Growing demand from the transition and traditional segments, coupled with ste foreign demand for manufactured exports, has caused sales of raw materials and se manufactured goods to grow rapidly. New plants and equipment are needed to replace existing equipment and to expand capacity (either because of import-substitution policies or because exports are increasing throughout the region). Large-scale turnkey projects in extractive industries and the processing of raw materials are further opportunities to sell capital goods. Road constmction equipment, power plants, telephone systems, port facilities are required to urgently develop and upgrade
• jfrastructure. Demand for industrial products is far greater in the ASEANTEs than in industrial countries of similar size.
Four market segments
Governments and state-owned enterprises
Governments play a major role in the purchasing of industrial products. either directly, or through state-owned enterprises. In most ASEANIEs the public seaor still dominates the industrial scene, despite some attempts to privatize political considerations often influence purchasing decisions, and as a rule preference goes to local suppliers, although competitive bidding also exists. Successful bids are often prepared by gathering extensive information well before a tender is officially announced. Consultants who determine the technical specifications of prOteCtS will play a major role.
Because Asian governments formulate policies, ser standards, grant licenses, provide foreign exchange and credit, they also have a major influence on purchasing decisions in the private sector. Industry associations and chambers of commerce can be of help to the foreign firm.
Leading local finns and non-Japanese multinationals
Leading local or regional firms, and the subsidiaries of Western multinationals, have similar purchasing processes: in both cases local technical staff. act as gatekeepers, specifiers and influencers. However, in local finns, important purchasing decisions are made by the chief executive (often the owner), while Western subsidiaries may have to refer to their headquarters or regional office; when expatriate staff are involved in the decision, they may introduce a slight bias toward suppliers of their own national origin, although not to the exclusion of others.
Japanese firms
Several thousand Japanese subsidiaries are actively operating in the region - an important but problematic segment for Western suppliers. By and large they prefer to deal with proven suppliers - usually Japanese. This is due to several reasons:
• close relationships with subcontractors at home, and the strong influence of headquarters on subsidiaries;
• the closed nature of Japanese communities abroad;
• most Japanese manufacturers in the region are joint ventures with local firms and with one of the large Japanese trading houses (sogo shosha), wi enormous product portfolio and geographic spread enables them to
practically anything that is not delivered by suppliers in Japan.
There is not much room left for non-Japanese suppliers except in n products, such as special chemicals. They should direct their marketing effort headquarters rather than at local units.
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