Asia Collapse an 'Economic Aberration'

SAN FRANCISCO–Asia/Pacific will continue to offer U.S. direct marketers great opportunities for sales and profits despite the economic meltdown that hit the region last year.

That was the central message of a conference on direct marketing to Asia held here last week. It was organized by the Institute for International Research and sponsored by the U.S. Postal Service's Global Delivery Service.

James Grubiak, head of the postal service's International Business Unit, called the collapse an “economic aberration” that will not affect the long-term upward trend.

“The volume of packages we're delivering in Japan has remained at the same level in the past six months,” he said. “[While] sales for some customers have dipped, new entries into the market are gaining business.

“One of our new customers has had volume more than double, and one marketer of apparel reported record Japanese sales volume last month,” said Grubiak, who did not identify either company.

The time to work with international partners is now, while their economies are convalescing, he said.

“You'll enter their markets with more realistic expectations than you might have had six months ago. By the same token, your partners in the Pacific Rim are likely to have more realistic aims for contracts negotiated at this time,” he said.

“They may have a stronger desire to work things out than in the past. Bottom line, taking steps to get established in the current economic climate will put you in good shape to compete when the Asian tigers are back on their feet.”

Conference chairman Richard Miller, CEO of Market Response International, said Americans cannot afford to stay out of Asia as it contains 57 percent of the world's population, including 1.2 billion Chinese.

But he warned marketers to pay attention to the cultural differences across Asia that are just as important, if not more so, than those in the more familiar European markets.

For instance, “Asians don't start a presentation with a joke but with an apology” that is designed to put an audience at its ease, Miller said.

Meg Gamble of Hemisphere Marketing, San Francisco, a DM company specializing in Japan, cited different service perceptions as a major cultural difference. In Japan, “the honorable customer is God,” she noted, whereas in the United States, “the customer is king,” clearly a much lower station.

“We see dissatisfied customers as a statistical phenomenon that becomes important once it reaches critical mass. The Japanese are unhappy with one unhappy customer. The key is 'don't disappoint your customer.' “

She described buying a shirt in Tokyo. It was marked down from 19,000 yen (about $180) to 5,000 yen (about $40) and had a loose thread. First the saleswoman ransacked the store stock to find a replacement.

“When she realized the sales item was out of stock, she found a hook and carefully drew out the offending thread,” Gamble said.

Presentation is important in Japan, she said

She warned that U.S. catalogers who deliver a skirt and a top separately risk losing future sales.

“Japanese consumers are detail-oriented and less impulsive buyers than Americans,” Gamble said.

Modes of payment are different, too, she said. Ninety percent of Japanese pay after the receipt of a product, “which makes Americans shudder, but Japan has negligible bad debt and a return rate of 2 percent.”

Mokrynski's Michael Rothschild urged U.S. direct marketers to research their Asian target audiences, down to what populations in Japan's various prefectures, or local government subdivisions, like to buy.

“Study the local competition that sells the same thing you do,” Rothschild said, “and find out how good they are before you send out your own mailings.”

Catalogs tend to have greater value in Asia than in the United States, Rothschild said, and they generally are passed on to five people.

“Coldwater Creek's catalog has become a coffee-table book with guests ordering from it,” he said.

Colors are important, Rothschild said. In many Asian countries white signifies mourning and red is the color of wedding dresses, “enough reason to watch what color you send out,” he warned.

Donald Snyder, a licensed customs broker for DynCorp, Alexandria, VA, described customs pitfalls for DMers not familiar with foreign rules and regulations.

In general, Asian customs are interested in the same things as U.S. agents: food products; plant/agriculture; animals and animal products; and cosmetics and pharmaceuticals, notably vitamins and nutritional supplements, he said.

But regional variations are wide, he added. China bars media products “deemed detrimental to the political, economic, cultural or moral interest of China.” It restricts imports of drugs, some fabrics, cosmetics and pocket calculators. It also charges a 17 percent value-added tax (VAT).

Hong Kong bars the import of gold coins, ivory and firearms. Textiles are hard to import. Pharmaceuticals need prior approval.

Singapore bars chewing gum, chewing tobacco, imitation tobacco products and obscene, seditious and treasonable materials.

Korea is tough on textiles. Japan charges a 5 percent VAT and restricts imports of knives longer than 6 inches.

Robert Gellman, a Washington-based privacy and information policy consultant, said the European Union's global push for stiffer data-protection rules was being felt in Asia.

So far, Australia, New Zealand and Hong Kong have privacy commissioners, Gellman said, but Japan offers data protection and other countries have some restrictions. So “privacy is on the Asian agenda,” Gellman said.

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