Last week, Equiteq’s Asia Pacific (APAC) team gave their three top tips when considering expanding a consultancy practice into Asia Pacific. This week they’re taking a look at which areas need particular focus, with reference to Equiteq’s Growth Wheel. There are eight levers of equity value, they will be taking a look at the five key areas that they recommend focusing on first in an expansion into APAC.
1. Market proposition
It is unwise to think that just because you’ve had success with a service offering in one part of the world, that you can simply transplant it to APAC and enjoy the same kind of result. Service offerings should be very targeted and adapted to the local business landscape, even to different countries in the area. Firms that have been the most successful concentrate on a niche market and on specific regions; for example the Leighton Group, an engineering consulting firm, has established its presence as the world’s largest mining services provider and derives a significant part of its revenues from APAC.
2. Intellectual property
The key advice here is to invest in creating intellectual property (IP). The more packaged the offer can be, with as much know-how as possible, the more local businesses will value it. Ideally you’d reach a point where the service is so well developed that it’s almost like a tangible product. Failing to develop IP can lead to service becoming commoditized and you will quickly end up in a race to the bottom based simply on price and not value.
3. Consultant loyalty
As mentioned in the previous APAC post, competition for consultant talent in this area is fierce. We recommend moving away from the locally predominant payroll management system towards a comprehensive human capital development program to encourage consultants to stay. Due to competition for talent, consultants will have to be well remunerated, but it’s also important to keep them engaged with the company through ongoing training, development and recognition.
While we believe the market proposition, intellectual property and consultant loyalty are the most important levers to focus on when expanding into APAC, the following areas are also due careful consideration when setting up in the region.
4. Sales & marketing / Client relationships
Trust is fundamental in Asia, it is often more important than actual capabilities. Because of this sales & marketing and client relationships, two different levers on the Equiteq Growth Wheel, go hand in hand in APAC. Focus on creating long-term relationships and developing existing accounts. It would be a shame to miss out on contracts for lack of follow-up once you have already done three quarters of the work by establishing trust.
5. Quality of fee income
The wide variability of political regimes in the region means you should take care not to put all your eggs in one basket when working in APAC. While there are limited ways of predicting black swan events such as Thailand’s coup or Japan’s tsunami, there are ample opportunities to preempt them through diversification.
Bearing in mind the points above while staying open to the revolving regional landscape will help you harness the huge potential of the Asian century. Furthermore, it will increase the value of your business from an investor perspective by demonstrating your local knowledge and adaptability skills.