How companies based in developed markets can explore the implications of Asian overseas expansion and figure out responses that will both anticipate change in global competition and maximize new opportunities. http://www.ey.com/GL/en/Issues/Driving-growth/Growing-Beyond/Beyond-Asia-developed-markets-perspectives---Introduction Our Growing Beyond program explores opportunities across expanding into new markets, finding new ways to innovate & implementing new approaches to talent. www.ey.com/growingbeyond

1. Beyond Asia Growing Beyond
Developed-markets perspectives –
meeting the challenge of changing
global competition
October 2012

2. Introduction
► The rise of Asia over the past few decades has transformed the global economic
landscape, creating opportunities for growth across Asia.
► A new generation of Asian companies has emerged, taking advantage of increased
spending power and opportunities in the region.
► As explored in Beyond Asia: strategies to support the quest for growth, these new
multinationals are now fanning out across the globe, capitalizing on a platform of strong
domestic markets, government support and readily available capital, becoming major
players in international business.
► This report examines how companies based in developed markets can explore the
implications of Asian overseas expansion and maximize new opportunities.
► Offered are practical perspectives into how both Asian and developed-market
businesses can turn this trend to their advantage and attain a common goal – growth.
Page 1 Beyond Asia: developed-markets perspective

3. About this report
► Research for this report is based on a series of in-depth
interviews with business leaders and Ernst & Young
Beyond Asia: developed-markets professionals.
perspectives – meeting the
► Beyond Asia: strategies to support the quest for growth
challenge of changing global was based on a survey of 617 business executives
competition complements our based in East and Southeast Asia, conducted by the
recent report, Beyond Asia: Economist Intelligence Unit in March and April 2012.
strategies to support the quest for ► In both reports, we use the term “Asia” to refer to the
growth, which described the nine rapid-growth markets in East and Southeast Asia
overseas expansion strategies of that we surveyed, including mainland China, Hong Kong
Asian companies. (SAR), Indonesia, Malaysia, Singapore, South Korea,
Taiwan, Thailand and Vietnam.
This report explores the ► Globally focused (global) Asian companies are those
implications of Asian business with operations in two or more of the following markets:
expansion for companies based Australia and New Zealand, Brazil, Eastern Europe,
in developed markets. India, Japan, Latin America, Middle East & North Africa,
Russia, sub-Saharan Africa, US or Canada, and
Western Europe.
► Regionally focused (regional) companies are those that
have operations only in East and Southeast Asia.
Page 2 Beyond Asia: developed-markets perspective

4. The story from Beyond Asia
Asian companies have ambitious plans for overseas expansion, moving from their own
region into both rapid-growth and developed markets. Below is a look at where, why and
how both global and regional companies will expand:
Global Regional
Where ► Asia, including India, China and rapid- ► Outside of Asia, especially in Western
growth markets such as Indonesia and Europe, the Middle East and North Africa
Vietnam
Why ► Access to new customers, sales growth, ► Access to skilled workers, natural resources
new technology and innovations or raw materials, low-cost labor, new
technology and innovations
How ► Franchises and overseas distribution/sales offices still common
► Partnerships, alliances and M&A
► Need for understanding the nuances of overseas markets
► Need for the capabilities and international outlook required for effectively expanding
Page 3 Beyond Asia: developed-markets perspective

5. Key issues and recommended actions
Key issue Recommended actions
► Have a well-developed, competitive intelligence
Growing demand for assets from Asian companies has
► Present yourself as an acquirer of choice
intensified global competition for acquisitions.
► Structure acquisitions properly
As Asian companies seek to develop more sophisticated and ► Think carefully about where you can compete
high-value products and services, developed-market ► Focus on differentiating yourself in the marketplace
companies will face much greater competition on cost in their ► Refresh your business model to maintain your competitive
core segments. edge
► Develop a clear understanding of the competitive landscape
Markets outside Asia and the developed markets are becoming you are likely to face
the new battleground for market share. ► Structure the investment so you can protect your assets,
especially from a tax perspective
► Access the right cost structures and operating models
Some mid-market segments are becoming crowded, forcing (e.g., an alliance or partnership)
developed-market companies to target the lower-end segment
in addition to the higher end that they are used to serving. ► Consider segmenting your supply chain differently for high-
and low-end products
Developed-market companies can combine forces with Asian ► Find Asian companies’ competency gaps – and fill them
companies so that both parties make the most of each other’s ► Form strong partnerships with Asian companies seeking to
strengths and capabilities. fill niche technology gaps
► Make sure that the right depth of management capabilities is
Rapid-growth markets are becoming the global centers for key in local markets to assume bigger, more global roles
corporate activities, necessitating considerable investment in
talent. ► Make the necessary organizational changes to ensure local
autonomy
Page 4 Beyond Asia: developed-markets perspective

6. Lessons to learn
► Asian companies are expanding globally at an extraordinarily rapid rate, giving rise to a
new generation of Asian multinationals.
► This could be viewed as a threat for those who do not consider how this expansion will
affect their business, yet presents many opportunities for those willing to embrace it.
► Asian companies will be looking for expertise, technology and management capabilities.
► Developed-market companies can benefit from access to capital and the ability to create
different cost structures and can gain access to Asian markets.
► Combining forces between Asian and developed-market companies may be possible
through partnerships, alliances or M&A.
Whether minimizing threats or maximizing opportunities, developed-market
companies need to think more broadly about their strategic options.
Page 5 Beyond Asia: developed-markets perspective
1

7. Appendix
Supporting survey results
Page 6 Beyond Asia: developed-markets perspective

8. Where are Asian companies expanding?
Excluding your company’s home market, which countries or regions do you expect will hold
the best growth opportunities for your company over the next three years?
For globally focused companies For regionally focused companies
Mainland China 42 Western Europe 32
India 33 Middle East and North Africa 28
Indonesia 29 Brazil 20
Vietnam 25 Russia 18
Eastern Europe
Middle East and North Africa 24 15
(excluding Russia)
Brazil 24 US or Canada 14
Western Europe 23 Mainland China 8
Russia 18 Sub-Saharan Africa 8
US or Canada 18 Singapore 7
Australia and New Zealand 15 Hong Kong 7
Page 7 Beyond Asia: developed-markets perspective

9. Why are Asian companies looking to expand
internationally?
What are the most important benefits you would be looking to achieve through international
expansion in developed markets?
Benefits of expansion into developed markets
New customers and sales growth 40
Access to new technology or
innovations 39
Access to new distribution channels 31
Tap a gap in the market for products
and services 29
Spreading risk across different markets 25
Access to skilled workers 22
Access to skilled workers 41
Access to natural resources and
raw materials
40
Access to low-cost labor 39
Access to intellectual property 37
Access to new technology or
innovations 36
Tap a gap in the market for products
and services
35
Globally focused Regionally focused
Page 8 Beyond Asia: developed-markets perspective

10. How are Asian companies expanding?
As you consider strategies for expansion, which methods will become more important in the
next three years?
In East and Southeast Asia In developed markets
Local sales/distribution/ 35
sourcing desk 46 Direct exporting 24
42
Direct exporting Local sales/distribution/ 35
38 sourcing desk 46
26
24
Partnership/alliance 36 M&A 2
40
24
Joint venture 28 Partnership/alliance 10
26
23
M&A Outsourcing agreement 19
24
4
21
Outsourcing agreement Joint venture 6
23
24
20
Franchise/licensing Franchise/licensing 34
21
29
Minority equity 12
Greenfield investment investment 9
19
19 12
Greenfield investment 6
Minority equity investment 18
36 Partnership with gov't- 8
Partnership with 5
18 owned enterprises
gov't-owned enterprises
27
Globally focused Regionally focused
Page 9 Beyond Asia: developed-markets perspective

11. Ernst & Young
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About Ernst & Young
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© 2012 EYGM Limited.
All Rights Reserved.
This publication contains information in summary form and
is therefore intended for general guidance only. It is not intended
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occasioned to any person acting or refraining from action as a result of
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