Asian CRM growth may be a rocky road

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By: Wise Marketer Staff |

Posted on April 26, 2003

Although the Asian market for customer relationship management (CRM) applications will grow from US$445 million (in 2002) to US$739m by the end of 2005, many western CRM providers have already been disappointed by the lack of return on their Asian investments, according to independent market analyst, Datamonitor.

In its new report, Selling CRM in Asia-Pacific: Tread carefully, Datamonitor warns that technology vendors seeking to enter Asia, and those already in the marketplace, must focus their resources on growing revenues in one or two specific geographies where their product and pricing are a good match for the market.

The report also warns that the road will not be as easy as some vendors may have thought it would be as little as two years ago. In the past year, many have pulled out of the market having failed to realise the huge growth potential originally expected.

"We've witnessed a number of internal reorganisations, sales re-deployments and office closures across Asia, but those have been particularly in markets which are now considered stagnant, such as Taiwan," said Evan Kirchheimer, lead analyst for Datamonitor's CRM research programme. "This is generally because western vendors have not adapted their strategies for each individual Asian market. The CRM market in Asia is extremely fragmented."

The report also reveals that, in two out of the three leading growth markets, small local vendors are most likely to prevail over the western CRM giants, and that investing in localisation in such a high-risk market may be unwise in the near term.

Geographical split
The most mature countries for CRM in Asia (excluding Japan, Australia and New Zealand) were found to be Hong Kong, Singapore, and Taiwan.

Meanwhile, the three smallest markets of 2002 (namely Indonesia, the Philippines, and Thailand) are considered by Datamonitor to be impractical at this stage for most US and European-based vendors.

"What is misleading about Asian CRM market growth is the fact that it is so uneven," noted Kirchheimer. "For example, while the Chinese market is set to grow at an average rate of 59% per year from 2002 until 2005, Japan is only expected grow at 6.6% over the same time."

However, according to Datamonitor, if CRM vendors plan their market presence carefully, assess their degree of risk tolerance, and make sure that their product matches local needs (in terms of functionality and price), they should be able to take advantage of Asia's growing demand for CRM applications.

More Info: 

http://www.datamonitor.com