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Competitive intelligence Asia : the strategic edge for corporate Asia in times of economic turmoil

This blog article is based on a previously published article in the SCIP Newsletter in 2003 and has been updated in July 2008.

Competitive intelligence Asia

Competitive intelligence Asia

When sales are down and margins shrink, one of the first things CEOs and senior executives usually do is to cut down overhead costs and prices. This is a short-term survival tool kit with substantial long-term consequences: how do you bring up your prices later on? Before cutting-down prices and margins, it is always wise to triple-check what the competition is planning. Are competitors retrenching, reshuffling pricing strategy, shifting manufacturing bases? Or are they after your business, increasing their marketing budgets, recruiting, and keeping their margins intact?

A typical example is Nokia, which increased its marketing and promotion budgets in the Asia Pacific region, right in the midst of the Asian economic crisis in 1997. Motorola, on the other hand, reduced its advertising budgets to avoid over-exposure to the economic slowdown. Nokia, its closest competitor, spotted this. In several Asian markets Nokia had a 25-30% market share, it can now claim up to 70% market share in most South East Asian markets. Where is Motorola? Ask yourself what kind of high impact decisions is your company about to take in the face of adversity ?

Wise and informed-decision or wild-bet? History could repeat itself in different industries now that the ongoing oil prices, inflation and Middle East affairs have placed most of Asia’s businesses in a nascent “wait and see” mode.

Competitive intelligence scarcity in Asia:

Although Competitive Intelligence is certainly not new to Asia (refer to Sun Tzu’s ancient “Art of War” for some fine ‘Made in China Competitive Intelligence’ basics) too many strategic decisions are often based on rather dubious statistics, when they should be based on rational market facts and economic needs. Too often they are influenced by internal politics, external shareholders pressure or plain media hype. In the past, many large players have failed in Asia because the apparently “huge opportunities” have overshadowed the need for exhaustive intelligence. In the 90’s many multi-national companies made substantial investment decisions in Asia without a clear environment picture, the addressable market size (as opposed to the “3 billions consumer market”) or the competition. In “Big in Asia:25 Strategies for Business Success” (Palgrave Macmillan Dec. 2002), Michael Backman and Charlotte Butler explain that Market and Competitive Intelligence information is scarce in Asia because:

  • Regulations that facilitate information flow (such as adequate corporate disclosure) either do not exist or are poorly enforced.
  • Government agencies charged with producing information either do not exist or are under-resourced and the quality of what is produced is often suspect, to say the least.
  • Most of the media lacks independence and is poorly resourced or over-zealous.
  • The environment is a low trust one and there is not a culture of openness and transparency.
  • Large opaque families and clans still dominate most of the corporate sector.• Minority shareholders have few rights and few means.

To counter this trend and improve business decisions, Competitive Intelligence in Asia can help by gathering and analyzing information about competitors’ activities and strategies by using both desk research (Internet, library, specialized press) and discussions with the all key market players involved in a specific industry’s spectrum. Some of these players usually include: direct / potential competitors, retailers, distributors, wholesalers, suppliers, service providers, partners, and end-users, as well as industry experts. In Asia, this gathered data and information needs to be cross-checked, filtered, distilled several times and then analyzed. Since desk research information is still relatively scarce and not often reliable, the bulk of the intelligence comes from marketplace interviews sources. Here, Competitive Intelligence know-how and interviewers’ experience will make a very significant difference. Although Competitive Intelligence will not exactly predict future activities of competitors it is a powerful fact-based strategic tool to:

  • Detect competitive threats
  • Eliminate or lessen bad surprises
  • Enhance competitive advantage
  • Find new product or market opportunities
  • Benchmark against marketplace best practices
  • Provide elements to your competitive and innovation strategy

Most Fortune 500 have been using Competitive Intelligence to anticipate marketplace changes, predict competitor moves, discover new or potential customers and benchmark others’ success. Jack Welsh even previously mentioned: “We brag about learning from HP, Allied, Wal-Mart. We learned quick intelligence from them. We’ve designed a culture that gets people to look outside the company”. (John Huey, “The Jack and Herb show,” January 1999. Bottom line, if you are not keeping track of your competitors’ activity in Asia, you can be certain someone is keeping track of yours…

Competitive intelligence success in Asia:

In Asia, most of the large Japanese companies have been actively conducting research on their domestic, regional and international markets, and thorough competitive landscape reviews are undertaken before any major corporate decisions are made. Although the commercial intelligence community in Japan remains small and closed to most foreigners, the Japanese have developed the most advanced competitive intelligence processes in Asia. The Koreans working for Chaebols (ie large conglomerates) have followed the same approach as well. Copy first, get critical market share at all costs, innovate after.

On the other hand, the overseas Chinese have also built very powerful family, ethnic and sometimes clan-like networks where information on new business opportunities, success and failure of competitors, and insider intelligence are being shared and exchanged. To the “foreign” eye these networks might be more associated to small-town gossiping. However in an environment where information costs are high, the Chinese have access to better information than anyone else and access it cheaply.

In Singapore, Shanghai and Hong Kong, Asia Pacific MNC headquarters are now very keen users of Competitive Intelligence. Few strategic decisions are made without a check on competition. True enough, many Fortune 500 came to Asia with 10-20 years lead expectations, only to realize that they actually have a 2-3 years technological lead (if lucky) on their Chinese competitors.  A humble competitor check can avoid  a lot of bad surprises in Asia.

To summarize, Competitive Intelligence in Asia…

1. …is a strategic decision-making tool that gives management a more comprehensive and accurate picture of the competitive environment:

• Who are my current and upcoming competitors in China?
• Is my market leadership threatened in Asia, how, where and why?
• What are my Asia competitors’ blindspots?

2. Forewarns decision-makers about impending threats as well as prompts them about emerging opportunities:

• Are my South East Asia competitors reducing their advertisement budget?
• Are they now motivating their sales staff with extra commissions?
• Is my direct competitor exiting Indonesia, why?
• Why did my competitor choose this specific new partner in Thailand?

3. Can be used for strategic, long-term decision-making:

• Where are my Japanese competitors sourcing their components?
• Who are my competitors’ OEMs?
• Why did two of my fiercest competitors recently relocate their factories to an Export Processing Zone in Vietnam?
• Should we relocate our manufacturing plant to Wuhan, China?

4. Can be used for tactical, immediate decision-making:

• Should we approach our competitor’s wholesalers in India?
• Can we possibly increase our prices next quarter in Hong Kong and Taiwan?
• Should we boost our R&D facility in Singapore?
• Should we launch an e-supply chain operation like our competitor?
After all, which Asian executive wouldn’t want to know more about its competitors’ next moves?

Damien Duhamel is the Managing Director Asia Pacific of kae:marketing intelligence. The company provides competitive intelligence and strategy solutions services through its unique infrastructure: a team of global specialists based in offices in Singapore, Shanghai, London, and Washington DC, working with a wide network of highly-specialized in-house consultants across 22 Asian countries.

For more information visit www.solidiance.com

Competitive strategy Asia
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About Solidiance

Summary: Corporate strategist with extensive Asia-based management & operational experience. Manages the long-term strategic planning of the organization. Responsible for multi-country team management, PBIT and revenue growth, geographical expansion, business development, key staff recruitment, business unit strategy and processes. Speaks English, French, Vietnamese and "Survival" Japanese. In Asia Pacific for the past 21 years. Specialties: Disruptive innovation strategy & implementation, Expansion strategy, Benchmarking, Asia market entry strategy, Market research Asia, Market sizing, opportunity analysis & market feasibility, Sales & demand forecasting, Competitive intelligence and strategy, Customers acquisition & loyalty, New product development, Distribution & value-chain optimization, Industrial B2B branding, Partner evaluation & selection, M&A due diligence - valuation, Marketing & Corporate strategy, Emerging markets

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