When entering Japan and other Asian markets, there are many strategies that you might consider, including investing in distributors or product branding.
What is the better choice for your business?
Do you really need a distributor in order to sell abroad?
What are distributors?
First things first, distributors provide goods to certain companies, markets, or areas while selling them for a profit. This means that they sell products at a higher price than they purchase them at. But what does this mean for the market? Will your goods automatically sell using this method? Distributors assist businesses by providing a sales channel, which is great in the short term. However, they lack the assistance to help businesses/brands grow and develop a long-term strategy.
What is the product branding strategy?
Another option that many businesses consider and implement is to forgo a distributor and invest their money in product branding. Businesses that choose this option often create sales channels through e-commerce by utilizing sites like Amazon.
What option is right for your business?
Before the era of the internet, technology, and booming e-commerce, the main strategy that many businesses used to tap into the Asian markets were:
1) Depend on Japanese or other Asian distributors to be able to enter the market.
2) Register a company in the country of the target.
– Register
– Register a bank account.
– Find and rent an office.
– Find staff, delegate responsibilities, train, and manage.
– Translate all information including brand and corporate image.
– Partner with local marketing and advertising firms.
However, with the ever-growing use of the internet, Asian e-commerce, and the development of digital marketing; businesses don’t always need a distributor. Rather a partnership with Asian marketing companies like Mondo Marketing helps create a long-term marketing strategy for foreign markets entry and brand expansion.
Stay with the times
Sticking with distributors when entering Asian markets is an outdated strategy. To penetrate the evolving APAC and ASEAN markets, strong product branding is the smarter option.
When tackling the ever-growing Asian market, it is important to create marketing materials; but it’s even more important to identify, and cater to the needs of your target market. In the emerging economies in Asia particularly, foreign brand recognition is low, meaning there is a need to shape the image of your brand to these potential customers. While distributors can help you create a sales channel, they are not necessarily going to provide you with the means to optimize your marketing efforts to enter and be embraced by a new market, and culture. Moreover, in the emerging markets of Asia, there are a large number of small shops which makes the control of distribution and image a challenge. (See “Think regionally, act locally”)
Benefits of the Product Branding Strategy
Through the creation and management of digital marketing campaigns you no longer need to:
- Depend so much on local distributors
Asian distributors will not invest in marketing campaigns due to a lack of marketing skills and because they buy products in bulk without worrying about the long-term future of the brand. - Register a company (at least, a full team in the target country)
Partnering with a creative marketing firm can save huge amounts of capital. This is because Amazon can be used as a sales channel and distribution can be completed through Fulfillment by Amazon (FBA).
Choosing to create a strong brand image in order to enter the Asian market allows your business to complete market research and testing without high risk. It is a lot easier to end investment and focus on other markets or new products instead of going bankrupt by choosing this method. It allows you to test the waters in a new market before essentially diving in. This gives your business the option to protect your assets and stop investing at a very painless stage.
Additionally, should your long-term goal be to set up shop in an APAC country, it is always something you can pursue after creating a strong brand entry. Once your products are well known and established in the goal region, some companies decide to hire a staff and distribute on their own. This by no means is necessary but is always an option.
In conclusion
At the end of the day, the importance of branding stretches beyond marketing or advertising. Analytics are the key to help create successful marketing campaigns to penetrate the Asian markets and this is something that businesses will never get from depending only on distributors.