‘If every Chinese citizen purchased just one pair of NZ wool socks we would be right’ is a genuine quote I have heard more than once from those in the industry.
Now change the words ‘wool socks’ for your own product and let me know if you haven’t thought this might be your own silver bullet?
China is a modern day powerhouse. With an estimated population of 1,354 million and estimated GDP per capita in 2013 of US$10,011, rising to US$16,231 by 2018 (all estimated data in this article based off IMF April 2013 information), you would be crazy to not be after a piece of the action. This is why almost every company in the world that exports has China on their radar – now that is some serious competition!
Personally for my own businesses and those I work with, competing against ‘the world’ for my Asian Strategy is not something that interests me. Unless you are a major commodity player, globally competitive in your field, how can you create a sustainable position in this environment? Do not get me wrong, I have been doing business in China since 1996 and find it the most amazing place with many opportunities. What concerns me is the number of NZ senior executives I speak to who have eyes for nowhere in Asia except China. This reminds me of when I was living in Japan 20 years ago and hearing all the talk about how the world had moved on its axis and Japan, through companies like Toyota, Sony and processes like Kaizen, had changed the world and were going to rule forever.
Lets look at Japan now, population of only 127 million and GDP per capita of US$37,525 rising to US$44,803 by 2013. Hang on a minute, that’s almost 4x China – that doesn’t look too bad. Lets look at some other Asian countries:
|Country||Population||2013 GDP per capita est.||2018 GDP per capita est.|
|South Korea||50 million||US$33,580||US$44,166 (3x China)|
|Taiwan||23 million||US$40,392||US$54,699 (4x China)|
To get GDP per capita numbers similar to China then:
Thailand 66 million US$10,783 US$16,973
In almost all industries NZ simply does not have the volumes or economies of scale to compete on price. The majority of us exporting to Asia are working at the premium end of the market and are looking at selling relatively smaller volumes at premium prices/margins.
As opposed to China with its huge population but relatively low GPD per capita, surely we should be cherry picking the tops out of markets and concentrating on those markets that:
a. appreciate and pay for quality
b. have a relatively simple regulatory environment to work in
c. are transparent and have experience dealing with our way of doing business
Japan, Taiwan and South Korea all offer these with transparent systems and discerning consumers. If you have the resources to do it properly by all means add a Shanghai or Beijing into the mix but if you are starting in one market, why would you pick the elephant in the room?
Lets look at Asia and pick niches where we are more likely to be successful as opposed to following the crowd. Right now there are amazing opportunities, in Myanmar, Vietnam, Indonesia, Philippines, South Korea, Taiwan and Japan – to name just some I know personally – and there will be many more.
Asia is our future. Take off the blinkers and think strategically.
Scottie Chapman spent 13 years living and working in Asia before returning to New Zealand in 2005 to purchase Redwood Cellars (Old Mout Cider) with his business partner. In 2012 this business was sold to DB Breweries, after which he started a consulting business called SLC Group which specialises in Asian Sales Strategies for medium to large companies in the FMCG and natural health sectors that are not performing to their full potential in Asia.
Image credit: Tommy Pariah