While teaching in Hong Kong for the semester, I’ve had the chance to meet some very interesting people. A standout in the B-to-B marketing field is David Ketchum, CEO of the demand generation agency Current Asia, and author of “Big M, little m Marketing: New Strategies for a New Asia.” David also serves as chairman of the Digital + Direct Marketing Association of Hong Kong. He kindly agreed to answer some questions based on his perspective on B-to-B developments in Asia.
1. What’s the State of B-to-B Marketing in Asia These Days?
Ketchum: B-to-B in Asia today has two contradictory dynamics in play. On the one hand, markets are driven by the deal. Whether it’s commodity supplies sourced from low-cost production countries, or professional services delivered from gleaming downtown office towers, price factors into every decision. Multiple quotes are required, often accompanied by time-consuming negotiation. That’s good governance, but it lengthens and complicates sales. The trend is accelerated by Web-based platforms, like Alibaba.com, that give buyers increased price transparency, while creating further opportunities for sellers to bid for contracts.
On the other hand, B-to-B in Asia operates within a strong tradition of family and government business relationships. These may not be considered modern and are certainly not western. But they still govern many markets and business interactions. These relationships are not necessarily corrupt, but they are often not transparent, and can involve multiple elements and interactions that make it difficult to understand the financial specifics clearly. For example, the sales arm of a property conglomerate may sell machinery to a factory that is both a tenant on their land, and a partially-owned subsidiary.
And keep in mind that Asia is not a monolith, and there’s little cross-border consistency. For example, B-to-B in China is influenced by government policy and macroeconomic factors. In Taiwan and South Korea, the environment is more liberal and western-minded. Hong Kong and Singapore have relatively small local economies, but serve as massive, influential hubs. Japan has a large self-contained market with its own complexities, in addition to being a major exporter.
2. What Are the Particular Sales and Marketing Challenges Faced by Asian B-to-B Companies?
Ketchum: One headache for B-to-B companies in Asia can be the lack of scale. The headline numbers for regional economic growth, infrastructure development and transactions are large in the aggregate, but made up of many small deals. It takes time to find, negotiate and service many accounts. That puts pressure on margins.
In China, the potential addressable market is enormous, but current PRC (People’s Republic of China) policy promotes sales between PRC businesses, and that can diminish the opportunity for multinationals and exporters.
The many languages and legal structures across the region make it difficult to get cross-border synergies. Finally, the lack of transparency I mentioned can be a challenge. Many deals happen without an RFP, and if you are not personally connected, you risk missing opportunities.