PwC: Local partnerships key to international success
Forging local partnerships will be the key to success for businesses looking to become profitable in markets, says a survey by consultancy PwC Thailand.
Strategic foreign partnerships are essential for companies from developed countries looking to expand in growth markets and emerging players looking for opportunities in their neighbourhoods.
Key investment spots in Asean include Thailand, Indonesia and Myanmar. Brazil, Russia, India and China are more established markets, while Nigeria, Mexico and Turkey have also attracted investors’ attention.
PwC Thailand chief executive Sira Intarakumthornchai said multinational firms are keen on prioritising markets and major segments to enter, in which the key to success is finding the right partner.
“What’s crucial is choosing the right partner to navigate the complex and fragmented routes to market,” he said.
They are also essentially relying largely on a local partner, and the companies must learn to have less control and visibility of the products and services in that market.
PwC also found only a few multinationals have developed distribution networks to a level that can support strong profit growth in their home markets.
But distribution networks become more crucial for new markets mostly lacking basic infrastructure such as roads and facilities.
Regulations and trade pacts are also among the issues requiring the knowledge of local partners instead of keeping their investment coverage within arm’s length.
Changing consumer behaviour in growth markets is also forcing multinational firms to rethink business models and approaches to meet demand and remain competitive.
On the other side of the coin, Thai business operators should partner with foreign firms to mitigate the uncertainties of entering an unfamiliar market.
Selecting those with know-how or technological advantages in particular will give a business a competitive edge and close the technological gap to compete with rivals.
“It’s essential to make partners feel part of the company through trust and loyalty,” Mr Sira said, adding that most Asians preferred to get to know their partners before entering into a formal agreement.