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Beyond Asia                         Growing BeyondDeveloped-markets perspectives –meeting the challenge of changingglobal ...
Introduction►   The rise of Asia over the past few decades has transformed the global economic    landscape, creating oppo...
About this report                                                     ►   Research for this report is based on a series of...
The story from Beyond AsiaAsian companies have ambitious plans for overseas expansion, moving from their ownregion into bo...
Key issues and recommended actions Key issue                                                                 Recommended a...
Lessons to learn►    Asian companies are expanding globally at an extraordinarily rapid rate, giving rise to a     new gen...
AppendixSupporting survey resultsPage 6                Beyond Asia: developed-markets perspective
Where are Asian companies expanding?Excluding your company’s home market, which countries or regions do you expect will ho...
Why are Asian companies looking to expandinternationally?What are the most important benefits you would be looking to achi...
How are Asian companies expanding?As you consider strategies for expansion, which methods will become more important in th...
Ernst & YoungAssurance | Tax | Transactions | AdvisoryAbout Ernst & YoungErnst & Young is a global leader in assurance, ta...
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Beyond Asia - developed-markets perspectives – meeting the challenge of changing global competition

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How companies based in developed markets can explore the implications of Asian overseas expansion and figure out responses that will both anticipate change in global competition and maximize new opportunities.
http://www.ey.com/GL/en/Issues/Driving-growth/Growing-Beyond/Beyond-Asia-developed-markets-perspectives---Introduction
Our Growing Beyond program explores opportunities across expanding into new markets, finding new ways to innovate & implementing new approaches to talent.
www.ey.com/growingbeyond

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Beyond Asia - developed-markets perspectives – meeting the challenge of changing global competition

  1. 1. Beyond Asia Growing BeyondDeveloped-markets perspectives –meeting the challenge of changingglobal competitionOctober 2012
  2. 2. Introduction► The rise of Asia over the past few decades has transformed the global economic landscape, creating opportunities for growth across Asia.► A new generation of Asian companies has emerged, taking advantage of increased spending power and opportunities in the region.► As explored in Beyond Asia: strategies to support the quest for growth, these new multinationals are now fanning out across the globe, capitalizing on a platform of strong domestic markets, government support and readily available capital, becoming major players in international business.► This report examines how companies based in developed markets can explore the implications of Asian overseas expansion and maximize new opportunities.► Offered are practical perspectives into how both Asian and developed-market businesses can turn this trend to their advantage and attain a common goal – growth.Page 1 Beyond Asia: developed-markets perspective
  3. 3. About this report ► Research for this report is based on a series of in-depth interviews with business leaders and Ernst & YoungBeyond Asia: developed-markets professionals.perspectives – meeting the ► Beyond Asia: strategies to support the quest for growthchallenge of changing global was based on a survey of 617 business executivescompetition complements our based in East and Southeast Asia, conducted by therecent report, Beyond Asia: Economist Intelligence Unit in March and April 2012.strategies to support the quest for ► In both reports, we use the term “Asia” to refer to thegrowth, which described the nine rapid-growth markets in East and Southeast Asiaoverseas expansion strategies of that we surveyed, including mainland China, Hong KongAsian companies. (SAR), Indonesia, Malaysia, Singapore, South Korea, Taiwan, Thailand and Vietnam.This report explores the ► Globally focused (global) Asian companies are thoseimplications of Asian business with operations in two or more of the following markets:expansion for companies based Australia and New Zealand, Brazil, Eastern Europe,in developed markets. India, Japan, Latin America, Middle East & North Africa, Russia, sub-Saharan Africa, US or Canada, and Western Europe. ► Regionally focused (regional) companies are those that have operations only in East and Southeast Asia.Page 2 Beyond Asia: developed-markets perspective
  4. 4. The story from Beyond AsiaAsian companies have ambitious plans for overseas expansion, moving from their ownregion into both rapid-growth and developed markets. Below is a look at where, why andhow both global and regional companies will expand: Global Regional Where ► Asia, including India, China and rapid- ► Outside of Asia, especially in Western growth markets such as Indonesia and Europe, the Middle East and North Africa Vietnam Why ► Access to new customers, sales growth, ► Access to skilled workers, natural resources new technology and innovations or raw materials, low-cost labor, new technology and innovations How ► Franchises and overseas distribution/sales offices still common ► Partnerships, alliances and M&A ► Need for understanding the nuances of overseas markets ► Need for the capabilities and international outlook required for effectively expandingPage 3 Beyond Asia: developed-markets perspective
  5. 5. Key issues and recommended actions Key issue Recommended actions ► Have a well-developed, competitive intelligence Growing demand for assets from Asian companies has ► Present yourself as an acquirer of choice intensified global competition for acquisitions. ► Structure acquisitions properly As Asian companies seek to develop more sophisticated and ► Think carefully about where you can compete high-value products and services, developed-market ► Focus on differentiating yourself in the marketplace companies will face much greater competition on cost in their ► Refresh your business model to maintain your competitive core segments. edge ► Develop a clear understanding of the competitive landscape Markets outside Asia and the developed markets are becoming you are likely to face the new battleground for market share. ► Structure the investment so you can protect your assets, especially from a tax perspective ► Access the right cost structures and operating models Some mid-market segments are becoming crowded, forcing (e.g., an alliance or partnership) developed-market companies to target the lower-end segment in addition to the higher end that they are used to serving. ► Consider segmenting your supply chain differently for high- and low-end products Developed-market companies can combine forces with Asian ► Find Asian companies’ competency gaps – and fill them companies so that both parties make the most of each other’s ► Form strong partnerships with Asian companies seeking to strengths and capabilities. fill niche technology gaps ► Make sure that the right depth of management capabilities is Rapid-growth markets are becoming the global centers for key in local markets to assume bigger, more global roles corporate activities, necessitating considerable investment in talent. ► Make the necessary organizational changes to ensure local autonomyPage 4 Beyond Asia: developed-markets perspective
  6. 6. Lessons to learn► Asian companies are expanding globally at an extraordinarily rapid rate, giving rise to a new generation of Asian multinationals.► This could be viewed as a threat for those who do not consider how this expansion will affect their business, yet presents many opportunities for those willing to embrace it.► Asian companies will be looking for expertise, technology and management capabilities.► Developed-market companies can benefit from access to capital and the ability to create different cost structures and can gain access to Asian markets.► Combining forces between Asian and developed-market companies may be possible through partnerships, alliances or M&A. Whether minimizing threats or maximizing opportunities, developed-market companies need to think more broadly about their strategic options.Page 5 Beyond Asia: developed-markets perspective1
  7. 7. AppendixSupporting survey resultsPage 6 Beyond Asia: developed-markets perspective
  8. 8. Where are Asian companies expanding?Excluding your company’s home market, which countries or regions do you expect will holdthe best growth opportunities for your company over the next three years? For globally focused companies For regionally focused companies Mainland China 42 Western Europe 32 India 33 Middle East and North Africa 28 Indonesia 29 Brazil 20 Vietnam 25 Russia 18 Eastern Europe Middle East and North Africa 24 15 (excluding Russia) Brazil 24 US or Canada 14 Western Europe 23 Mainland China 8 Russia 18 Sub-Saharan Africa 8 US or Canada 18 Singapore 7 Australia and New Zealand 15 Hong Kong 7Page 7 Beyond Asia: developed-markets perspective
  9. 9. Why are Asian companies looking to expandinternationally?What are the most important benefits you would be looking to achieve through internationalexpansion in developed markets? Benefits of expansion into developed markets New customers and sales growth 40 Access to new technology or innovations 39 Access to new distribution channels 31 Tap a gap in the market for products and services 29 Spreading risk across different markets 25 Access to skilled workers 22 Access to skilled workers 41 Access to natural resources and raw materials 40 Access to low-cost labor 39 Access to intellectual property 37 Access to new technology or innovations 36 Tap a gap in the market for products and services 35 Globally focused Regionally focusedPage 8 Beyond Asia: developed-markets perspective
  10. 10. How are Asian companies expanding?As you consider strategies for expansion, which methods will become more important in thenext three years? In East and Southeast Asia In developed markets Local sales/distribution/ 35 sourcing desk 46 Direct exporting 24 42 Direct exporting Local sales/distribution/ 35 38 sourcing desk 46 26 24 Partnership/alliance 36 M&A 2 40 24 Joint venture 28 Partnership/alliance 10 26 23 M&A Outsourcing agreement 19 24 4 21 Outsourcing agreement Joint venture 6 23 24 20 Franchise/licensing Franchise/licensing 34 21 29 Minority equity 12 Greenfield investment investment 9 19 19 12 Greenfield investment 6 Minority equity investment 18 36 Partnership with govt- 8 Partnership with 5 18 owned enterprises govt-owned enterprises 27 Globally focused Regionally focusedPage 9 Beyond Asia: developed-markets perspective
  11. 11. Ernst & YoungAssurance | Tax | Transactions | AdvisoryAbout Ernst & YoungErnst & Young is a global leader in assurance, tax,transaction and advisory services. Worldwide, our167,000 people are united by our shared values andan unwavering commitment to quality. We make adifference by helping our people, our clients and ourwider communities achieve their potential.Ernst & Young refers to the global organizationof member firms of Ernst & Young Global Limited,each of which is a separate legal entity.Ernst & Young Global Limited, a UK companylimited by guarantee, does not provide servicesto clients. For more information about ourorganization, please visit www.ey.com.© 2012 EYGM Limited.All Rights Reserved.This publication contains information in summary form andis therefore intended for general guidance only. It is not intendedto be a substitute for detailed research or the exercise of professionaljudgment. Neither EYGM Limited nor any other member of the globalErnst & Young organization can accept any responsibility for lossoccasioned to any person acting or refraining from action as a result ofany material in this publication. On any specific matter, reference shouldbe made to the appropriate advisor.EYG no. EX0138BSC no.1209-1393683ED noneGrowing BeyondIn these challenging economic times,opportunities still exist for growth. InGrowing Beyond, we’re exploring howcompanies can best exploit theseopportunities – by expanding into newmarkets, finding new ways to innovate andtaking new approaches to talent. You’llgain practical insights into what you needto do to grow. Join the debate atwww.ey.com/growingbeyond.

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