When it comes to destination comparisons in Asia, some of the hard factors are relatively easy to identify, measure and evaluate. These are the country-level macro indicators such as economic growth rate or tax rate, and industry-level indicators such as sector growth rate. However, company-level indicators are more difficult to obtain as Asia does not have a uniformly consistent or comprehensive set of registries or databases.
Hence, most of the private and confidential Asia company-level information resides in the heads of primary decision-makers and influencers, which explains why one-to-one business-to-business in-depth interviews will continue to be the most effective way of conducting company research in Asia. Most of the publicly available reports containing generalised recommendations on Asia investment destinations are unfortunately based largely on quantifiable hard data and not customised for each investor company.
Companies are advised not to base their multi-million-dollar investment destination decisions solely on cheap, hard-factor information. Some business executives wisely allocate only a small weight to information provided by the host destination’s city officials to avoid bias from showcasing of strengths only. These executives also know the very limited usefulness of Western tools and techniques such as competitive intelligence, which works in the West because information there is much more publicly available than in Asia.
Soft factors, particularly from an institutional player’s viewpoint, are even harder to measure objectively. There is progress being made in measuring some indicators such as quality of life and worker satisfaction. However, other soft factors remain a holy grail. How can we tell what extent of difficulties a country’s leader may have protecting foreign investment, how militant and strike-happy a workforce is, or how trustworthy are relationships to narrow the gap between a signed contract and effective implementation?
In the absence of perfect knowledge, making a decision to locate in a particular destination based on incomplete, subjective and imprecise estimates is unavoidable. A rough guess is better than no guess. In Asia, the soft micro-level information is often more important than the hard macro-level information.
Lawrence Yeo is CEO and principal consultant of AsiaBIZ Strategy, a Singapore-based management consulting firm providing Asia market research, business strategy development and export/FDI promotion services. US subsidiary is East West Enterprise LLC.