Distributors Are the Way to Go: Indirect Channels Highly Dominant in the ASEAN-5

Why Is It Paramount to Understand The Optimal Management of Distributors in ASEAN?

As in most emerging market regions, multinational corporations (MNCs) operating in the ASEAN-5 are heavily dependent on distributors, making optimal management of these partners key to survival and growth in these highly dynamic markets.

A combination of the three factors below makes it imperative for regional heads to concentrate on improving internal capabilities to complement the unsophisticated nature of the market:

1. Dominance of Distributors: Most MNCs will be using distributors for their sales in the ASEAN markets, with the indirect channels bringing in 71% of revenues, as compared to 65% in the APAC region overall. Companies will only use their own sales team for handling key clients in relatively well-established geographical locations (national capitals)
2. Few Established Players: On average, companies tend to use 2–4 distributors but often state that they don’t have enough established partners to work with; 41% of the respondents (based on FSG’s survey) found scarcity of finding alternative distributors to be a key issue
3. Hands-On Approach Critical: Given that there aren’t many established partners, companies have to find local entrepreneurs with potential and grow them into successful businesses by training and supporting their activities

Distribution in the ASEAN-5: Fairly Similar Model Across the Region

When comparing the same industry in the majority of the ASEAN markets, the go-to-market strategy should be fairly similar. However, on-the-ground tactics can differ based on the needs of the individual market and company.

• Example: In Indonesia, if the firm’s goal is to achieve geographical expansion, then having a few sets of distributors becomes important in order to have some to manage Jakarta, and others to manage outside of Jakarta (Java), where credit management tactics can differ vastly

Using Local Sources Effectively Can Go a Long Way in Helping You Find Distributors

Selecting the right local partner can be the difference between success and failure for most companies expanding within the ASEAN region. Following an analysis of the distribution landscape, companies can identify potential partners through some of the following sources: