The Challenge
In today’s global and increasingly virtual economy, business leaders and senior executives of small and large companies alike expect to rely on easily accessible information to help develop their strategies, business plans, improvement programs, and management processes.
When it comes to Asian Emerging Markets however, the fundamentals for these well-oiled Western management techniques and practices change radically. More often than not, these practices are fraught with misleading assumptions or misunderstandings that lead to frustration, delays, and losses of financial and human capital. Here are some typical challenges:
- Information is hard to get and unreliable
- Data accuracy requires extensive field research and cross-checking
- Strategies need to incorporate intangibles and contingencies unique to the local administration and regulatory environment
- Standard business paradigms and practices must be revised to reflect local customs and reality
- Projects and processes must adapt to the local culture and code of conduct
- Qualified professionals are hard to find and retention is a major challenge.
Lessons learned
Multinational companies have ventured increasingly into Asian emerging markets for the last 30+ years, some meeting their Waterloo, others claiming success and paving the way for best practices.
Whether the undertaking is market entry strategy, equity joint venture, global procurement or local distribution and market penetration, foreign companies have largely defined modern business management practices in the fast-growing and changing Emerging Market environments.
And while most companies are quick to extract hard facts in terms of financial results, the less obvious learnings reveal that critical “soft” management skills ultimately make the difference between success and failure.
From China to India and across emerging markets, we have identified common key success factors including:
• Clear, focused, and consistent business strategy and objectives
• Realistic business plan and profitability targets
• Permanent local presence, long term commitment
• Active talent management and retention
• Strong government relations and corporate citizenship
• Open, trusting, and close communication between local management and HQ
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In our work with foreign companies in Asian emerging markets, we have guided them on their learning journey and helped them recognize the need to adapt corporate standards to local requirements.