By Aimee Chanthadavong
Despite overall weakness in retailing, businesses are still looking for opportunities to expand their market growth and for many retailers they’re targeting the Asian market.
As Deloitte suggested in its Global Powers of Retail 2013 report, parts of Asia are “immensely attractive to the world’s top retailers. This is because they are likely to experience strong growth, have limited modern retailing and are likely to see expansion of the middle class which drives modern retail.”
So far there are some Australian retailers who are reaping the rewards of their strategic expansion into Asia, including The Just Group’s Smiggle and the Oroton Group. Then there are others like Premier Investments, owners of chains including Just Jeans, Peter Alexander and Portmans, who are shopping around for opportunities.
However, making the jump to open up shop in Asia is not as easy as people think, especially when it comes to setting up an e-commerce store, Bluecom Group managing director Florian Legendre tells RetailBiz. In fact, it depends on which part of Asia too.
“We see three types of markets in Asia – China, Japan and East Asia. People see China as a goldmine so there’s lots of activities regarding this region. Japan is still extremely hot especially for luxury premium brands because it’s a huge market there. We also see emerging markets in south-east Asia,” he said.
According to Legendre, many businesses that opt to expand into Asia choose not develop a country by country strategy but rather base their headquarters in countries like Hong or Singapore.
“The East Asia market at the moment is a bit too small and it’s too complicated in countries like Indonesia, Malaysia and Vietnam so what we see is people are targeting those countries through different hubs, from Singapore or Hong Kong,” he said.
“With their e-commerce, they’ll usually ship the products directly from those countries and it will allow them to target different countries with minimum costs.”
As for reasons why some of these Asian countries are too complicated? Legendre explained:
“What’s holding the market back a lot is still their immaturity, for example, in their payment system, which is a very big topic because it’s something that isn’t really developed in those markets.
“There’s also the fact that people are not accessing the internet. Right now those countries are creating a white colour population, which are basically people who purchase online. It’s going to take time but it’s definitely a market with lots of people.”
But it’s an entirely different story for retailers looking to enter into China, which is a country that operates a strict firewall.
“China is the most specific country for us in many regards such as hosting because there’s a firewall around China so usually what we advise our clients is to host a website in China if they’re really serious about selling in China,” Patrick Deloy, Bluecom Group executive director, said.
“Many people think they can just translate their website, use the same payment process but this doesn’t work in China because people don’t use credit cards there to buy online.”
On the plus side, Legendre said: “If you go to China and you’re meeting trouble your competitor are also meeting trouble so that’s the good news.”
Despite these differing challenges, Deloy said: “Technical platform aside from the social networks, the checkout process, the deliveries and logistics, the base platform can always be the same. And this is what we focus on with our service because we always use the same platform. But apart from that you have the core platform and you modify it accordingly to your target region.”