Aug 07 2015

New ASAE Study Offers Lessons from “Growers” on Expanding Your Global Business

Achieving Global Growth. Year 2

“It’s not a decision to be global, it’s a decision not to be.”

– Healthcare Association Executive

The latest ASAE Foundation research on global growth strategies and operations sponsored by MCI Group is now available for access today.  The report  represents the second year of a partnership to provide a common roadmap for associations as they plan, execute, or refine their global efforts.

This year we brought together a diverse group of association leaders all of whom participated in the Year 1 study and had indicated that their associations were experiencing global growth.  In Part 1 of this year’s study we used a series of focus groups to explore how associations determine their strategy and direction relative to the conclusions of our Phase I report and to more deeply explore strategy, understanding what tools associations use to cultivate new markets and what decision-making processes support those selections.

In Part 2 of our study, we feature a “Special Focus on China,” which examines the operational decisions and financial results experienced by associations.  China was selected because it was perceived as offering the greatest opportunity for associations according to our Year 1 report with 57 percent of growers (associations who identify their business to be growing globally) and 47 percent of non-growers (associations whose global growth is either flat or in decline) anticipated their greatest growth in the coming years would occur there.   Over 40 interviews with association leaders active in China were conducted and covers topics including business planning, operational decisions, and major challenges anticipated.  And a survey was also conducted to obtain quantified data on performance in China.

Here is an outline of the results and the link to the study below.

Part 1:  Key Considerations for Entering New Markets and Achieving Success

Motivations, Organizational Commitment, and Strategy Setting

  1. Can you deliver value locally?
  2. Can you find local assets to support your business growth?
  3. Finding a sustainable business model
  4. Overcoming Board or staff hesitance to expand globally
    1. Bad for local US market competitiveness
    2. Worry over losing money in early years of investment

Know the Market, Know the Customer

  1. Off the shelf information has little utility
  2. What is essential in gathering the right information?

Right Competencies, Right Capacity, Right Results

  1. Mistakes with partnerships; many are dissatisfied
  2. What are the keys to forming good partnerships?
  3. Are all partnerships the same?

Mission and Margin

  1. Do you launch new products or adapt existing ones?
  2. What is the impact of locally relevant marketing and business development to product sales success?
  3. Insights to protect IP

Avoiding Rude Surprises – Risk Management

  1. Establish clear time horizons
  2. Assessing investment size and defining specific goals throughout the early investment phase
  3. Protecting brand and reputation

A Challenge to Strategy and Process: Why Culture Matters

  1. What are the translation needs?
  2. What is the local pace of doing business?
  3. What is the attitude toward intellectual property?
  4. How do communication styles differ?
  5. What is the legal landscape?

Core Findings

  1. Establish a research-driven plan that persuades stakeholders to invest
  2. Educate yourself on culture and adapt accordingly
  3. Invest mindfully, but make a strong commitment
  4. Protect your brand

Part 2:  Special Focus on China (What’s working and not working operationally)

Establishing a Foundation through Relationships and Research

  • How are associations doing with their China operations?
  • The importance of gathering good market intelligence and customer insight, yet our survey shows many are not heeding this advice.
  • Do associations have a formal strategy for China and a relevant value proposition?

The Importance of Committed Investment

  • The American Chamber of Commerce in Shanghai annually survey its members to understand the profitability and time to profitability of US companies in China.  The average time to profitability has been between 5-8 years.
  • 74% of US associations responding to the survey made less than $100,000 annually in China while those who have been in China for longer periods saw an annual improvement of $500,000 and higher.
  • 51% of respondents have yet to achieve profitability from their investments in China.
  • Our survey respondents indicated that the majority of associations do not have a formal business strategy for China. Interestingly, the less successful they were the more likely they were to say that.

Finding the Right Partners

  • Many associations are not forming the right partnerships to get the right results and this appears to be no different in China.
  • Who makes a good potential partner for an association in China?

Communicating through Cultural Differences

  • Culture and language issues are a problem for many and especially for those choosing to run their operations from thousands of miles away rather than having local teams of Chinese working with HQ team.
  • What strategies should be used to make culture and language less of a barrier?

What Sells?

  • 60% of respondents made very limited business capacity investments (less than $250,000) in China since they began operations.
  • 81% of associations conducted minimal to no marketing in local Chinese languages to build brand and activate demand.

Top Business Growth Challenges in China

  • Culture and language
  • Finding good partners
  • Lack of business capacity
  • IP infringement
  • Lack of market intelligence
  • Working with government

Conclusions and Recommendations

  • Find partners with a mind to establishing clear contractual relationships
  • Focus on offerings besides membership
  • Prepare to make a substantial investment
  • Establish goals without anticipating profit, especially early on
  • Recognize the different perception of intellectual property
  • Have a presence, and understand the regulatory landscape if you establish
    a brick-and-mortar one
  • Know that the government can be mercurial
  • Establish success metrics besides revenue
  • Consider the halo effect

The new report on the Phase II research, Global Growth Strategies can be found here.   

About the author

Peter Turner

As MCI's Senior Advisor, Global Development Strategy, I help associations build and execute global growth strategies. Over the past 30 years I have served three associations (ASAE, MPI and IEEE Computer Society) as a leader of business, product and partnership development.

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