OPPORTUNITIES AND CHALLENGES in the Asian market were highlighted in a seminar during the yearly Nordic Private Equity Congress, arranged by the Swedish Private Equity & Venture Capital Association. The first thing you need to consider when setting up business in Asia is
the magnitude of the region which cannot be regarded as one homogenous market.
– The economy, the culture and the laws in each country are very different, explains Michael Ricks, Managing Direct at Investor Growth Capital Asia.
Investor Growth Capital Asia has offices in Hong Kong, Beijing and Tokyo and invests primarily in technology companies expanding in Asia.
20 YEARS AGO, Investor Growth Capital Asia’s favourite country was Japan. However, in the past years China is getting the most attention. According to Michael Ricks, one of China’s strengths is the favourable conditions for production and outsourcing as well as the large purchasing power. Above all, China is very successful in production and manufacturing. However, Michael Ricks believes the IT industry will increase in importance in the future. When it comes to technology, Japan is still world leading with a long history of successful commercialisations of new innovations.
– Unfortunately, there is not a lot going on in Japan right now. There is no inclination to try new technology and business models.
As a result of decreasing exports and private consumption, the Japanese market and economy is weakening substantially. According to a recent SEB prognosis, Japan’s GNP growth will reach 0.7 percent this year and 1.0 percent in 2009.
INDIA IS ANOTHER COUNTRY growing in importance on the world map.
– The Indian market is maturing and becoming a very attractive alternative to China. India has gone from low cost services to quality products and services, says Ajay Pathak, head of SJ Berwin’s Indian business group.
Interesting sectors in India right now are technology, real estate, infrastructure, trade, biotech, the finance market, telecom and pharmaceuticals.
– One reason why companies choose India before China is the stable and strong legal framework. In addition, India has a very young population which offers great future selection in manpower.
A CHALLENGE IN BOTH China and India is finding the right personnel.
– There is a limited selection of people with entrepreneurial experience which makes it hard to establish management in the new office, says Michael Ricks. Another disadvantage in India is the lack of infrastructure.
– When travelling from the airport to Mumbai you realise how undeveloped the infrastructure is, says Ajay Pathak.
That is why he considers infrastructure one of the most interesting sectors to invest in.
Emelie Ring
Photo: Lisa Björner