Slowdown in Emerging Asian Markets Force Global Brands to Rethink Strategy

Asia - Satellite image - PlanetObserver

Emerging Asia (Photo credit: PlanetObserver)

Emerging Asian markets remain critical to the long term performance of consumer products (CP) companies. However, CP companies must rethink their approach, shaking off traditional mindsets and becoming more responsive if they are to unlock the profitable growth on offer in many markets.

Global brands understand the importance of their success within an emerging Asia, as the region poises itself to generate 38% of the sector’s growth by 2017 and account for 25% of the CP market, up from 15% in 2007. While many global CP companies have been operating in the region for decades, the days of chasing market share at any price are over and profitable growth is key. Currently, 20% of companies are high performers; generating accretive margins and sustained growth that are significantly higher than their peers. Companies can no longer succeed with a homogenous market share/growth mentality and it is therefore imperative for them to understand the real drivers of both growth and profitability at a detailed local level and empower local managers to make the fast, effective decisions they need to win in the market.

Identifying where to compete, agility and local relevance critical to success

Slowing economic development, demand volatility, evolving channels, rising costs and increasing competition are making profitable growth in emerging markets more challenging. Companies need to prepare for growing complexity, volatility and disruptions by making more disciplined choices around where to play, giving local managers decision rights and designing supply chains that have the flexibility to both customize products and adapt quickly to changing demand.

Companies need to develop a deeper, more granular understanding of local demand and profit potential, often down to the city level and beyond. Data and analytics capabilities will become core elements of competitive advantage in this environment. With significant global and local competition chasing the same opportunities those companies who can best cater to local consumer and channel needs are most likely to succeed.

Establishing a trusted local team is critical. Local managers need the autonomy to react quickly but within a framework that ensures decisions are consistent with global strategy and values of the firm. High performers are increasingly giving more decision rights to local managers.

Underpinning this challenge is the war on talent in Asia’s emerging markets. In many markets companies face high staff turnover, rising labor costs and skills shortage. Even among high performers, just 18% report being very effective at developing local talent. It requires going the extra mile in creating an attractive working environment to both recruit and retain talent.

The eight business imperatives that CP companies and retailers need to address are:

1. Empower local leadership to be agile

2. Disrupt traditional approaches for local relevance

3. Be granular in understanding current and future profit pools

4. Create scale by placing bets across categories, price tiers and channels

5. Balance efficiency with consumer immediacy

6. Cluster for synergies based on common characteristics

7. Flex the approach as the market develops

8. Create a culture that mandates disciplined execution

 

From: EY

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2 thoughts on “Slowdown in Emerging Asian Markets Force Global Brands to Rethink Strategy

  1. Pingback: Slowdown in Emerging Asian Markets Force Global Brands to Rethink Strategy | Kenneth Carnesi

  2. Pingback: Slowdown in Emerging Asian Markets Force Global...

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