APAC: Where small markets mean big business, PART 2

By ESOMAR APAC Representatives

This is the second piece from a regional analysis created by the ESOMAR Asia Pacific Representatives. For Part 1, click here

Demands and expectations

When conducting research in Cambodia, the challenges are visible when it comes to collecting a representative sample. Remoy comments, “With limited infrastructure, research covering rural and remote areas in Cambodia is expensive. There is no telephone registry and Internet penetration in rural areas is still low, the only way to conduct national representative studies is through household surveys. The implication of this is that people representing a significant proportion of the population is often excluded from the sample because of limited budgets. This is a problem if generalisations are made based on non-representative samples.” It is also more time-consuming to conduct interviews in rural and remote areas, coupled with a high degree of illiteracy, makes the overall task harder, observes Remoy. The same is also visible in China, where Zhang notes, “Urbanisation and population mobility increases the difficulty of collecting a representative sample of the market.”

In Vietnam the overall demands and expectations of clients has increased drastically, observes Matthaes, “The term ‘better, faster, cheaper’ is creeping into the lexicon of marketers nationwide. This places a strain not only on resources but on the bottom line. This undoubtedly puts pressure on market research agencies in an already competitive industry.”

Likewise, the same is happening in New Zealand. Horst Feldhaeuser, Group Client Director at INFOTOOLS, comments on the surge in need for cheaper and faster insights. “Clients don’t seem to mind where those insights come from, e.g. traditional MR, social media, big data etc – this is both a challenge and an opportunity for our industry,” he remarks. And similarities are also visible in Vietnam, Matthaes comments, “anything digital, mobile, which addresses the issues of speed and cost has opportunity here, although clients are still tied to traditional methods, which will require time and proof to remedy.”

Susan Burrell, Head Of Research & Client Insight, Standard Chartered Bank, Wholesale Bank Client Research and Service Excellence comments on the pressures of Singapore being one of the most connected societies in Asia and globally. “In an era of “always on” how do we avoid simply adding to the noise? How do we ensure that we cut through in a way that is relevant to our clients? As well as winning the next transaction, we also need to ensure that we are creating the long term value that builds a real relationship with our clients.”

China is seeing an increase in competition within the market research industry. Gloria Jun Zhang, CEO of Horizon Research Consultancy Group & Chairman of Horizon Elab, comments, “There is intense price competition in the market research industry, this impacts on the quality of fieldwork, and further results in decreasing the quality of data.” Competition is also high in Vietnam. “For a developing country such as Vietnam, the research industry is actually quite developed and highly competitive, with over 40 agencies vying for a relatively small piece of the pie,” notes Matthaes. “Thus, unless you are willing to invest significant funds into development of specific industry relevant syndicated products or services, with a national reach and a true technological advantage, do not waste your time on Vietnam. However, overall retail measurement, supply gain evaluation and speed and scale of economy research is the way of the future and any product or service which can address these gaps would be welcome.”

Growing competition from IT organisations and analytics companies is having an impact on the market in India. Arora, comments, “There is a lot of ancillary competition to the MR industry such as the IT organisations, and Analytics companies, who work with global end-clients on enhancing their data, analytics and technology platforms. And, it’s not difficult for most of such companies to acquire MR expertise, to start a commanding position in the market research and technology space, which is where the new age MR is headed to. Simultaneously, there is a huge pressure on MR managers in India to utilize the current existing data, instead of commissioning new researches.”

An increase in DIY research platforms is leading to more competition in Indonesia. “There are a growing number of companies using free online questionnaire software, which is directly competing with the traditional market research industry,” comments Harry Puspito, President Director at Marketing Research Indonesia. Whereas in Sri Lanka, there is not so much a problem with direct competitors, rather the drive to make brands see the relevance of market research. Madurasinghe comments on this lack of awareness, “There is a low awareness of the market research process, making it difficult to justify costs. Additionally, there is a need for the industry to convince the corporate sector about the importance of scientific research to back their decisions.”

When it comes to competition in New Zealand, Feldhaeuser comments on how the country is seeing a different problem entirely. “More clients are commissioning overseas companies to conduct market research within New Zealand, even the New Zealand Government – begging the question why?”

New directions

In India, new directions come with the shift to the digital age. “The MR industry in India is currently going through a metamorphosis, a tectonic shift! The key challenge is that most of the MR agencies are not able to unlearn their previous business models, and are lost in their road-map to the new-age digital MR”, observes Arora. “MR users are also in a state where they are not able to let go of their previous ways of functioning (conducting surveys, brand-tracking, etc) while adopting the new models of data collection (through social media for example) and integrate with existing enterprise data (through CRM, ERP, etc).”

Growing technology and new advances in China have seen an increase in e-commerce that will impact the traditional MR business. Jin Chen adds that this is one of the key trends currently impacting China, “Online consumer insights and precision-marketing will be the next new market to research in China.”

Singapore is witnessing an increase in companies seeking to grow their businesses within the region or globally, observes Burrell. “Some Singapore-based buyers operate within global MNCs. Many research firms have amazing knowledge within their global organisations, so the opportunity for them is to find smarter ways to bring that expertise into Singapore for the benefit of local buyers and Singapore-run projects. Don’t get distracted by internal wrangling over revenue sharing, do a great job for your clients with all your resources, because when you do that you can be sure that you will win the next project, and the next.”

For Indonesia, opportunities lie with the establishment of the ASEAN Economic Community, “The AEC will mean that Indonesian consumers will be the largest consumer segment of an integrated regional market. Therefore, understanding Indonesian consumers will be a priority for regional ASEAN-based clients, as well as international clients looking into entering ASEAN as one market”, comments Hribernik.

Likewise, in Thailand there is also growth within the market research industry due to AEC, comments Griffin. “The AEC also gives more Thai companies the desire to expand their business overseas and we see more Thai companies wanting to conduct research in neighbouring countries. Thailand has the potential to become a hub for South East Asia and this will demand a research industry that can comfortably execute work on a larger scale than previously seen.”

Differences are abundant

It seems fairly obvious to say, each country within APAC has its own individual complexities. Feldhaeuser echoes this sentiment, “New Zealand is not Australia,” an often misconception of these two neighbouring countries. “You need to understand the subtle differences apparent in New Zealand – the best way, use local agencies when conducting market research, as they truly understand the market.”

Sri Lanka suffers the same comparisons with that of other Southern Asian countries. Madurasinghe observes, “Although Sri Lanka is situated in South Asia, it is quite different to other countries in the region, such as its economic and quality-of-life indicators.” Yet here lies opportunity, Madurasinghe describes the country as the perfect test market, “Sri Lanka is a great test market for anyone wanting to try out new things – a good stepping stone to the vast Indian market. Historically it’s been a market to test out modern technology e.g. Cellular GSM, 3G, 4G to market testing of e-commerce websites.”

India is another market full of diversity, comments Arora. “First of all, the Indian market is very unique. We have a high number of languages and unique socio-cultural regions – 57 of them! That is why I would suggest going with a credible local partner, who understands the abovementioned socio-cultural and market-led nuance.”

What many reps agree on, is the need to contact local expertise when carrying out research within APAC. Hribernik tells of three pieces of advice when doing business in Indonesia, “Look for reliable local partner(s) with a strong local network, ensure access to the right talent, patience and thus willingness to invest into the long-term and not the short-term.” Hosokawa observes the same in Japan, “Building a Japanese consumer base is a little tricky for overseas companies, it is better to have an alliance with a local company – this would be the safest strategy.”

Echoing this sentiment of “local” matters is the research culture in Singapore. Burrell, comments, “Local matters to many large research buyers in Singapore. You need researchers who grew up within the local culture, who understand the local context, who have the ability to deliver sometimes difficult research findings in the right tone of voice and language to help the insights to be understood and so to drive change. So the push to internationalise needs to be balanced with the need to remain locally connected and relevant.”

Doing business in APAC

Gloria Jun Zhang discusses doing business in China, “The business environment here is complex, issues are complicated, mixed and correlative to each other. It is necessary to understand problems comprehensively, and provide innovative and practical solutions rather than simply follow traditional models.”

And in terms of suggestions for doing business in India, Arora comments, “The existing space is already too crowded, look for a vertical-level or competency level niche. A one-inch-wide-and-one-mile-deep strategy would be the best fit in current market dynamics.”

For Cambodia, Remoy comments, “I would encourage potential investors to go in with a long-term perspective. There has been substantial growth but much of it has been disproportional; it will take time before we see a significant increase in the purchasing power in rural and remote areas, which constitutes 80% of the population. The implementation of inclusive growth is essential for Cambodia to move to the next level.”

In Myanmar, Schimpl comments, “There is no quick dollar to be made [in Myanmar]. You need to have a longer-term perspective and be ready to invest – not just money but also time to train staff. If you come with a flexible and open mind, you will see the many opportunities Myanmar has to offer.”

And in Singapore, Burrell comments on the three C’s – Connections, Competence and Curiosity. “Find out who you know that can help you with introductions, act as a reference client for you, etc. Have an area of competence, something that you know how to do and a track record of success that brings new value into the local market. And arrive with your curiosity on full beam, ask lots of questions, be prepared to adapt to the local environment, be ready to learn as well as to teach.”

So what have we learnt about the APAC region? Time to take advantage of the increased connectivity and smartphone penetration and the time has never been better to invest in those smaller growing APAC markets, too.

Many thanks to the authors:

Jin Chen, CEO, Greater China Consumer Search Group, China
Gloria Jun Zhang, CEO of Horizon Research Consultancy Group & Chairman of Horizon Elab
Horst Feldhaeuser, Group Client Director, INFOTOOLS
Marita Schimpl, Head of Marketing Research at Myanmar Survey Research
Susan Burrell, Head Of Research & Client Insight, Standard Chartered Bank, Wholesale Bank Client Research and Service Excellence
Ralf Matthaes, Managing Director at Infocus Vietnam
Craig Griffin, ESOMAR Representative, Thailand
Sandeep Arora, Sr. Vice President & Global Head (Research & Analytics Solutions) at Datamatics Global Services Ltd
Karl Johan Remoy, Research Consultant at G:LAB
Harry Puspito, President Director at MRI (Marketing Research Indonesia)
Nico Hribernik, Managing Consultant, SINUS consult
Himalee Madurasinghe, Chief Executive at Lanka Market Research Bureau (Pvt) Limited