World of Rewards: Breaking into Asia

Author: Leo Jakobson
Date: October 16, 2006
Publication: Incentive Magazine

Across the globe, expanding economies and the growing westernization of business offer incentive companies an opportunity to teach local firms how to improve sales and help multinational firms repeat the success they've seen in North America and Europe.

With 1.3 billion people and the world's fastest growing economy, China is the big market in Asia. But it is not the only one. Businesses employing and selling to India's one billion citizens are definitely a secondary target.

"India is massive," says Lisa Hopkins, regional business director of Asia Pacific meetings and events for Minneapolis– based Carlson Marketing. "Everyone's trying to find out how to get into India. One of the things [incentive firms] are finding is [that companies there employ a large] number of employees. It's not unheard of to have twenty thousand employees in one building. It is an amazing, dynamic country with staggering opportunity."

Other countries in the region presenting a new opportunity to the incentive market include Malaysia and the Philippines. And developed countries like South Korea and Japan that in the past had not been very interested in employee motivation programs are starting to be seen as countries where incentive providers can find a market.

The Two Indias

Like most companies doing business in an emerging market, incentive providers find a wide gulf between the local divisions of multinational corporations and local firms. Most of Carlson's business in the region is with the former, focusing on IT, automotive, pharmaceutical and financial services companies. "In India, the sales [managers] know what [incentives] are all about," Hopkins says. "But India is not where [those managers] sell. The people we're talking to are predominantly in marketing and human resources. They have high staff turnover. The churn rate in India is massive. We are starting to talk to them about retention programs." The key, she says, is showing them that these programs are worth the money. "They want to see the return."

For the 10 percent of Carlson's business that involves local companies, incentives are mostly used in channel partner programs, she says. Steve Hibberd, managing director of international business for Accumulate, a Melbourne, Australia–based full-service incentive house, agrees that channel sales programs are the most common incentive run by Indian firms. He notes that these tend to be cash based and says that using merchandise or travel can be both a point of differentiation for new players and a way to communicate with those partners.

Beyond the Boom

India and China are not the only target markets in Asia. For incentives, "Japan, South Korea and Australia have emerged, while China, India and Malaysia are picking up steam and recognizing the value of [incentive programs]," reports Hopkins.

Not everyone agrees that Japan and South Korea are that far along. "Japan has the perfect underlying trends for the services we provide," says Hibberd. "But there are bigger cultural barriers [than in China]. There is a focus on the group, not the individual. Japan is all about loyalty, so businesses are not trying to motivate employees, because they assume people are loyal because they have a job."

Cultural barriers like this vary widely from country to country in Asia, says Hibberd, who has spent a large part of the past two years investigating these markets. But generally, he adds, these companies are far less open to change—although that is less true of India and Hong Kong. It's also important to get "the right introduction or you'll spend a lot of time getting them to trust you," Hibberd says. "We work with channel partners, direct marketing firms, advertising agencies." South Korea and Taiwan are even harder nuts to crack in this regard, he adds.

One of Hopkins' clients is a Canadian IT firm, a multinational with an enterprise sales force based in Bangalore. The firm wants to bring 100 channel partners together with its sales force on a three-day trip, possibly to Bali or the Middle East. "They want to build relationships and ensure partners stay loyal, "Hopkins says. "It's important that the trip has a big number of business sessions. It's designed to allow the host company to really knit relations with their channel partners."

On the merchandise side, incentive companies must have a local fulfillment partner in place, Hibberd says, noting that importing goods can be very expensive, and the infrastructure for delivering them can be very poor in less-developed Asian countries. "The biggest challenge is finding local suppliers who understand what we are doing," he says. Hibberd looks among the consumer goods aggregators that service India's massive retail market.

He also looks at local companies differently than Hopkins. There are those that do business with Western firms, such as call centers, IT companies and the pharmaceutical manufacturers, and those that sell into India. The firms aiming at India's internal markets have huge numbers of employees, but they tend to earn too little to fund an incentive program.

The programs aimed at companies with international clients tend to be very basic, Hibberd adds. Rolling out an American program to a local Asian workforce often doesn't work, he says. "Mature programs that affect multiple behaviors don't work here," Hibberd notes. "They are basic. No peer-to-peer programs that drive values. It's employee-of-the-month."

For more information about the Accumulate employee recognition rewards programs and software, sales & channel incentive programs or customer loyalty programs call 1300 733 725 or email info@accumulate.com.au