Asia Corporate Strategy Assessment

10 Trends In Corporate Strategic

Planning for the Asian Region

Intercedent for

Team Finland Future Watch January 2015

Main Findings

# 1 Organising for Regional Integration (and other FTAs)

The establishment of the ASEAN Economic Community promises a single market and

production base, with free flow of goods, services, skilled labour, investments and

capital. While sceptical of the timetable and implementation, and wary of

countervailing non-tariff barriers (e.g. standards and domestic taxes), corporates are

already organising and planning for an integrated market nonetheless. TTP

negotiations may be concluded by March 2015 (or delayed due to US elections).

# 2 China Plus1 Continued

The increasing territorial assertiveness of Beijing has reminded investors that doing

business in China comes with risks. Labour and other business costs continue to rise,

weakening the comparative advantage of China as an export platform. Although few

are abandoning China altogether, surveys reveal a continued strategic intent to

rebalance regional investment portfolios.

# 3 Regional Supply Chain Management

As MNCs turn their attention to the so-called ‘middle of the pyramid’—Asia’s next one

billion consumers—there is a growing impetus to adopt lower price points or

differential pricing. Competition is intensifying also. Hence, there will be a greater

need to secure competitive advantage via more efficient regionalised supply chains.

Main Findings

# 4 Senior MNC Leadership to Asia

To better capture the high growth market opportunity, MNCs are moving more of their

senior management teams to Asia. They are sourcing more global management from

Asia also.

# 5 Lifting the Local Relevance of Products

HQ will demand 30% growth from Asian operations and then provide ‘world-beating’

products from the home market (yes, it’s a trap). As premium market segments mature

and local competitors start to emerge, MNCs will develop more relevant, second tier

‘good enough’ product offerings for Asia’s emerging markets.

# 6 Productivity Prioritisation

As the demographic dividend winds down and some Asian markets mature, growth

rates will start to taper off. In response, and to sustain competitive advantage, MNCs

and policymakers are prioritising productivity growth.

Main Findings

# 7 South-South Strategies

The rise of emerging markets, the deepening business links between them, and the

importance of Asia to the new South-South axis (emerging markets are mostly located

in the Southern hemisphere) have important implications for corporate strategy. The tilt

in economic power from North-South to South-South is creating new trade and

investment flows, to which corporate leaders must respond.

# 8 New Corporate Strategy for China

China is still the next ‘big China’ (the BRICs are a con job—there is only one China).

How companies respond to the China challenge is no longer a key element of Asian

strategy—some MNCs have removed China from Asian regional management). China

is central to global strategy—70% of MNCs, according to IMA Asia, expect to have

more sales in China than their home market within a decade.

Key issues to manage: (a) how best to manage the internationalisation of Chinese

business; (b) resource should allocation given the expectation of slower growth, over

capacity and competition; (c) how to deal with the risks associated with a more

assertive China at home, and abroad; and (d) how to organise for China given its

growing role importance both within the region and as a rising contributor to

companies’ global sales.

Main Findings

# 9 Competing Against Emerging Asia

Corporations from emerging economies are becoming important players in the world

economy. The best of them have embarked upon rapid globalisation targeting the

industrialized economies, particularly North America, Australia and Europe, as well

resource-rich Africa and the Americas. Internationalising Asian companies have a

better understanding of their local markets. They are also more nimble in terms of

resource allocation and decision making.

# 10 Leveraging Asia as a Source of Innovation

Asia is emerging as a global innovation powerhouse; the region’s growth in purchasing

power, its tech-savvy skilled workforce and high-tech production capabilities are

attracting corporate R&D as innovative vitality shifts eastward. Increasingly Asia will be

used as an innovation incubator for other emerging markets.

Read whole report here

Interested to know more?

Contact us

Future Watch contact in China & East-Asia

Sari Arho Havrén (sari.arhohavren at tekes.fi)

Future Watch Team in Helsinki

Heli Karjalainen (heli.karjalainen at tekes.fi)

Laura Nurmi (laura.nurmi at tekes.fi)

Read whole Asia Corporate Strategy Assessment report in

Slideshare or our webpage www.tekes.fi/futurewatch