Here are three key tips for Australian companies exporting to Asia:
South East Asia is a mixture of nations and cultures that have combined under the regional block called ASEAN to assist with the development of the region.
These nations are Thailand, Malaysia, the Philippines, Singapore, Brunei, Indonesia, Vietnam, Cambodia, Laos, and Myanmar (formerly Burma).
Each Nation has unique resources and is at various stages of development, so it is crucial to remember that to export to Indonesia is not the same as exporting to Thailand. For example, for countries such as Singapore and Malaysia, you’ll need to prepare to work around Chinese New Year.
In most cases, countries and cultures are very different and should be considered individually when developing an export strategy. You may also need different export documentation depending on the individual country.
Countries and cultures are very different and should be considered individually when developing an export strategy.
Negotiating is an in-built part of Asian culture, and is unavoidable. Be prepared, and seek advice if unsure on how to develop your pricing strategy or do not have knowledge of these many variables.
Negotiating in ASEAN has become an artform, and many Australian executives will, when asked for their best price, immediately give the bottom price without realising this is only the beginning of the negotiating process and are then left with a lose-lose situation.
When developing export and pricing strategies, a company should have a well-structured pricing strategy.
Put simply, price list "A", which is what you would really like to achieve, price list "B" what you would consider your domestic wholesale price and therefore acceptable, and pricelist "C" which is your final offer.
Bear in mind that many ASEAN exporters will expect you to consider quantity discounts, longer than normal payment terms, open accounts, and exclusivity 90% of the time.
You have to decide if you are to bankroll your exports at low margins, the costs of using banking instruments (such as letters of credit), and should prices drop too low, whether this is a suitable market for you.
Finally, one must consider shipping terms such as FOB, C&F, and ex-works, and the impact these pricing terms have on your prices.
One point to your advantage is the term exclusivity, as this gives you the right to demand minimum orders, minimum yearly sales, and contributions to marketing and promotion costs in getting your product to market.
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