best practices in market intelligence for asia pacific

www.globalintelligence.com

Best Practices in Market Intelligence for Asia-Pacific

Webinar presentation November 18, 2010

The White Paper will be available soon on request from [email protected] after the webinar.


Presenters

•  Ms. Stephanie Tan, Global Intelligence Alliance !  Marketing Manager, Asia-Pacific !  Webinar conferencier

•  Mr. Pete Read, Global Intelligence Alliance !  SVP, Asia-Pacific !  Webinar presenter


GIA is a strategic market intelligence and advisory group

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Global Intelligence Alliance (GIA) was formed in 1995 when a team of market intelligence specialists, management consultants, industry analysts and technology experts came together to build a powerful suite of customized solutions ranging from outsourced market monitoring services and software, to strategic analysis and advisory.

Today, we are the preferred partner for organizations seeking to understand, compete and grow in international markets. Our industry expertise and coverage of over 100 countries enables our customers to make better informed decisions worldwide.


Access local knowledge in over 100 countries

GIA Group has 13 offices on 4 continents. Together with affiliated GIA Member companies, certified GIA Research Partners and consultants, GIA provides access to local knowledge in over 100 countries.

All GIA Network companies adhere to GIA’s Research and Analysis Quality System as well as the SCIP Code of Ethics.

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Webinar content outline

•  An overview of the Asia-Pacific region •  Challenges of Market Intelligence in Asia-Pacific •  Some ideas on addressing the challenges •  Market intelligence case studies


An overview of the Asia-Pacific region


Asia-Pacific fast facts

•  Asia-Pacific supports 60% of the world’s population with China and India are the 1st and 2nd populous countries in the world.

•  China and Japan are the 2nd and 3rd largest economies in the world. •  India and China are the motors driving the growth of Asia-Pacific in 2009/10 •  Asia-Pacific’s development has been largely uneven, both across the region and

within countries •  Asia-Pacific is diverse in terms of economies, culture, climate, governments,

regulations and level of wealth


Asia-Pacific overview GIA divides Asia-Pacific into four sub-regions

Southeast Asia

East Asia

Australasia and Oceania

South Asia

Asia- Pacific fact file

Population 60%of the world’s population

Languages Around 3,000 languages

Association ASEAN, the APEC, ASEAN plus three, OECD

Major currency units No unified currency in Asia-Pacific China: Renminbi (RMB) Japan: Yen (JPY) India: Rupees (INR) S. Korea: won (KRW) Australia :Australian dollar (AUD)

The 4 zones

East Asia China (includes Macau SAR and Hong Kong SAR), Japan, South Korea and Taiwan

South Asia Bangladesh, Bhutan, India, The Maldives, Nepal, Pakistan and Sri Lanka

Southeast Asia Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam


Australia and New Zealand together with smaller countries such as Papua New Guinea


East Asia covers 28% of the Asian continent with more than 1.5 billion people. It contains both developed and developing countries with a large discrepancy in GDP per capita. Political alliance between China, Japan and South Korea is relatively weak.

East Asia

China is one of the largest and fastest growing countries in the world. It is still (arguably) a developing country, and the government has great influence on the economy. •  Largest labour force in the world - around 814 million •  2nd largest exporter with textile, electricals/electronics

and machinery as the major exports •  5th largest consumer market in 2010 •  Recently, government has increasingly emphasized

domestic consumption, which mainly drove GDP growth in 2009

Country/ Regions GDP

(US$ bn) GDP Growth

(%) Population

(‘000) GDP/Capita (US

$) Import

(US $bn) Export

(US $bn) China 4,984 9.1 1,330,141 6,600 954,300 1,204,000

Japan 5,068 -5.3 127,470 32,700 499,700 542,300

South Korea 832.5 0.2 48,636 28,100 317,500 373,600

Hong Kong SAR 210.6 -2.8 7,089.7 42,800 348,700 321,800

Taiwan 378.5 -1.9 23,025 32,000 172,700 203,400

Japan is the 3rd largest economy in the world •  77% GDP came from service sector in 2009 •  Strong in technology of motor vehicles, electronic

equipment and chemicals •  Government debt is estimated to have reached 192%

of GDP in 2009

South Korea’s economy is export-driven; a developed country that maintained growth during the financial crisis •  9th largest exporter in the world in 2009 •  Electronics, telecommunication, automobile and

shipbuilding are main industries •  Overdependence on conglomerates (chaebol) and an

inflexible labour market


Economically, Southeast Asia countries are very diverse, though there is some shared history and culture. Several countries have been plagued by political bottlenecks or exclusive collaboration between government and government/politician linked business, resulting in considerable restrictions on domestic growth, wealth development and inward investment.

Southeast Asia (South/West)

Singapore is largely an open-market economy and is also said to be one of the most business-friendly economies in the world.

•  The world's fourth largest foreign exchange trading center.

•  Relies on (re-)exports, particularly in consumer electronics, information technology products and pharmaceuticals.

•  Main international gateways to Southeast Asia •  English is its first language and technology is

advanced, which favours foreign investment

Country GDP

(US$ bn) GDP Growth

(%) Population


$) Import

(US $bn) Export

(US $bn)

Malaysia 193 -1.7 28,274 14,900 119,300 157,600 Singapore 182.2 -1.3 4,701 52,200 240,500 274,500 Indonesia 539.4 4.5 242,968 4,000 84,320 119,500 Brunei 10.4 -0.5 395 51,200 2,610 10,670 Cambodia 10.9 -1.5 14,454 1,900 5,440 3,647

Malaysia is well-endowed with natural resources in areas such as agriculture, forestry and minerals.

•  It is one of the top exporters of natural rubber and palm oil in the world.

•  Tin and petroleum are the two main mineral resources that are of major significance in the Malaysian economy.

•  State-owned oil producer Petronas supplies 40% of government revenue.


Southeast Asia (North/East)

Thailand’s economy has been plagued in recent years by a prolonged political crisis despite a relatively well-developed infrastructure, pro-investment policies and a free-enterprise economy.

•  Tourism is the key industry in Thailand •  Thailand has being ASEAN’s largest automotive

market and assembler. •  A favourite with Japanese conglomerates investing

in Southeast Asia

Vietnam’s economic growth is one of the fastest in Southeast Asia and the country has recently received a positive assessment from investors and economists alike.

•  Industrial sector is the largest contributor to the economy, accounted for 45% of GDP

•  Key industries include food processing, garments, shoes, machine manufacturing, mining, cement, chemical fertilizer, glass, tires, oil, coal and steel

Country GDP

(US$ bn) GDP Growth

(%) Population


$) Import

(US $bn) Export

(US $bn)

Vietnam 93.2 5.3 89,571 2,900 65,080 56,980 Thailand 263.9 -2.2 67,089 8,200 119,000 154,200 Philippines 161.2 0.9 99,900 3,300 46,390 37,510 Laos 5.6 6.5 6,368 2,100 2,034 1,104

Apart from Singapore, most of the Southeast Asia countries’ economies rely on rich natural resources and cheap labour force


The economy in South Asia is mainly driven by agriculture. GDP per capita is relatively less diverse than other parts of Asia-Pacific, and it is one of the poorest regions on Earth, with the lowest GDP per capita in region. With the rise of India as a global power, South Asia is gaining the world’s attention and most countries have showed positive growth since the global financial crisis.

South Asia

Country GDP

(US$ bn) GDP Growth

(%) Population


$) Import

(US $bn) Export

(US $bn)

India 1,236 7.4 1,173,108 3,100 268,400 164,300

Bangladesh 94.6 5.6 151,118.5 1,500 20,220 15,910

Bhutan 1.2 5.7 699.8 4,700 533 513

The Maldives 1.3 -3 395.7 4,300 782 88

Nepal 12.9 4.7 28,952 1,200 3,626 907

Pakistan 162 4.2 184,405 2,500 28,470 18,440

Sri Lanka 42.2 3.5 21,514 4,500 9,700 6,983

India serves as one of the motors driving Asia-Pacific recovery from global recession, with average 7% growth per year since 1997.

•  2nd largest labour force with 467 million people, many English speaking •  Well-known as the outsourcing center for Information technology and business process (BPO) •  Strong in technology of motor vehicles, electronic equipment and chemicals •  The growth of GDP is mainly driven by domestic demand, especially consumer durables and cars/2-wheelers •  Power shortages, inadequate quality of roads and capacity shortages in the ports sector are restricting growth


Australia and New Zealand are two developed countries with relatively high GDP per capita compared to many countries in the region. Australia is rich in natural resources such as coal, iron ore, copper, natural gas and renewable energy resources, which attract high levels of foreign investment. Agricultural products such as meat, dairy and fruit are a key export.


Australia has successfully transformed itself into an internationally competitive and advanced market economy in recent decades, with 17 consecutive years of growth prior to the global financial crisis.

•  Service sector contributed nearly 70% to its GDP in 2009

•  Recently, Australia concentrated on expanding the resources industry, for example, the US$40 billion Gorgon Liquid Natural Gas project

•  In terms of infrastructure, it owns 37,855 km railways which is the 7th largest in the world.

Country GDP

(US$ bn) GDP Growth

(%) Population


$) Import

(US $bn) Export

(US $bn)

Australia 994.2 1.3 1,173,108 40,000 163,900 160,500 New Zealand 117.8 -1.6 4,252.3 27,400 23,450 24,990

New Zealand has a small population but is one of the most developed countries in Asia-Pacific region.

•  Urbanization is over 85% •  Service sector contributed 72% of GDP in 2009 •  The economy fell into recession before the global

financial crisis, the central bank cut interest rate aggressively and the government developed fiscal stimulus measures to pull out of the recession in late 2009


Challenges of Conducting Market Intelligence


Intelligence challenges in APAC: Fundamentals

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Each of the countries within the region is unique with differing economic characteristics dictated by factors such as culture and language, government, history, geographical location and (lack of) natural resources.

Socioeconomic levels, purchase power parity, unemployment rates, and other population measuring tools are inconsistent with those used in the West and must be adapted to local conditions and climates.

Unreported black / grey market factors must be estimated when calculating market size. The impact of contraband products, copies and clones must be taken into consideration within short-, medium-, and long-term sales objectives.

Reported growth rates (usually in US$) must take into consideration foreign exchange fluctuations and possible devaluations

Reaching precision in market strategy and positioning can be frustrating, as target markets frequently shift rapidly in size and structure as a result of the economic dynamics mentioned above.


Intelligence challenges in APAC: Cultural factors (1/2)

•  Official information Information quality varies from country to country and source to source. In many countries government data are

unreliable and/or outdated.

•  Press With the exception of a handful of worldclass players, the press is very often equipped with limited research and

investigative capabilities, and there is a lack of industry specific publications.

•  Associations Most do not generate market intelligence. There are few exceptions in specific industries within certain countries (eg.

automotive in Indonesia, AV in Japan).

•  Off-the-shelf studies Mostly available only on a macro economic or political scale; industry studies tend to be shallow and/or inaccurate.

•  Websites Plenty of information in some countries and industries but difficult to differentiate credible from non-credible sources. In

addition, definitions vary across the information landscape, resulting in challenges making like-for-like comparisons.

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Intelligence challenges in APAC: Cultural factors (2/2)

•  Social Disparity / Eliteness Accessing business decision makers and high level consumers is difficult; they often isolate themselves.

•  Skepticism Consumer research is sometimes inhibited by lack of awareness or fear of commercial (or criminal) motives.

•  Legal System A relatively undeveloped and inconsistent (across APAC countries) legal system fosters mistrust of competitors and

competitive intelligence.

•  Centralized Management Changing rapidly in some companies and countries, but centralization of management handicaps the information flow

amongst middle management, meaning challenges for B2B information gathering.

•  Corruption Valuable information is closely guarded by public and private sectors and may only be available in return for “special

incentives”, which does not sit well with multinational companies and consultancies.

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Intelligence challenges in APAC

Time Factors

•  The absence of secondary data requires increased time (and money) investment in primary research

•  Telephone interviews have limited success with some Asian cultures so interviews must often be conducted in person

•  Decision makers can be difficult to access

•  Travel to and from interviews can take 1-2 hours each way in many countries

•  Survey techniqes may require large samples due to demographic segmentation

•  More focus groups must be conducted to research the entire market, again due to diversity

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Cost Factors

•  Need for primary research to gain full understanding

•  Telephone costs are higher than in the US or Europe

•  Skilled consultants are as expensive as their US or Europe counterparts

•  Real estate prices are highly inflated in many capitals due to the region’s rapid growth

•  Travel costs may be double the US or European rates due to the distances involved.


Some ideas on addressing the challenges


Primary Research is essential for Market Intelligence in APAC

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Tackling market changes, grey markets and lack of secondary •  Primary research is the best and only way to obtain most up-to-date information and grey market

data. •  Data collected from primary are most relevant to a particular company’s needs •  Telephone interviews are cost effective however face-to-face interviews are preferable in some

countries and industries. •  Good geographical spread of interviews is needed to understand the factors that sharing similarity

and driving difference.

Lack of secondary information Rapid Market Changes Grey Markets


Always cross verify information with primary research

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Tackling lack of structured and reliable information •  Always verify the information using multiple sources before reaching any conclusion •  Test and validate information obtained from secondary sources through primary interviews with

industry players and experts. •  Cross-checking data with other Asia-Pacific countries when conducting multiple countries study •  Look for an Market Intelligence partner that has strong industry knowledge and primary research

capabilities.

Secondary information •  Information is not reliable, unstructured or not valid


Work with an Market Intelligence partner with local knowledge, track record and country-level presence

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Tackling Diversity •  Tailored approach needed in the information collection process with a geographical element built in •  Local partners understand the reality on the ground as they are continuously interacting with people

along the value chains •  Local partners have network of local contacts and know the right points of contact for gathering

information

Diversity • Social , Cultural , Language, Economy, etc


Establish market monitoring and Market Intelligence partnerships

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•  Customised market monitoring is cost efficient and can help decision makers to understand market development in short order.

•  By working on continuous projects, the results will become increasingly valuable and fit to the company context. Switching partners from time to time requires lot of efforts on selection and the project results are not guaranteed

Work on project

Understand corporate

culture and expectation

Deliver result that fits into company context

Benefit from the project

Engage new project

Repeated process helps Market Intelligence succeed

Repeated process helps the company succeed

Company Company

MI Partner MI Partner MI Partner


Market intelligence case studies


Business Case (1/2) – Daily market monitoring and analytical insights for a global logistics leader

Industry: Logistics Geographic scope: Asia-Pacific, 15 countries Method : Secondary research, Continuous market monitoring

Strategic objective/issue •  A leading global logistic giant needed support on sales and marketing updates and strategic

planning through tailored intelligence content. •  Replace and improve the existing system involving two in-house analysts and email

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

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

Japanese, Chinese and Korean, competitor updates and industry reports covering. •  Delivering daily intelligence via an online portal to 100 users in the client organization across

top management, strategic intelligence, country management and sales & marketing.


Business Case (1/2) – cont’d Solution

•  GIA created a cost-efficient Intelligence Desk™ market monitoring service which delivers tailored content and regular analytical summaries for decision-makers, thorough a customized web-based platform.

Key Benefits •  Access to the information easily and directly in one customized platform •  Keep abreast of competitor developments, service launches, acquisitions, and other signals •  Understand important trends in key customer segments. •  Make better informed business decisions.


Business Case (2/2) - Market entry and business expansion analysis for Asia small appliances market

Industry: Consumer & Retail Geographic scope: Korea, Philippines and Thailand Method : Primary interviews, on-site observation, market attractiveness analysis and

recommendations

Strategic objective/issue •  A global leading small appliances maker was looking to strengthen its presence in Asia with

initial thoughts focusing on business expansion in Korea, Philippines and Thailand.

Approach •  GIA conducted in-depth interviews with industry players and observers such as key

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

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

•  On-site observation with retail visits and distributor /showroom visits were also conducted


Business Case (2/2) – cont’d Solution

•  GIA provided the client with analyzed market and industry structure, drivers and growth, value chain as well as competitor information.

•  GIA recommended a business expansion strategy including investment prioritization, optimal channels, product focus and price positioning, and the fastest route to implementation.

Key Benefits •  The client gained valuable information on the target markets that enabled it to strengthen its

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


GIA capabilities in APAC

•  Offices in Mumbai, Singapore, Hong Kong and Shanghai. •  We help companies understand, compete and grow, serving both:

!  multinational organizations interested in doing business in the region, and;

!  local organizations looking for growth in the region and expansion on a

global level. •  ~400 consultants on the ground across 16

APAC countries •  Industry experience in manufacturing and

industrial, chemical, ICT, healthcare, media, consumer & retail, energy & resources, media, and financial services


Contact GIA

For additional information about Global Intelligence Alliance and our services, please send an email to [email protected] or log on to the GIA website www.globalintelligence.com.


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