The Schumpeter column in the recent Economist, “Mammon’s new monarchs” describes the emerging world consumer as king. It seems that Western companies are interested in knowing how to appeal to emerging world consumerism and compete with home-grown domestic rivals. Consultants from Boston Consulting Group (BCG) advise companies to jump in early. I agree that going in early can be useful, but according to my observations, this is not essential nor a panacea.

honda-city

Consider the automobiles industry – Honda started early in India, in 1998. Toyota started shortly afterwards in 2000. Their early start has certainly helped. Honda’s City and Toyota’s Innova enjoy stable market leadership in their respective segments. Though many thought Renault-Nissan to be a late entrant to India (over a decade later than Honda), given that automobile ownership is still at the lower tail of the S-curve, it still has potential to emerge a winner. Renault is already doing well with its Duster shining in the market this year.  The same applies with Volkswagen, which really kicked off with the Polo in 2010. So, coming in later, even a decade later can be okay. On the other hand, in the absence of quality offerings, coming in early is not a cure-all as Fiat has failed to learn in repeat attempts at conquering the market.

Similarly, in the appliances arena, Hitachi that started early in the upper end high quality air conditioner segment, continues to enjoy aspiration status. Panasonic that is just starting its big bang could yet do well. LG may have made early inroads, but eventually quality shall become the priority of the consumer. Already, at the “non-frugal” end LG finds it difficult to attract the well-to-do. Experience with air conditioners also demonstrates that starting early is fine, but quality is perhaps more important.

LG

My own feeling is that when deciding market entry into emerging Asian economies, companies shall do well to concentrate on two things. Firstly, they need to get the price point right and match local tastes, while matching the quality expectations. This is where Hyundai succeeded with Santro. The second point is to focus on a core competency. So, for example, Daimler Benz did well to first start with its Mercedes E-class, a core competency yet economically right for India. It’s A-class is only now being contemplated, over a decade later (the price point is no doubt more suitable, but not what Daimler is more commonly associated with).

Many people try to bring out a single point solution, such as “start early”. This pithy advice can result in disasters as the Fiat experience in India demonstrates. Instead, international business strategy needs to concentrate on what sells (the buyer’s desires), and what can be sold (the seller’s competency), which are perhaps more important to conquer the Asian consumer.