APAC: Where small markets mean big business, PART 2

By ESOMAR APAC Representatives

The Asia Pacific market research industry recorded a mixed performance for 2014 (according to ESOMAR’s Global Market Research report 2015), yet the future looks bright with an increase in Smartphone penetration and a rise in GDP for many countries. We asked the ESOMAR representatives in some of the APAC countries (China, New Zealand, Myanmar, Japan, Singapore, Vietnam, Thailand, India, Cambodia, Indonesia and Sri Lanka) what the challenges, opportunities and trends are in their markets.

The growth of Internet and smartphones

Around two years ago the biggest change for Myanmar was the arrival of mobile communication and faster internet, comments Marita Schimpl, Head of Marketing Research at Myanmar Survey Research. “Mobile phone penetration has skyrocketed from below 5% in 2011, to 80% today among the 15-49 year olds. Myanmar consumers are leapfrogging and crazy about the latest technology: approx. 80% of mobile users own a smartphone and 60% of all mobile owners use the internet through it (aged 15-49 years). New services like mobile money are now possible. Young people enjoy the new chatting and flirting possibilities – formerly not imaginable due to tight parental control,” observes Schimpl. Although internet rates are high, fieldwork is not yet carried out via mobile due to limited digital literacy, “But, we can utilize the faster and cheaper internet connection to reduce the field time by using SIM enabled tablets”, comments Schimpl.

Vietnam shows similarities observes Ralf Matthaes, Managing Director at Infocus Vietnam, “Without a doubt, the growth of smartphone ownership will tip the balance of how consumers interact with products, advertising and overall entertainment consumption.” He comments further, “Since 2013, smart phone penetration has grown from a paltry 15% nationally to an estimated 60% by the end of 2016. The advent of smartphone technology and nationwide Wi-Fi accessibility will tip the scales of market research in the next 2 to 5 years.” And the same can be said for India, where “the role of mobility and an integrated social media component is growing,” comments Sandeep Arora, Sr. Vice President & Global Head (Research & Analytics Solutions) at Datamatics Global Services Ltd.

In Indonesia, Nico Hribernik , Managing Partner at Sinus Consult, notes, “The country is predominantly penetrated by mobile internet-devices vs. only a marginal number of desktop or laptop users (compared to total population), traditional CAWI research is mostly not representative for larger segments. Therefore, researchers have to focus on mobile-research (if they want to do online) or classic PAPI. On the other hand, Indonesia is one of the most innovative mobile markets across all relevant industries (e.g. mobile banking, m-commerce, etc.) in the world. Thus, understanding mobile users and trends in Indonesia can often be a good future-indicator for other markets in the world.”

Yet, in Sri Lanka increase in high mobile connectivity and internet usage has provided the country with the opportunity to move away from traditional PAPI to more high tech methods, comments Himalee Madurasinghe, Chief Executive at Lanka Market Research Bureau (Pvt) Limited.

In Thailand, where internet growth is driven through data usage via mobile, a trend we are seeing across APAC, many clients are looking at a number of socio-economic trends that impact the country, comments Craig Griffin, Managing Director, GfK Thailand. “In particular how to engage with Gen Y/ Millennials in a digital world and the impact of an aging population.”

Internet and smartphones are also shaping the way research is being conducted in Cambodia. There is a rapid growth in internet penetration among the youth (of which 60% of the country is under 26), comments Karl Johan Remoy, Research Consultant at G:LAB. “A think tank on ‘Cambodian youth behaviour in context of change’ recruit ‘Trend Scouts’ as a way of reaching out to youth – the ‘scouts’ report their research findings by uploading small documentaries about a specific topic as well as recordings of interviews with their peers. This kind of innovative approach to research has been made possible by the rapid uptake of technology by Cambodian youth – a development we expect to continue”, observes Remoy.

Attracting talent

In the APAC region, a key challenge is attracting talent. In the growing market of Myanmar, the country has a relatively low local education level, which means there is no pool of qualified staff for any position, not just market research. The market research industry is still new (having only kick-started in 2012), observes Schimpl, “so you won’t find senior market researchers with an in-depth experience in tools that are commonly used elsewhere.”

Likewise in Indonesia, where Hribernik comments, “Similar to other industries in Indonesia, there is only a small pool of qualified talent available that when hired is able to deliver results in research and/or consulting, in-line with expectations by international clients. For any company operating in Indonesia or entering the market, this represents a natural limitation to its growth-potential that needs to be overcome by changes in both local education systems and regulations concerning foreign employee hires.”

The challenge is also visible in Vietnam, where there is a real problem in attracting young researchers and mid-level management for almost all research agencies. “As pricing pressures prevail and longer working hours are required, many young millennial researchers find better, easier opportunities in other industries,” comments Matthaes. Sri Lanka also sees a similar struggle, “There is an inadequate pool of young talent for market research, partly due to the subject not being part of the regular curriculum and less opportunities for learning at the tertiary level,” comments Madurasinghe.

And in Thailand, Griffin comments on a high staff turnover, “The high turnover of staff in the industry is also a challenge, particularly on the agency side where many agencies are reluctant to invest in training because of high turnover. The development and retention of skilled staff to execute great work is a major challenge for everyone.”

It is not just the smaller APAC countries that suffer with attracting people to the industry. Take India, where other industries offer more attractive packages, according to Arora. “There are a lot of other allied industries that have come up which offer much better salaries, and growth prospects to the existing staff. For example, data processing staff are being attracted by the analytics companies, or outsourcing organisations. The field teams are being lured by retail or the logistics industry.”

Growing markets

New opportunities and challenges lie in the growing markets of APAC. Vietnam for example, seeing economic development and an overall increase in income and living standards. “The fabric of Vietnam is changing”, comments Ralf Matthaes, Managing Director at Infocus Vietnam, “Gone are the days of under employment, easy access to respondents and genuine curiosity of what market research is.” However, this change in economy doesn’t necessarily mean a positive impact when carrying out research, with difficulties in reaching different participants for market research purposes ever increasing. Matthaes expands on this, “Today, the Vietnamese are beginning to live in high rises, condo’s and walled off security compounds, making them more difficult to reach, especially the more affluent. The average Vietnamese consumer is also much busier, working long hours to maintain/ increase their new found lifestyles, thus again, harder to reach. Pair this with a growing consumer distrust due to scams and nefarious marketing activities, and all in all reaching consumers is beginning to be a true challenge.”

However, there are positives to reflect on. Such as Myanmar, where the research market is on the up. The market is in an early stage when compared with its neighbours, comments Schimpl. “In the past four years, the market has grown but we are still on a rather small base. However, we expect substantial growth over the next years”. This is partly due to a new government in Myanmar where it is expected that this new government will continue and accelerate the reform process, making Myanmar more attractive to foreign investors. “All these factors result in an increasing demand for research”, comments Schimpl.

The positives continue within India, where the GDP is one of the fastest growing globally, and a lot of disposable income is being generated. Now more than ever in India, there is the great opportunity to add new revenue streams to business, comments Arora. “By finding new users, new segments, new usage occasions for existing products. By finding which products complement one another, market research can own incremental business as its solo contribution which it does not have to share with others. Unlike what always happens with successful new offers that has many creators. MR is always an important one but not the only one,” observes Arora.

Despite recent downturns in growth-rates, Indonesia is still growing steadily as a consumer market. “This consequently means new market entries, new product launches and subsequently more competition for market shares, which should have positive impact on the market-research category in the mid- to long-term,” observes Hribernik.

Yet, whilst we start to see growing markets for the less developed countries in APAC, some of the most developed markets are actually seeing a downturn in growth. In China, Jin Chen, CEO of Greater China, observes the decrease in the growth of the economy – which in turn is seeing a reduction of market research budget from multinational corporations in the country. Additionally, Jin Chen comments, “An increase in staff cost vs price sensitivity is leading to a margin decrease.”

Japan now falls behind China as the second largest market research industry in the region, comments Shin Hosokawa, C.E.O. at GMO Research, Inc. “Overall, there is a real need to change and expand to the area of the data scientist field or work together with the advertising and promotional technology area,” Hosokawa observes.

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
Shin Hosokawa, C.E.O. at GMO Research, Inc