Seizing the Online Opportunities in Asia
By Nicola de la Salle
Technologically savvy consumers in the Asia-Pacific region present a golden opportunity for marketers to advertise and market via the mobile Internet. In addition, countries in this region have some of the largest growth potential in the world. So why aren't more European and American marketers taking a closer look at the Asia-Pacific market?
Asian speakers comprise 33 percent of the total online population. It is, therefore, surprising that in a survey of 186 U.S. online merchants, a third of those interviewed generate as little as 10 percent (approximately) or more of their annual online sales from customers outside the U.S. Three of the countries reported for international business were based in Asia, with Japan garnering second place in the international listings, followed closely by China and India, according to a May 2005 article in Internet Retailer.
It certainly isn't due to low consumer confidence. At the end of 2006, nearly 50 percent of all Americans, 41 percent of Asian-Pacific consumers and 44 percent of Latin Americans believed that now is a financially good time to purchase the items they "want and need" and pursue a shopping spree, according to an AC Nielsen December 2006 report.
Although many businesses have encountered hurdles in replicating their business overseas, many have done so with great success. In South Korea, one of the leading auction sites is Internet Auction, a subsidiary of eBay. In Japan, Yahoo provides an auction site and Amazon owns a good portion of Joyo.com, which has established an online retail site in China.
Companies such as Amazon and Yahoo may be leading the way in Internet retailing internationally, but for many others, the e-commerce activity of these countries remains an afterthought. According to Internet Retailer, some 82 percent of those surveyed still use the same URL to serve both U.S. and international customers. However, only 11 percent of .com and .net registrations come from Asia. The Hong Kong-based DotAsia believes that the provision of the newly proposed .asia domain will help to provide a "clear brand."
Despite the apparent potential and recognition by a few large brands, this has yet to be realized by many marketers. Surprisingly, 79 percent of Internet sites published product prices in U.S. dollars overseas, with 74 percent of these sites using the English language.
WHAT ATTRACTS BUSINESSES TO ASIAN MARKETS?
Despite any language barriers and operational issues, the reasons to enter the Asia-Pacific marketplace are compelling.
Educated and computer-literate populations - With large populations of educated, as well as computer-literate people, the Asia-Pacific markets provide a canvas for marketers to sell their product. The only caveat, as with any campaign, is that the websites should be marketed to the target group with the relevant currencies, language, etc.
Growth potential - Japan, Hong Kong, China and South Korea have 262 million consumers combined and offer the most mature online presence. The potential of the region has been largely recognized by venture capitalists. According to the National Venture Capital Associations (NVCA), investment in Internet and media-related investments are expected to climb by approximately 70 percent in 2007. Much of the interest is in overseas markets, with more than 90 percent stating they planned to increase investments in China and India as well as other Asian markets, according to CNET news.
It seems that the buyer penetration rates in the Asia-Pacific market still have some way to go to achieve the same rates as in the U.S. It is important to see, however, that the ongoing market potential far exceeds that of the U.S. and Europe. South Korea has a large amount of broadband users and is the regional leader for the largest amount of Internet users who have made an online purchase.
As far as spending goes, eMarketer reports that the average amount spent per Internet user in the United States is $692, with Japan following closely behind at $527 per Internet user. South Korea also boasts a high spending market at $199 per Internet user, while the Chinese consumer only spends $11.
State-of-the-art telecom structures in metropolitan areas - Internet connectivity and technology infrastructure are keys to success. There appears to be much disparity in the "e-readiness ratings" of Asia-Pacific countries, which the EIU attributes to the lack of coordinating forces (such as Europe with the European Union) to lead the development in this area.
Technology and connectivity are highly rated as important factors in the success of e-commerce in any country. While China has the world's second largest number of subscribers to the Internet, the 23 million broadband accounts only translated into less than 7 percent household penetration.
It is, however, important to note that some of the technology seems to have leaped a phase--in China, the majority of the population still doesn't have Internet access at home and it is, therefore, easier to put up a single mobile network tower than providing wiring and piping to the thousands of homes. With the absence of home Internet access, the population has quickly learned how to use their mobile phones to receive online access.
Mobile Internet services - Technology-savvy Japan launched its Internet service via mobile e-mail. Consumers reacted well to the new technology, and steadily used it more and more to access both e-mail and mobile websites. Accessing e-mail via the Internet, as opposed to sending SMS messages, seems not only to be a more preferable option for the consumer but also can provide a lucrative revenue stream for marketers able to advertise via these channels.
Social networking - Asia also is sharing the unprecedented rise of social-networking sites, where Internet users can upload and share videos. Sites such as Cyworld (South Korea) and Mixi (Japan) are attracting the most traffic in the Asia-Pacific region. In China, video sharing sites and podcasting attracted 76 million users in 2006, according to BusinessWeek.com.
The rise in social networking has made a huge impact on the way in which Internet users wish to see advertising and at the risk of losing customers through a static direct-selling approach, advertisers are coming up with more creative ways to immerse the consumer into a product and consequently make a purchase. Undoubtedly, video content still creates added appeal and taking this one step further, Intel developed a series of offbeat commercials last year and posted them on video sharing sites to promote its products. The results were phenomenal with more than 2 million consumers in Asia watching the video. In addition, the campaign saw a large number of people submitting their own video. There would seem no doubt that this creates the brand through the eyes of the consumer. What's more, they are able to access the video through mobile Internet technology.
With a growing number of Internet users and in many countries an advanced technology platform, now is the time to replicate an Internet business in Asia. It is a marketer's dream--the consumer has embraced watching television online, not to mention on their mobile phone. This provides a marketer access to a captive audience and consumers access to your captivating advertisement wherever they and their mobile Internet connection may go.
|
Asia's Internet Users and Population:
Top 10 Penetration (by percentage of population) |
| Country |
Population |
No. of Internet users |
Penetration
(% population) |
| 1 Hong Kong |
7,150,254 |
4,878,713 |
68.2% |
| 2 Japan |
128,646,345 |
86,300,000 |
67.1% |
| 3 South Korea |
51,300,989 |
34,120,000 |
66.5% |
| 4 Singapore |
3,654,103 |
2,421,000 |
66.4% |
| 5 Taiwan |
23,001,442 |
14,500,000 |
63% |
| 6 Malaysia |
28,294,120 |
13,528,200 |
47.8% |
| 7 Macao |
500,631 |
201,000 |
40.1% |
| 8 Brunei Darussalam |
403,500 |
135,000 |
33.5% |
| 9 Vietnam |
85,031,436 |
14,913,652 |
17.5% |
| 10 Thailand |
67,249,456 |
8,420,000 |
12.5% |
| Source: Internet World Stats, March 10, 2007 |
|
Top 10 Asia-Pacific Countries With
Internet Users (by total number and percentage) |
| Country |
No. of Internet users |
% of users in Asia |
| 1 China |
137,000,000 |
34.4% |
| 2 Japan |
86,300,000 |
21.6% |
| 3 India |
40,000,000 |
10% |
| 4 South Korea |
34,120,000 |
8.6% |
| 5 Indonesia |
18,000,000 |
4.5% |
| 6 Vietnam |
14,913,652 |
3.7% |
| 7 Taiwan |
14,500,000 |
3.6% |
| 8 Malaysia |
13,528,200 |
3.4% |
| 9 Pakistan |
12,000,000 |
3.0% |
| 10 Thailand |
8,420,000 |
2.1% |
| Source: Internet World Stats, March 10, 2007 |
Nicola de la Salle is vice president of West Coast operations at Livemercial. She can be reached at (949) 306-9449, or via e-mail at ndelasalle@livemercial.com.
