Local analysts dominate Asia-Pacific

Users of analyst research in Asia-Pacific mainly read research written in that region. That’s the clear message emerging from spending last week in the region. Efrem Mallach and I met with most of the largest Asian, US and European firms conducting analyst relations professionally in the region.

The observation that CIOs and executives are most influenced by analysts in the same geography should be no surprise to global AR teams that have cut their teeth in Europe. However, many firms that over-estimate the overseas impact of US analysts are being dangerously outmanoevred in the high-growth Asia-Pacific markets.

Asia is now a make-or-break market for most technology brands. Latest figures show the growth of the US gross national product slowing to 3.6% annually. China, India and Singapore are growing roughly three times faster. Hong Kong, Pakistan and South Korea are growing roughly twice as fast. Industrial production is rising even faster that those figures suggest: 16.6% growth in China and 19.3% growth in Pakistan. Almost all the region’s economies has positive current account balances and trade balances.

As a result, many of the world’s leading technology brands are growing twice as quickly in Asia as they are in the rest of the world. However, the web of external influence on buyers is more complex there than many global AR directors dare admit. The fastest growing firms are those that adapt their AR strategies to local realities.

Locally headquartered firms are powerful influencers: Firms like ITR, Yano and Isaka in Japan, CRC-Pinnacle, CCID and CCW in China; IDEAS, Budde, S2 and Hydrasight in Australia; and Springboard in Singapore. Other influencers exist, who are often customers of these local analyst firms: channel partners and respected academics. Furthermore, few of the transatlantic analyst houses have real roots in the region: Frost & Sullivan, Gartner, IDC and Ovum have multiple offices in Asia-Pacific; Forrester is also adding analysts there. However, many of these analysts with global firms are vendor-facing analysts serving the research needs of global vendors.

In this respect, analyst influence in Asia is much like analyst influence in continental Europe: Anglo-Saxon analyst firms have so far failed to overcome the massive cultural and linguistic barriers to entry.

Of course, the home advantage exists in every market. The ‘not invented here’ groupthink initially obstructed European firms selling to the US and Japanese firms selling to Europe. However, the intangible aspects of the advisory relationship mean that Western firms have to either adapt substantially to local needs, or restrict their Asian opportunities to the subsiduaries of Western firms.