Technology brands in Asia have strong selling points, but to succeed in overseas markets, they need to do better at managing issues such as marketing, branding and human resources, say industry experts.
Neil McMurchy, Gartner's research director for IT markets and channels strategies, noted technology companies from Asia typically have strong technical capabilities and well-made products.
"A particular issue for Asia [however], is they are not necessarily very good at what I would call marketing--in a strategic and tactical sense," he told ZDNet Asia in a phone interview. "If you look at technology worldwide, it's very rare that the best product is necessarily the market leader. In the technology marketplace, having a good product is important but is absolutely not the guarantee of success."
|If you look at technology worldwide, it's very rare that the best product is necessarily the market leader.|
|Neil McMurchy, Gartner|
Asian technology brands, McMurchy added, also tend to bank their competitiveness on price or product features and functions, which may not be suitable for more mature markets. "When you see the market entry strategies of Huawei, they went down the path outside China of focusing on emerging economies--economies where customers were primarily focused on buying lower-priced products that had good performance.
"The end customers in emerging markets were less focused on brand and more focused on price, which played to Huawei's strength," the Sydney-based analyst explained. "They've done a good job with that, but they have clearly not been so successful in some of the more developed economies where…price becomes less important."
McMurchy, however, acknowledged that the focus on price and product features may be a result of language barriers or culture differences. Conveying features or functions in another language is easier than communicating value or customer satisfaction, he pointed out.
"There's definitely a reticence or reluctance to talk too much…let the product speak for itself, but…customers, whether SMBs (small and midsize businesses) or larger enterprises or consumers in more developed economies, do expect to be marketed to, and they also expect that the vendor understands them as a customer," he added.
Charge of the Chinese
Echoing McMurchy's sentiments, Eric K. Clemons, professor of operations and information management at The Wharton School of the University of Pennsylvania, pointed out in an e-mail that Chinese companies, for instance, need to practice the Western brand of management.
"Right now Chinese markets are geared around cheap exports and most Chinese still view Western brands as status symbols," he said. With time, Chinese brands can shake off the image of being inexpensive but of lower quality, if they focus on design and stamp out counterfeiting.
Shaun Rein, managing director of China Market Research (CMR), agreed in a phone interview that most Chinese technology companies have focused on price, but not on creating value or building up a brand.
Even within China itself, because foreign brands are better at creating that "emotional connection" with customers, there is gradually less and less brand loyalty for homegrown brands, he pointed out.
In a report on Chinese companies venturing abroad published earlier this year, Rein pointed out the majority of Internet and software businesses have done so due to demand for their products and services in overseas markets.
Companies producing enterprise management software, for instance, have penetrated the Southeast Asian market while the vast majority of Internet companies have chosen countries which they believe have a similar culture to China, such as Japan and Southeast Asian nations. Social networking businesses, can be found in countries with large overseas Chinese communities.
According to Rein, the lack of the right mix of human resources is often a stumbling block for Chinese companies that venture, or want to venture, abroad. Many businesses do not have capable middle management or staffing teams to go into target markets.
There is also the tendency for key executives such as the CEO to exercise rigid control, he noted. "Chinese companies also cannot make the same mistakes that eBay and Google made in China, where they were slow to delegate power and localize services for the local communities.
"This failure to localize and react quickly to local wants is why most foreign Internet companies have failed in China. Chinese companies will face the same problems as they move into overseas markets," explained Rein.
Gartner's McMurchy added that partnerships are an "almost always very critical" component of an overseas market foray. Smaller vendors, he said, find it especially difficult to find the right partner. A lot of companies that don't succeed, often fail to seek out complementary partners, set and communicate expectations or understand what is the best way to reach out to target customers.
CMR's Rein pointed out that overseas expansion may, at the end of the day, not be the right option for all Chinese software and Internet companies. "The difficulty in moving abroad is considerable and the China market might remain the best avenue for growth," he said.
Companies that take their business out of their home market need to be sure they "want to and can make money", and not do it for the sake of earning the rights to being a global player. "We don't want egos to get involved," he added.