Western Businesses Need to Redesign Their Business Models to include Asian clients

Earnings in Asia and across emerging markets like China have remained solid, underlining good fundamentals and superior growth prospects, compared to the West, according to leading economic development agency, Vector Scorecard (Asia-Pacific) ("VSAPAC"), an entity that is partly equity-funded by the investment arm of the Singapore government agency, Spring SEEDS Capital.

VSAPAC believes that an increasing number of businesses will be looking a bit beyond the domestic market and diversify overseas, particularly given the exciting potential of Asia and the emerging markets. Asia and other emerging markets such as Brazil would continue to offer better returns as the most of the economies in the developed world - the US and Europe - would remain sluggish. Growth rates for China and India, in particular, are showing upward trends, even as countries in the euro zone, such as Greece and Spain, grapple with large debt burdens and budget deficits.

The Asian Development Bank expects developing Asia to grow 7.5 per cent this year, and 7.3 per cent next year, picking up from 5.2 per cent last year.

"Growth is likely to continue for the last quarter in 2010 for most parts of Asia, although next year the growth rates are likely to be not as high as this year because this year you had the benefit of the trade recovery against last year," said M Nazri, Group Managing Director of the VSAPAC Group.

Mr Nazri also said sectors such as consumer discretionary, financials and industrial companies are likely to lead the growth trends.

"Within the financial sector, we are likely to see emerging market banking sectors in Brazil, Russia, India, Indonesia and China to shine. Most banks in these regions are still underbanked, particularly in mortgages and consumer financing and where the banks, with the exception of some banks in China, are in reasonably good shape," he said.

In view of the bullish Asian broad-based, growth story, VSAPAC strongly recommends that businesses in the West should consider designing their business models to include Asian clients. Some of the steps would be:

1. Start researching on B2B and B2C patterns, trends and dynamics in emerging Asian economies
2. Identify potential partners and distributors in Asia
3. Relook into their product offerings and ensure compatibility to the Asian markets
4. Consider franchising their brand for the Asina markets
5. Understand better the Asian culture and ways of doing business