Increasing urbanization in the next half decade makes the Philippines
and the rest of the ASEAN region more attractive to multinational firms, if
only they can build a strong business case and the right entry plan.
This was the premise made by executives of
Accenture, the global management consulting, technology services and
outsourcing firm with the largest footprint in the country, operating 12
facilities in Metro Manila and 2 in Cebu.
Definitely, Accenture expects
ASEAN to emerge as a prime business destination for multinational companies in
the next three to five years.
The region – which includes
Brunei, Cambodia, Indonesia, Laos, Malaysia, Burma, the Philippines, Singapore,
Thailand and Vietnam – is currently incubating a group of innovative companies
that will compete against them in Asian markets and beyond.
The Philippines, for its part,
has become a preferred global business process outsourcing destination.
Vietnam is actively nurturing a
high-tech presence, investing in Quang Trung Software City, which employs
nearly 24,000 people at more than 100 companies.
Singapore is a free trade model.
Its transparent business rules and
regulations, strong intellectual property protection and ideal shipping
location helped make it the world’s easiest place to do business once again in
2011.
Malaysia has established the
Iskandar development corridor on the southern part of its Western Peninsula,
attracting investors via incentives that include tax breaks and import and
sales duty enticements.
Overall, the region’s recent
economic performance shows makes it an attractive place to do business.
Furthermore, ASEAN provides access to
consumer markets that are predominantly young, dynamic and increasingly
affluent.
By 2020, the region’s under-30
population will account for nearly half of the total population. Southeast
Asia’s expected 81 million city dwellers in 2020 alone, will exceed the
combined populations of Boston, London, Madrid, New York and Tokyo for that
same year.
These markets already have an
outsized appetite for new technology and social media. As purchasing power
grows, consumer demand for education opportunities, household goods and
services, and communications and dining options will increase.
Bypassing outmoded fixed-line
infrastructure, mobile technology has become the preferred source of
connectivity.
So far, the 6 countries in the
ASEAN have more Facebook users than the United Kingdom, Germany, France and
Italy combined. Broadband, smartphones and readily available mobile apps will
accelerate the already high levels of social media adoption across the region,
particularly in capital cities.
However, companies interested in
exploring the region’s market potential should build a strong business case and
entry plan, Accenture stressed.
And inasmuch as accurate consumer
research is either hard to get or nonexistent for some of these markets,
companies should be prepared to develop their own market insights.
Diversity is a distinct feature
of the ASEAN region. Hence, understanding regional and country-specific
idiosyncrasies can help a company use these differences to build a flexible,
targeted value proposition.
“Keep in mind that global brands participating
in these markets often enjoy high levels of name recognition and hence prestige
among consumers,” according to Accenture executives.
Importers, for instance, dominate
the perfume industry in Thailand because consumers consider local products
inferior.
In fact, across the region, the
leading cosmetic and toiletries brands are from Europe or the United States. In
this case, high-quality boost a brand’s attractiveness among diverse consumer
segments.
Choosing the right entry plan,
whether through acquisition, greenfield or joint venture, is just as important
as selecting which markets to sell to first, Accenture executives counselled.
In most ASEAN nations,
establishing strong local business and government contacts and relationships
should be a priority for newcomers.
As a matter of course, every multinational
should familiarize themselves with the laws and regulations of the local
government before entering any market.
This is especially important in
the ASEAN region, with its welter of different tax breaks, subsidies and other
incentives designed to help companies meet their goals. Conversely, ignoring
these policies could scuttle the best-laid plans.
New entrants might likewise be
unprepared for day-to-day business realities.
EMMIE V. ABADILLA
Business & Investment Opportunities
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