 1997, the Chiang Mai Initiative was established, calling for better integration between the economies of ASEAN and the ASEAN Plus Three countries (China, Japan, and South Korea). As well as aiming to improve each member state’s economy, the Initiative also focused on peace and stability in the region.

The main international gateways to Southeast Asia are Bangkok (Thailand), Singapore, and Kuala Lumpur (Malaysia). A railway line runs between Vietnam and China, and thence into Russia, whence Europe becomes accessible. As yet, there are no connections between Vietnam and other Southeast Asian countries, although there are plans for links through Cambodia and Myanmar as part of the existing Thailand-Malaysia network.

Apart from Singapore, which is the most developed country in the region with US$ 42,653 GDP per capita, most of Southeast Asia’s economy relies on rich natural resources and a cheap labour force:

Table 3� Economic indicators in Southeast Asia.

GDPGDP

GROWTH RATE



Brunei 12 0.5 402 28,340 2,610 10,670

Cambodia 11 4.8 14,702 795 6,005 4,687

Indonesia 695 6 245,613 2,963 111,100 146,300

Laos 6.3 7.7 6,477 984 1,504 1,950

Malaysia 219 6.7 28,729 7,755 174,300 210,300

Philippines 189 7 101,834 2,011 59,900 50,720

Singapore 217 15 4,740 42,653 310,400 351,200

Thailand 313 7.5 66,720 4,621 156,900 191,300

Vietnam 102 6.7 90,549 1,156 84,300 72,030



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Vietnam: Vietnam’s economic growth has been one of the fastest in Southeast Asia, and the country has generally received positive assessments from investors and economists alike. In 2008, industry accounted for nearly 41% of the country’s GDP, and agriculture 19%. Key indus-tries in Vietnam include food processing, garments, shoes, machine building, mining, cement, chemical fertilizer, glass, tyres, oil, coal, steel and paper. Major export partners for Vietnam are the US, Japan, Australia, China, Singapore, Germany and the United Kingdom.

Thailand: Despite a well-developed infrastructure, pro-investment policies and a free-enterprise economy, Thailand has been plagued in recent years by a prolonged political crisis which has resulted in the erosion of investor and consumer confidence. Political disputes, combined with the general global economic downturn in 2008/09, saw a major decline in Thai exports, with most sectors seeing double digit drops in 2009. The Thai government is now focusing on financing domestic infrastructure projects and stimulus programmes to revive the economy as external trade remains weak, and the persistent internal political crisis dampens foreign direct investment prospects.

Tourism remains the key industry in Thailand and has been the economy’s saviour during the political troubles, powering demand in other sectors. Other key sectors include textiles, petro-chemicals and auto assembly.

Indonesia: Indonesia is a diverse country consisting of distinct ethnic, linguistic, and religious groups. It is spread across more than 6,000 inhabited islands (out of a total of 17,508), and is the world’s fourth most populous country. It has easily the largest economy in Southeast Asia, and is richly endowed with natural resources. Oil, gas and mining industries feed many other sectors, including building, machinery, industrial equipment, and related services. Unlike its neighbours, Indonesia relies on domestic consumption rather than exports as the driver of economic growth.

Malaysia: Malaysia is rich in natural resources in areas such as agriculture, forestry and miner-als. It is one of the top exporters of natural rubber and palm oil. Palm oil is also a major genera-tor of foreign exchange. Tin and petroleum are the two main mineral resources of major signifi-cance in the Malaysian economy, with the state oil producer Petronas supplying 40 percent of government revenue. The Malaysian government is apparently trying to lessen its dependence on Petronas, and the country also faces a challenge in its reliance on electronic exports, which suffered a drop in profits in 2009 due to decreasing worldwide demand.

Singapore: Singapore is highly dependent on an open-market economy and is one of the most business-friendly economies in the world. The Singaporean economy depends heavily on a growing financial services sector and on exports, particularly consumer electronics, information technology products and pharmaceuticals. It has one of the busiest ports in the world, is of stra-tegic importance for transshipment traffic, and is also the world’s biggest ship refuelling centre. Singapore has the world’s fourth largest foreign exchange trading centre after London, New York and Tokyo. In addition, as the only country in Asia where English is the first language, Singapore is often the country of choice to set up base for foreign multinational companies venturing into Asia.


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5� OVERVIEW OF AUSTRALASIA

5�1 IntroductionAustralasia consists of Australia and New Zealand, together with smaller neighbouring islands in the Pacific Ocean such as such as Fiji. Both Australia and New Zealand are members of OECD (Organization for Economic Cooperation and Development). The region is rich in natural resources (coal, iron ore, copper, natural gas and renewable energy) which attract high levels of foreign investment. Agricultural products from Australasia are exported throughout the world. Australia and New Zealand are Asia Pacific’s two most Westernised countries, and here English is the first language.

Australia has 37,855 km of railways, (the seventh largest in the world) and 11 ports; New Zealand has five ports. There are regular flights to both countries, with easy connections.

Exhibit 5� Overview of Australasia and Oceania

New Zealand

Australia

Papua New Guinea

Table 4� Economic indicators in Australasia.

GDPGDP

GROWTH RATE



Australia 1,220 3 21,766 54,869 200,400 210,700

New Zealand 138 3 4,290 31,589 30,240 33,240



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5�2 Strategic positionAustralia and New Zealand are two well developed countries with high GDP per capita. Their urbanisation rates are above 85%. Australia in particular has successfully transformed itself into an internationally competitive and advanced market economy in recent decades, with 17 con-secutive years of growth in GDP before the global financial crisis. New Zealand’s economy fell into recession before the global financial crisis. The central bank cut interest rates aggressively, and the government developed fiscal stimulus measures to pull the country out of recession in late 2009.

In 2010, the Australian government removed the wholesale funding guarantee for financial insti-tutions. It is focussing on raising Australia’s economic productivity, and its economic relation-ship with China, and aims to have budget surpluses as early as 2015.

Recent initiatives in Australia, for example the US$40 billion Gorgon Liquid Natural Gas project, provide good opportunities for foreign investment in its natural resources and renewable energy sectors.

The market potential in Australasia, particularly the consumer market, is often overlooked. Investors focussing on Asia Pacific often forget Australia and New Zealand because of their geographical separation from the rest of the region. However, with its high GDP per capita and well-developed infrastructure, Australasia offers an opportunity for foreign companies to invest not only in the resources industry, but also in the services and retail sectors.

6� CHALLENGES IN CONDUCTING MARKET INTELLIGENCE IN ASIA PACIFIC

As one of the fastest growing regions in the world, Asia Pacific is gaining attention from the West, keen to take advantage of potential opportunities. However, the diversity and the com-plexity of the region present real challenges.

The various countries in Asia Pacific differ from each other in terms of culture, language, natural resources, political frameworks, and legal and administrative systems. Moreover, develop-ment has been uneven both across sub-regions and within individual countries. For example, Singapore’s GDP per capita is five times that of its neighbour Malaysia. These differences and gaps among countries contribute to the complexity of the Asia Pacific market, and only those companies which seek to understand the dynamics will succeed here. The Korean conglomerate LG, now one of the biggest global players in electronic appliances, is one such example, and has captured significant Asia Pacific market shares by ‘going local’ with its employment strategy and launching products customised specifically for different countries.

MI is very important for understanding the Asia Pacific business environment, and to provide decision-making insight and direction for top management, strategic planning, business de-velopment, marketing and sales, among others. However, challenges in conducting MI in Asia Pacific should not be underestimated. Major challenges are introduced below:

6�1 DiversityLanguage diversity is one of the most distinct features in Asia Pacific. There are over 3,000 lan-guages in the region, with 700 in Indonesia alone, and 347 in India. There is no common official language either across the region or, in some cases, within individual countries (in China, for example, Mandarin is the official language, but people in Guangdong province prefer to speak the local dialect, Cantonese).


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Diversity also extends to the large social and economic gaps between countries and sub re-gions, where differences in income, education, level of industrialization and globalization are extreme. For instance, highly industrialised, educated Japan has a very advanced infrastructure and GDP per capita of US$42,325, while Laos, with a labour-intensive economy and a lack of infrastructure, has a GDP per capita of merely US$984. Different countries are experiencing dif-ferent economic growth rates: in 2010, China’s GDP grew at 10.5%, India’s at 7 %, and Bruneis’ at only 0.5%.

When assessing market opportunities or planning strategies for Asia Pacific, diversity must be accounted for. At the same time, diversity affects the methodologies used to study and address the market. New entrants to the market should keep in mind that no single business plan for the region is valid; strategies need to be tailor-made according to each sub region and country, based on reliable local information.

6�2 Secondary information obstaclesAsia Pacific has less sophisticated reporting methods than the West. Industry associations and publications which are responsible for reporting company data and market trends in the West may not have the same reach in Asia Pacific as they have elsewhere. In addition, the business environment is often characterized by small, independent, family-run manufacturers or distribu-tors who do not report rigorously to any formal organization or association.

There are three main issues in collecting secondary information in Asia Pacific:

1. Lack of secondary information Secondary information may not be available in some Asia Pacific countries because: a) governments are not highly organized enough to have developed a national data base covering the area of interest; b) industry and public awareness of the importance of information is lacking (for example, in Indonesia industry associations tend to be relationship-driven rather than information-driven);

2. Inconsistent information Where secondary information is available, it cannot always be relied upon. In India, for example, although government bodies and industry associations which collect data do exist, it is still hard to find credible sources. Data collection is inefficient, due to the irregular updating of information, and this information itself is not fully compre hensive. As mentioned above, there are many small, independent, family-run manufacturers and distributors who do not report to formal organizations or associations.

Obtaining quality information in China is challenging. There is no universal standard, and information is often available only through networks of people. In addition, the credibility of government statistics is a concern - for example a discrepancy exists be tween the central government’s GDP figure and the consolidated figure of each of the provinces, with a report from the National Development and Reform Commission clearly stating that some provinces may actually manipulate GDP figures.

3. Validity of reliable information Companies may find reliable secondary information in more developed countries such as Australia. However, product definitions and industry standards differ from country to country, and it is risky to compare countries without unified information scope and definitions


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6�3 Cultural barriers to primary researchPrimary research is needed to collect the most relevant and useful information before making strategic decisions. However, cultural differences, not only between Asia Pacific and the West, but also within the sub regions and countries of Asia Pacific itself, can pose a challenge to car-rying out effective primary research. For example, it is often hard to get to the crux of what Japa-nese interview respondents actually think because of their conservatism, while respondents in India may talk freely and be willing to give comments - but these comments may not accurately reflect what they truly believe. Thus, different interview techniques and approaches are needed in order to collect relevant data, and transform them into solid insight.

Local knowledge is essential when organising primary research. A striking example is the desire of Japanese companies to have appointments scheduled well in advance, usually in writing, and for these be approved sometimes by two tiers of management prior to a meeting or interview taking place. Any last minute changes cause an uncomfortable sense of uncertainty.

6�4 Rapid market changesWe are currently witnessing a market change due largely to the fact that Asia Pacific is a major contributor to the growing global middle class. The World Bank defines the middle class as earners making US$10 to US$20 a day in PPP (Purchasing Power Parity) terms, and estimates that it is likely to grow from 430 million people in 2000 to 1.2 billion by 2030. China and India will account for two-thirds of this expansion. Other Asia Pacific countries that are forecast to see a significant rise in the middle class include Indonesia and Vietnam. This translates into a major opportunity for companies across many industries, as growth of the middle class will in turn drive growth in retail and other consumer spending. Aside from consumer goods and retail, the sectors most likely to benefit from this trend include natural resources, construction, telecom and technology, healthcare, media, chemicals, manufacturing and logistics.

For strategic planners and marketers it will become more important than ever to understand the effect of these market changes, which sectors and companies are poised to benefit, how compa-nies within the region and externally are reacting to the changes, and at what point in the future such changes are likely to have a material effect on their business.

Exhibit 6�

Sources: Euromonitor International from national statisticsNote: Data for 2010 and 2020 are forecasts

Number of households with annual disposable income of $5,000 to $15,000 : 2000-2020

200

180

160

140

120

100

80

60

40

20

China India Indonesia Brazil Egypt Ukraine Vietnam Russia

200020102020

Mill

ion


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In summary, there are many challenges for conducting market intelligence across Asia Pacific. To execute high quality research with results that lend themselves to meaningful analysis and creation of true intelligence and insight, multiple sources of information must be considered and evaluated.

7� RECOMMENDED SOLUTIONS

7�1 Form partnerships to optimize local knowledgeWhen conducting market intelligence, the fact that Asia Pacific is not one but many markets with an uneven distribution of wealth and development must be kept in mind. A tailored approach is needed to collect reliable and valuable information. Qualified Asia Pacific Market Intelligence practitioners should possess broad knowledge to provide a wide view on strategic sub-regions, as well as local knowledge at country level for sufficient depth. Local partners may also prove to be useful for their solid market understanding and well established networks within target countries.

Geography should also be taken into account when conducting Market Intelligence in Asia Pacific. Due, in part, to their strategic positions in the region, different countries have diverse industries and consumer patterns. Working with local partners gives an understanding of demand/supply situations before entering a market. For example, Singapore is a relatively small market yet because of its geographical position and size, as well as free market policies, it is host to a disproportionately large financial sector. This is apparent to anyone looking at the sta-tistics or reading the business press, however it may take a local eye to see that a large section of that industry is fuelled by inflows of money from Indonesia and Malaysia.

Local partners are continually interacting with local people along value chains, and therefore understand the reality on the ground; they can collect information in an effective and efficient way. They also know where to find relevant information sources; can conduct industry interviews without language barriers so that interviewees are able to talk freely; and have networks of local contacts who know the right points of contact for gathering information. For instance, a local network is a valuable asset when conducting intelligence in China and India as people in both these countries are far more willing to share information with people they know than with people outside their networks.

-> Choose to work with partners who have presence and networks in Asia Pacific, with a track record in market intelligence and in-depth local knowledge.

7�2 Cross verification In Asia Pacific, data and information are very often more available at the country level rather than the regional level. Information sources are fragmented across the region, and different lan-guages may be used across sources such as industry reports, local newspapers and websites. The quality of information coming from secondary sources is sometimes open to question and cannot always be taken at face value. MI practitioners should always verify information using multiple sources before making any conclusions.

Experienced MI practitioners with hands-on local knowledge should be able to identify which sources of information are likely to be the most accurate and comprehensive. Cross-checking data with other Asia Pacific countries is good practice when conducting multi-country assess-ments. For example, in one recent case, GIA compared industry association data on the power tools market in Australia with similar data from Japan, and discovered that the value of the Australia market was unexpectedly higher than that of Japan. This suspicious result in turn led to a crucial reassessment of the scope and definitions of the Australia data.


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Primary interviews offer a useful opportunity to cross verify information obtained from second-ary sources. Industry players and experts are familiar with their markets and are able to help MI practitioners verify or correct information of dubious reliability. In the power tools case mentioned above, by talking directly to a sample of retailers, wholesalers and customers of power tools in Australia, GIA further confirmed that the price assumptions used in the industry association data were inaccurate, and thus the reported market value was not reflecting the real situation.

-> Choose to work with a local partner who is responsible and reliable. The partner must have strong quality control and data validation processes as well as primary research capabilities.

7�3 React quickly with close market monitoringIn a growing and emerging market like Asia Pacific, the market environment changes rapidly. Up-to-date information helps to ensure a fast reaction to market fluctuations, meaning continu-ous monitoring of the marketplace and competition should be a necessity rather than a luxury.

Such monitoring also helps to prioritize the need for ad hoc market studies by reducing the time and resources spent on searching for relevant information. This enables better annual budget-ing, operational efficiency and ultimately better decision-making.

-> Conduct continuous market monitoring tailored to your business. It is cost efficient and helps decision makers understand market developments, particularly in Asia Pacific where information may otherwise remain ‘hidden’ in local language sources.

7�4 Need for primary research Primary research is the only way to obtain the most up-to-date information in many markets, especially those which are fragmented, and with unreliable secondary information sources. It is also often the only means by which to understand ‘grey’ and parallel markets, via carefully planned interviews with industry players along the value chain.

Moreover, primary research is tailor-made, which means the data collected will be most relevant to the company’s needs. This is especially useful when investigating niche markets.

The interview technique adopted will affect the type and depth of results possible. Consultants should possess good communication skills to encourage the interviewee to express their views freely. Also, consultants should have the ability distinguish reliable information from unreli-able.

While telephone interviews may be more cost-effective, face-to-face interviews are preferable in some countries and some industries. For example, players in Indonesia’s retail industry respond much better to face-to-face interviews than telephone interviews, and the depth of information and insight possible is much greater.

When interviews are organised across the region, a carefully selected geographical spread is needed to understand the factors that influence similarities and differences from country to country. For example, when examining the textile industry, interviews should ideally cover China, Japan, Korea, India, and Thailand as the majority of textile plants in the region are in these locations.

-> Choose to work with a partner with efficient and reliable networks to generate primary information sources, and a strong understanding of the various primary research approaches available to them, and their relative pros and cons in different countries and sectors.


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7�4 Establish long term partnershipsEstablishing a true partnership type of relationship with MI providers is often beneficial to the company. Responsible MI partners will always put themselves in their client’s shoes before act-ing or making recommendations. Very often, MI partners will need some time to learn and adapt to a company’s corporate culture, way of working and expectations. Working on multiple cases ensures the results become increasingly valuable, and relevant to the company’s business and strategic priorities.

-> Choose a partner with a proven track record of working with your company’s peers, be committed to the relationship and be prepared to spend time on it to create a true partnership that is mutually beneficial.

8� BUSINESS CASES

The following three case studies illustrate some of the best practices to be applied within the Asia Pacific context, to suit its unique set of opportunities and challenges.

Case example: Asia small appliances market entry and business ex-pansion analysisIndustry: Consumer & RetailGeographic scope: Korea, Philippines and ThailandMethods: Primary interviews, on-site observation, market attractiveness analysis and recommendations

NEED• A global leading small appliances maker was looking to strengthen its presence in Asia with

initial focus on business expansion in Korea, Philippines and Thailand.

APPROACH• GIA conducted in-depth interviews with industry players and observers, such as key com-

petitors, channel players, prominent master distributors, industry associations, analysts, and experts.

• GIA arranged two focus group discussions with consumers in each country’s major city to explore usage, attitudes, perceptions, concept reactions, brand loyalty, etc.

• On-site observation with retail visits and distributor /showroom visits were carried out.

SOLUTION• GIA provided the client with an analysis of the market and industry structure, drivers

and growth, value chain, and competitor information. • GIA recommended a business expansion strategy, including market priorities, optimal

channels, product focus and price positioning, and the fastest route to implementing the strategy.

KEY BENEFITS• The client gained valuable information on the target markets which enabled it to strengthen

its presence in Asia, with initial focus on business expansion in Korea, Philippines and Thailand.


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Case example: Daily market monitoring and analytical insights for a global logistics leaderIndustry: Transportation & LogisticsGeographic scope: Asia Pacific and Middle EastMethods: Secondary research, continuous market monitoring

NEED• A leading global logistics giant needed support on sales and marketing updates and strate-

gic planning through tailored intelligence content.• Replacement and improvement of the existing system which involved two full time in-house

analysts and email distribution of weekly and monthly newsletters.• Coverage of macro-environment, customer sectors, competitors, and the logistics industry.

APPROACH• Monitoring news in the logistics market and competitive environment in English, Arabic,

Japanese, Chinese and Korean; competitor updates and industry reports covering 17 coun-tries.

• Delivering daily intelligence to 100 users in the client organization across top management, strategic intelligence, country management, and sales and marketing.

SOLUTION• GIA created a cost-efficient Intelligence Desk™ market monitoring service which delivers

tailored daily content and regular analytical summaries for decision-makers, through a customized web-based platform.

KEY BENEFITS• Information easily and directly accessed in one customized platform• Client kept abreast of competitor developments, service launches, acquisitions, and other

signals via email alerts.• Understanding of important trends in key customer segments.• Better informed business decisions made.

Case example: Commercial due diligence for acquisition of an on-line business information service in Southeast AsiaIndustry: Technology & MediaGeographic scope: AsiaMethods: Primary interviews, secondary research, partner evaluation and selection, and recommendations

NEED• A global B2B media group wanted to assess the commercial viability of acquiring an estab-

lished Asian online business directory company, and its market position, before entering into deal negotiations.

APPROACH• GIA conducted primary research among advertisers, an online user survey and competitive

benchmarking.• GIA assessed the target company’s competitive status, image in the market, growth plan,

projected earnings, strengths and weaknesses, and its suitability for acquisition.


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SOLUTION• GIA profiled main industry players, including target company, on criteria such as size,

country and sector coverage, as well as usability. • Advertising expenditure and renewal rates were analyzed. • Recommendations were provided on the viability of acquiring the target company, which

led to a successful acquisition for both parties.

KEY BENEFITS• GIA provided an objective competitive analysis of the target company and its main peers in

the region, which gave sufficient insight for the client to decide to acquire the target com-pany, as well as an increased understanding of customer needs and attitudes.

9� CONCLUSIONS

Asia Pacific holds huge investment potential for business leaders across various functions – top management, strategic planning, marketing, sales and business development, procurement, supply chain, and M&A. There are great opportunities for growth in entering new untapped markets, increasing market share, differentiating product offerings in areas where there is sig-nificant competition, exploring cheaper and more efficient materials and supply chain logistics, or identifying potential partners with suitable business synergies for joint ventures and/or acquisition.

However, Asia Pacific is a region with contrasting physical, cultural, legal and economic landscapes, all of which contribute to significant market differences that need to be taken into account when doing business here. Understanding the markets through appropriate continu-ous monitoring and issue-driven market intelligence assessments, planned and executed with an appreciation of the region’s diversity, is especially important in this era of globalization, in which many businesses are seeking to expand beyond their home territory.

10� ABOUT GIA ASIA PACIFIC

Global Intelligence Alliance (GIA) is a strategic market intelligence and advisory group.

The company is the preferred partner of international organizations for customized solutions which help them make better-informed decisions to achieve their business goals. GIA was formed in 1995 by a group of Market Intelligence specialists, management consultants, industry analysts and technology experts who came together to build a powerful suite of solutions rang-ing from outsourced market monitoring services and software to strategic analysis, business advisory and workshops.

Today, GIA provides clarity on global markets to business decision makers on a daily basis, through our offices around the world and through a network of partners in over 100 countries. Our three offices in Asia Pacific really understand their clients’ businesses and deliver strategic, timely and affordable market intelligence, competitive intelligence and consultancy to sector-leading companies.

With an operating model that is both lean and in-market, we coordinate several hundred consultants living and working across the entire region, as well as working with our offices in Europe and the Americas on global assignments. Our suite of market intelligence and strategic analysis services helps our clients understand their markets, compete more effectively, and grow into new opportunities. Our services are offered on a project or retainer basis.


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