Though many U.S. manufacturers and distributors have struggled to gain market access in Asia because distribution is "not a well-understood science" there, companies should work to gain a foothold because of the myriad opportunities that exist, says Barry Lawrence director of the industrial distribution program at Texas A&M University, in A Passage to Asia.
“We need distributors in Asia, and they need to develop their value proposition," says Lawrence, whose duties at Texas A&M include taking graduate ID students to Singapore to work with U.S. companies’ foreign operations. "There is a huge gap between the Western idea of what distribution is and what’s happening in Asia.”
Asia’s numbers – the largest population in the world and rising GDP – make compelling arguments for distributors and manufacturers, if they are willing and able, to contemplate an expansion to the region. And, as Lawrence, points out, a company's "value proposition only has to land with a tiny percentage of places before you have a very big market.”
Distributors should look to set up shop in countries and cities that are more welcoming to U.S. businesses, such as Singapore, Hong Kong, the Philippines, Vietnam and Thailand. They also should consider places with a higher percentage of English speakers, such as Hong Kong and Singapore, or communities with a high concentration of U.S. expatriates.
That approach worked for Fort Worth, TX-based electronic components distributor TTI Inc., which opened a small warehouse and sales office in Singapore in 2000 and has “grown tremendously” in the region since then, according to Michael Knight, senior vice president, TTI Americas.
The company’s Asia Pacific presence now includes 500 employees in 13 offices, half of which are in China, and three warehouses. “We exported our culture, business system, business model and line card,” Knight says. “We concentrated first on the U.S. multinationals and slowly branched out into China and into indigenous customers.”
Read more about how to strategically grow overseas in A Passage to Asia.
