Developing a G2M Strategy for APAC

About 10 months ago I had the pleasure of hiring a highly talented executive to run our Asia Pacific business as we continue to expand our footprint in the region. As an executive, most of my experience prior to the past 2 years, had been on the Americas and Western European markets, and while I had a superficial understanding of the market dynamics across APAC, I understood little of the nuance.

Since bringing on our new Head of APAC, I’ve spent more time in the region, and have sponsored him developing and executing an aggressive market expansion plan to take our APAC business, which was healthy but heavily indexed on revenue coming from Australia and New Zealand, to net-new and/or nascent markets (for our company), namely Southeast Asia (Singapore, Indonesia, Malaysia, Philippines, Thailand, etc), India, Korea, Japan, and Greater China (Hong Kong & Taiwan), with plans for continued expansion. With offices in Australia, Singapore, and India as well as strong need and demand for our products in the market, much of our efforts in building our plans were on sizing the opportunity in each market, better understanding the specific market dynamics related to our products, then backing into a G2M plan to address those markets. We, of course, developed comprehensive plans for each market, but through that process, developed a simplified framework to assess each market, which consisted of 3 primary considerations:?

1.???Sizing the market opportunity

2.???Business culture and complexity to enter

3.???Ideal entity structure and routes to market

Details on each below:

1.???Sizing the Market Opportunity:

As you consider entering any new market, whether it is vertical, geographic, etc. one of your first considerations should be sizing the opportunity to determine whether it is worth your investment of time, capital, and energy, or whether it represents an opportunity cost and thus should be reduced in priority relative to other opportunities, or, avoided altogether. Depending on your specific business, there will be a variety of ways to size any market opportunity, but given APAC’s unique characteristics as a broader market, our approach was to look at the market through two lenses:

Individually vs. Collectively

APAC is a combination of highly fragmented markets, such as Southeast Asia / ASEAN, and markets that are highly concentrated (China, India, Japan, Australia) thus you have to size each market based on its respective dynamics individually, then look at the broader market collectively, rather than just saying you’re going to “enter Asia”…which is like entering outer-space if you don’t what the hell you’re doing. Once you’ve determined the value of each of the individual markets, you can then look at what the collective opportunity represents, and as you layer in the other considerations outlined below, determine the approach and priority of each individual market, and finally determine how to “eat the elephant a bite at a time”, stack ranking and prioritizing the markets that you will enter and how.

Macro vs. Micro sizing

Macro sizing, on average, should be relatively straight forward depending on the characteristics of your business and the general market you are going after. Assuming you are in an established category, there will likely be close-to-comprehensive reports that are published by industry analysts that convey on a market-by-market basis, the total addressable market (TAM) available for your particular category, and you can also use proxies such as GDP to establish relative size of markets. If there’s an incumbent in the space you can also use size of the incumbent or collective competitions’ combined revenues to determine the market size then couple it with an expected growth rate to determine the size of that market over time, or identify some similar proxy to use. Micro sizing is where I anticipate most companies will fall short, most likely relying exclusively on macro trends to support their investment / entry strategy while neglecting the micro dynamics that are unique to their company and products in those respective markets. If, for example, you are a premium priced product that has been successful in the Western markets, where the average cost of labor is high and the price sensitivity is low(er), and you are now entering markets with a lower cost of labor, and / or higher general price sensitivity, such as several SEA countries, that can materially impact your strategy and ability to service said market. Some questions we considered to nail the “micro” market dynamics:

How will the market dynamics impact OUR KPIs / unit economics?

• ASP?
• Cost per lead? Cost per customer?
• GM profile? CAC Payback?

How does our product differentiation standup relative to competitors in this specific market?

• Does your value proposition have the same appeal?
• How does our current pricing approach standup in this market??Competitive differentiator? Competitively limiting?
• Are modifications required? New tiers? Market-specific offering? Partial offering?

How do these modified KPIs inform my business plan?

• Volume of accounts needed to achieve revenue targets?
• Leads and conversion rates required to achieve target deal volume?
• Required level of market penetration to reach financial goals?

2.???Business culture and complexity to enter:

Given the Asia-Pacific region is a complex tapestry of unique and distinct cultures, there are varying postures and preferences towards how and to what degree each market does business with US & European companies. While I don’t intend to stereotype, I do believe our experiences entering specific markets are representative of some broader and more consistent dynamics in these markets. A few examples that come to mind:

Singapore, for example, is increasingly trending toward being the de facto “Western corridor” to the Asian markets, as the city-nation has both an open posture towards working with Western companies, and business-friendly environment to enter the markets. This dynamic has continued to shift favorably, as the former Western corridor, Hong Kong, has complex geopolitical considerations related to their relationship with mainland China. With this confluence of factors as well as others, Singapore has become a substantial market for Westerners to pursue business, as well as an excellent hub for US and European-based companies to reach the broader Asian markets.

Japan, in contrast, tends to be more insular in nature and is a notoriously challenging and complex market for Western companies to enter, many spending much capital, time, and energy based on perceived “initial traction” only to later fail, at high costs. Given the size of the Japanese economy, if you can develop the right plan to successfully penetrate the market, the rewards are massive, but they won’t come easily, on average.?

The above are just two basic examples, with the point being that there is a broad continuum of nuances and postures based on the market that you’re entering and that Western companies, especially US-based companies, often don’t fully appreciate the complexity of developing a strategy to do business with a series of countries (some contiguous others not) without a singular governing body or culture, and fail to recognize the nuances of entering each market individually. As such, it is important to assess the distinct challenges you’ll face entering each market and decide whether your company has a path to success - a few areas to consider related to culture and complexity:

Where does this market fall on the “general” continuum of low to high “complexity to enter”?

Ex: On average, mainland China and Japan are considered highly nuanced and complex markets to enter while Australia and New Zealand are often considered the most western friendly markets with many parallels with doing business in America and / or Europe; while Southeast Asia, Korea and India often fall somewhere on the middle of the “complexity continuum”. Actual mileage may vary for your business, but these are some general “rules of thumb”.

What is the market’s level of current and predicted geopolitical stability?

• Are there International business restrictions that should inform your approach
• Economic / trade relations with parent company HQ country?
• Legal considerations such as ability to protect your IP?

Unique entity requirements and tax considerations?

What is the country’s general posture to doing business with foreign companies?

• Hierarchical? High “power distance”??Parochial??

3.???Business Structure & Routes to Market:

The ideal business or entity structure and routes to market in each country are largely informed by the aforementioned business culture and composition of the addressable market. Korea, for example, has a large concentration of addressable market in massive, often family-owned, conglomerates called Chaebols (think Samsung, Hyundai, LG), these Chaebols usually have a partner network that they prefer to do business through - if you’re a preferred vendor of the partners that work with these Chaebols, and you address the business need, this may be your exclusive route to market in Korea, and it can make or break you in that market. Japan also has a large concentration of addressable market inside of mega-conglomerates (think Toyota, Hitachi, etc.) and are known for their preference in doing business with local entities, with boots on the ground, and have a very strong referral and word-of-mouth business culture that is perceived as risk-averse and very hard to penetrate. This has led?many Western companies opting to either establish a subsidiary KK (Japanese entity) or enter the market via a Joint Venture / JV , where a local expert will co-invest in a local subsidiary (KK) and will assist in bringing your company to market (entity creation, hiring , G2M execution, partner network, etc) often times with a put option that allows them to sell the Japanese entity back to the US / European parent entity at a predetermined multiple on revenue or ARR. This JV structure isn’t unique to Japan and is also used to enter Greater China amongst other markets. That said, these are just a few examples of the distinct structures and routes to market required to service specific markets, but some broader considerations should be:

Can business be conducted and serviced remotely (i.e. outside of the target country) both operationally and/or culturally?

• If so, what country can act as a hub to provide the local language support and other important nuanced operating approaches??Ex: We are using Singapore as a hub for much of our broader Southeast Asian business, and hiring Sales, Customer Support, and Professional Service team members that speak the language and understand the cultural nuance of the market we’ve hired them to support, but most will be located in our Singapore offices. This provides better economies of scale and has cultural and team benefits of being centrally located.?
• ?If not, what is the best way to establish a business presence and hire in market
• Local entity / wholly owned subsidiary?
• PEO? (i.e. a company like Papaya)
• Joint Venture?
• Tax and cost implications of each?

Does the market and the specific companies you are selling to do business directly (business to vendor) or indirectly (via a partner / reseller network)

• Does your business have a track record of leveraging the preferred distribution channel for that market?

Localization requirements??How quickly will you need to localize varying assets?

• Software??Does the product that you sell need to be localized? Is it a requirement to enter the market? To address a portion of the market? All of the market? Ex: double-byte enabled? Can it be translated to the local language without major investment??Ex: Entering the greater Chinese market is a great example of complexity in product localization, as Taiwan and Hong Kong both use and expect software to be localized in traditional Chinese, while mainland China relies on simplified Chinese text.
• Support??Does the market expect and / or require support (human) and literature in their local language?
• Service delivery??Do you need boots on the ground to deliver professional services in the local market? Can this be outsourced to an enabled partner network? Do you have the ability to enable a partner network and provide resources in their local language?
• Marketing Assets / Websites / Etc??Do websites and marketing content need to be translated to the local language in order to drive demand?

While there are many more considerations that go into the decision of whether to enter a market, these 3 areas were a helpful starting point for us to determine the level of complexity, potential ROI, and our operating approach to each before building a comprehensive business plan. Our journey into the broader APAC markets has been rewarding for our business, partners, and customers, as well as intellectually stimulating for me. The privilege of spending time abroad and becoming more entrenched in these cultures will give you great perspective, as each is rooted in a long and unique history, all of which will inform how you must approach doing business with them.