Strategies to support the quest for growth
Asian players are now international players in their own right.
Asian companies are on the move. Once viewed by Western multinationals primarily as a source of low-cost labor and manufacturing, Asian players are now international players in their own right. They are expanding into new markets for a variety of reasons.
As Asian companies grow, they are running into challenges that could slow or even block their expansion. These challenges — and the responses to them — are different for companies that operate only within Asia and those with significant operations in at least two markets outside the region.
Asian companies' expansion patterns
Although newly globalizing Asian companies are not restricting themselves geographically, some markets stand out as more attractive than others. Regional and global companies exhibit differences in their market expansion patterns.
Global companies expect most of their growth to come from within Asia in the next three years. By contrast, companies operating just within Asia cite Western Europe and the Middle East and North Africa (MENA) as their top destinations for investment. This is thanks to the attractively priced assets of the former and the cost-effective manufacturing of the latter.
- Setting the scene: Asian companies' expansion quest
- Where are Asian companies expanding?
- What are Asian companies looking to achieve by international expansion?
- How are Asian companies expanding?
Challenges and Recommendations
While Asian companies are on a high growth trajectory, they also face a host of dilemmas. Our research identified four challenges:
|1||Challenge 1: Moving up the value chain could erode a critical advantage – low cost.|
|2||Challenge 2: The nuances of local markets are difficult to understand or control.|
|3||Challenge 3: Top management teams often lack an international outlook.|
|4||Challenge 4: Full international expansion requires shoring up infrastructure and capabilities.|
The strategic moves Asian companies must make to counter these obstacles are tricky and difficult, but they are essential steps in the path toward globalization. In this report, we recommend some winning strategies for both regional and global companies:
- Recommendations for globally focused companies
- Put in place robust risk management
- Make the transition from investment to profitability
- Take steps to make the corporate culture more international
- Choose which functions should be global or local
- Recommendations for regional companies
- Prepare for greater competition.
- Build the capabilities for international expansion.
- Rethink organizational design to enable greater local autonomy.
- Leverage global resources.