Evolving conditions in Asia's three largest markets create challenges and opportunities for US businesses
Changing conditions in China, India and Indonesia require fresh perspectives
China, India and Indonesia are the three largest markets in Asia, and are key focuses for US companies seeking global growth. Neil Hough, head of RSM International’s Asia Pacific region, believes that keeping abreast of conditions in these markets is vital.
“Too many US companies still think of China as a production location with low costs, low taxes and minimal regulatory burden,” says Hough. “But those conditions are changing. Income and Value Added Tax (VAT) changes, new anti-monopoly rules, and new employment regulations all have gone into effect in recent months. Those are changing the cost structure, and more changes are likely. China is still an attractive location for many manufacturers, but those achieving the best results no longer view China a just a production location, they see it as a huge market on both the consumer and industrial side.”
US companies have been gaining competitive advantage in India, especially in the IT and outsourcing sectors, but operating there can be difficult. “India is a tremendously complex environment,” says Hough. “Different regions and states present different opportunities and challenges – understanding those differences is the key to success there. It’s important to work with local advisors who not only understand local cultural and business issues, but who also can help you navigate India’s governmental bureaucracies.”
Indonesia has a consumer market of more than 180 million people, yet received little attention in the US. “The perception in the US dating back to the Suharto regime is that Indonesia is a market with poor transparency, considerable corruption, and both national and regional layers of risk, which made it an unattractive location for many,” says Hough. “Yet the new government there has taken substantial steps to reduce corruption and streamline the national versus regional issues. They also are pushing infrastructure investments, which are creating significant opportunities in some sectors. Indonesia is worth a fresh look.”
And the changes will continue, says Hough. “China is sitting on huge currency reserves and is beginning a $200 billion outbound direct investment campaign. Indonesia is strongly courting inbound direct investment. Companies looking primarily at low labor costs are exploring new options like Vietnam and Cambodia. The size and ramifications of the markets here mean that globally focused companies must continually track conditions in order to pursue the most effective strategies.”
To learn more about opportunities in China, India and Indonesia, click on the links below:
- Tax, Regulatory Changes Changing China Equation
Companies need to start looking beyond cost savings and start building revenue in China
Read More
- India’s Complex Environment Demands Local Experience
Cultural and regional differences complicate business in India
Read More
- Improving Risk Environment Make Indonesia Worth a New Look
Indonesian government targeting corruption, inefficiencies to attract investment
Read More
