COLORADO SPRINGS, Colo. – While Western businesses may wring their hands in frustration at the difficulties of doing business in Asia, at least one industry insider views high barriers to entry as positive.
High barriers to entry can be good, because it keeps others out, Lance Puckett, president of Ergon Refining, said during a panel discussion at the Independent Lubricant Manufacturers Associations annual meeting here earlier this week.
Ergon is a relative newcomer to overseas expansion, having ventured into Europe in 2006, Latin America in 2010 and Asia as recently as 2016. Were still working on some lessons in those regions, and we still have the scars associated with some of it, Puckett joked.
But companies with good buy-in and commitment to entering new markets can reap plenty of benefits, he noted.
The biggest story with Asia is the growth, really extending from China, which has spurred development in other countries in the region, according to Puckett. With 800 million people already in Chinas middle class, Asia is expected to be home to two-thirds of the worlds middle class by 2030. That bump in income will bring greater consumption of products, including lubricants.
China is currently the fastest growing and largest market for electrical vehicles. As EVs increase their share of the car parc, industrial lubricants will claim a larger share of lubricant demand, Puckett observed.
Quick growth can also create inefficiency, but Puckett has seen improvement each year as Asian countries work to fight corruption and make doing business easier. To combat problems like counterfeiting and theft of intellectual property, he recommended working closely with local legal counsel.
Brian Nourse, vice president, Americas with Afton Chemical, recommended taking advantage of resources offered by United States embassies, whose economic divisions can help companies enter new country markets.
If you paint the picture properly for [the embassy], they will do a lot of work to help you, Puckett agreed. But you have to know what youre looking for.
Finding partners already established in the region and building a complimentary business is another proven strategy for success, Nourse said.
Whenever youre starting a company in another region, the first five people that you hire are the most important, said Puckett. These people will carry over your corporate culture, beliefs and strategy. The challenge then becomes employee retention, the panelists acknowledged.
Panelists emphasized that what works at home doesnt always work in other markets. Understanding local quality and pricing demands, original equipment manufacturer standards and how quality standards are measured and enforced is essential.
To become a new entrant to a market, you have to be very clear on what it is that youre bringing to the market, said Sinead Adamski, regional executive market manager EMEA for Infineum.
Wagner Santo, general manager Americas region with Chevron Oronite, pointed to logistics as another potential stumbling block in regions where transportation and other pieces of the operational puzzle are vastly different from what a company may be accustomed to.
The benefit of going global, according to Puckett, is being available and able to participate in change as a market grows. A global presence can be another type of diversification for a stability and success, much like participating in different product markets, he concluded.