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CRM Success Tricky in Asia
CRM vendors seeking to enter or already in Asia must focus their limited resources on growing revenues in only one or two geographies where their product and pricing are a good market match, says research firm Datamonitor.
Posted Apr 21, 2003
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CRM vendors seeking to enter or already in Asia must focus their limited resources on growing revenues in only one or two geographies where their product and pricing are a good market match, says research firm Datamonitor. The report warns that the road will not be as easy as vendors thought it would be just two years ago. The report also reveals that in two of the three leading growth markets, small local vendors will prevail over Western giants, and says that investing in localization in a high-risk market may be unwise. However, Datamonitor says, if CRM vendors plan carefully, assess their degree of risk tolerance, ensure their product matches local need in terms of functionality and price, they should be able to take advantage of Asia's growing demand for CRM applications. "We've witnessed a number of internal reorganizations, sales redeployments, and office closures across Asia, but particularly in markets that are considered stagnant, such as Taiwan," Evan Kirchheimer, lead analyst of Datamonitor's CRM research program, said in a statement. "This is generally because Western vendors have not adapted their strategies for each individual Asian market. The CRM market in Asia is extremely fragmented and immature." Kirchheimer says that in general the market falls into a number of categories. The most mature countries for CRM in Asia, excluding Japan, Australia, and New Zealand, are Hong Kong, Singapore, and Taiwan. Although Korea has shown recent signs of recovery, overall these markets will not exhibit the high levels of growth that other Asian markets will. Indonesia, the Philippines, and Thailand are markets too immature to be singled out for investment, Kirchheimer says, since almost all CRM applications bought in those countries will be sold to Western-based outsourcers keen to reap profits through labor-cost arbitrage. In contrast, Malaysia, China, and India can be characterized as the markets with the greatest growth potential, according to Kirchheimer. India's CRM market is dominated by call center technologies, although this will change and become more balanced in the coming three to five years. The Malaysian market is small, but many vendors have cited its growth potential, good infrastructure, increased liberalization, and high levels of education to justify planned investment.
"What is misleading about Asian growth," Kirchheimer says, "is that fact that it is so uneven. For example, while the Chinese market will grow at an average rate of 59 percent per annum from 2002 to 2005, Japan will only grow at just 6.6 percent over the same period." Kirchheimer also says in the report that small, local vendors could prevail over Western vendors in India and China, unless vendors look to provide solutions specially suited for the needs of companies in these countries.
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