Asia’s New Competitive Game

Many businesses venturing into Asia for the first time are surprised to find that their toughest competitors in the region are neither their familiar Western rivals nor well-known Japanese companies; they are lesser-known Asian companies based in other Asian countries. And Western businesses are chagrined by their Asian competitors’ use of an unusual but highly effective set of tactics and strategies—unorthodox approaches that often turn textbook management thinking on its head and help the companies that use them to enter and win share quickly in the region’s still underdeveloped markets. What are the rules of Asia’s new competitive game? Although specific strategies differ by industry, home country, and company culture, I have identified eight general rules that should be studied closely by Westerners intent on succeeding in the region.

It Is Better to Be Always First Than Always Right

Senior managers in emerging Asian multinationals argue that by being the first mover into markets, they can enjoy the advantages of having first pick of partners, sites, and other resources. First movers also are able to establish their products and brands quickly and cheaply—well before marketing channels become cluttered with competing messages. Although this strategy will lead to some mistakes, its practitioners point out that it gives them time to make corrections. Latecomers may make fewer errors, but when they do err, they will lack the time to recover. As one CEO of a large Asian company puts it, “When you go in early, you’re not always right, but you have time to correct. If you’re a latecomer, you have to hit a hole in one. There isn’t any time for detours and mistakes; unless you get it right the first time, you’ll never catch up.”

At the headquarters of Charoen Pokphand (CP) in Bangkok, for example, financial analysts and journalists have been lining up recently to learn how a company whose roots are in chicken feed has done so well operating in 26 of China’s 30 provinces in businesses as diverse as motorcycles, petrochemicals, and telecommunications. Chairman and CEO Dhanin Chearavanont points out that CP’s success is no overnight miracle: soon after China opened its doors in the late 1970s, the company began to explore opportunities. He says that his was the first foreign company to invest in both China’s now-booming Shenzhen development zone and its Shantou region. Early entry allowed the company time to build its experience and capabilities while demonstrating that it was a reliable long-term investor that would ride out the sometimes volatile cycles generated by China’s rapid pace of change. In around 1984, when a solid platform was in place, the company’s growth was able to take off. Competitors that had waited until it became crystal clear that China would not turn back the clock were already far behind CP on the learning curve. The latecomers lacked a solid launching pad. They also risked being labeled fair-weather friends.

To justify their early entry into markets, many Asian companies imagine a worst-case scenario, make sure they can survive it, and hope that, should the worst come to pass, an upside will develop later on. For Western-trained managers brought up on risk-adjusted net-present value, the idea of simply putting a floor under the nightmare scenario and then plunging in is anathema. But when the Indonesian corporation Raja Garuda Mas (RGM) decided to build a $250 million pulp plant at the depth of the worst recession in pulp prices for more than a decade, that was exactly its approach.

Looking to pioneer the use of fast-growing forests in northern Sumatra, RGM’s subsidiary Indorayon asked, Would the plant be able to cover its interest costs if it were forced to sell its first output at very low prices (35% below normal) when the plant was due to start regular production five years later? Once satisfied that it could cover the interest costs, it went ahead. Today Indorayon is one of the largest and most successful pulp manufacturers in the world. CP applied the same logic when it first entered the Chinese market for processed animal feed in 1981. Having established that it could export the feed from its operations in Shenzhen to Hong Kong and still make a profit even if its China gambit did not work out, CP decided to proceed.

Asian companies enter so-called frontier markets in Asia—places such as Cambodia, Myanmar, and Vietnam—well before Western companies do. Between 1993 and 1994, two Singaporean companies established joint ventures that took over Myanmar’s entire domestic and international aviation industry. Myanmar Airways International, which has been operating since August 1993, is 60% owned by Singapore’s QAF (a diversified company whose core business is baking Gardenia brand bread) and 40% by the Burmese government. Backed by QAF’s initial investment of $10 million, Myanmar Airways International is confident that it can obtain the landing rights to 37 countries as tourism and business traffic expand. Meanwhile, another Singaporean company, Techmat Holdings, invested $40 million in Myanmar’s other major airline, Air Mandalay, and now owns 60% of the operation. While Western companies remain on the sidelines, these Asian companies now have a firm grip on the industry and its future potential for growth.

Equally significant is the fact that, by 1996, Taiwanese companies’ cumulative investment in Vietnam was 50% higher than the combined investment of all European Union countries and three times higher than the total investment of either Japan or the United States. Meanwhile, in Cambodia, the ABC Stout and Tiger beer brands of the Singapore-based Asia Pacific Breweries have established themselves as market leaders. The $50 million joint-venture brewery being built near Phnom Penh by Asia Pacific Breweries (itself a joint venture between the Singaporean company Fraser & Neave and the Dutch company Heineken) was described by one of Cambodia’s prime ministers as “the first great investment in our country.” It will be the company’s second brewery in Indochina, the first being a $42.5 million plant in Ho Chi Minh City, Vietnam.

Some observers see this penchant for being the first mover as an appetite for reckless gambling, but they are overlooking a number of factors. First, because emerging Asian competitors are close to the markets they serve, they have a capacity for rapid decision making and solid risk management that many Western companies lack. Second, as mentioned earlier, pioneers have time to make mistakes and to learn from them. Third, when a market is just opening up, partners and governments aren’t in a position to demand hundreds of millions of dollars in investment or the latest proprietary technology. Therefore, it is more feasible to start with a low-cost bet as an early entrant. Later on, when the market is obviously established and investors are lining up to come in, the risks associated with each dollar of investment may have gone down, but the stakes required to play have often gone up.

Control the Bottlenecks in the Chain

By controlling the bottlenecks in the supply chain, companies gain the leverage to command a high share of the total available profit. Bottlenecks may occur when proprietary technologies, specialized skills, distribution networks, or raw materials are limited. If companies invest in enough capacity in controlling raw materials, components, or distribution, they can influence their competitors’ volume growth and cost structures. This leverage is especially great in emerging markets that experience severe bottlenecks owing to their rapid growth.

The production of color television sets in China demonstrates the effectiveness of identifying and controlling bottlenecks in Asian growth. When it became clear that China’s huge potential market for color television sets was taking off, foreign and domestic assemblers flocked into the business. Between 1986 and 1990, some 85 new assembly plants sprang up. But there was a severe bottleneck in the chain: good-quality cathode-ray tubes (picture tubes) were in short supply locally, their import was restricted, and the technology to produce quality tubes in efficient large-scale plants simply wasn’t available to most of the new competitors. Just a handful of companies controlled the local production of top-grade picture tubes, one of them a joint venture between Japan’s giant Matsushita Electric Industrial Corporation and a Chinese state-owned enterprise. That venture was large enough to supply not only its own needs but also those of its competitors. As the market surged, the venture enjoyed the luxury of being able to decide which of its competitors to supply with tubes—and at what price.

Taiwan’s Acer is using a similar approach in the personal computer business. Taking advantage of low barriers to entry, new competitors have poured into the business of assembling personal computers, offering cutthroat prices and driving down margins. But this growing assembly capacity has created bottlenecks in other links in the industry’s value chain: in sourcing key component technologies; in manufacturing critical components reliably at high volumes; and in brand building, logistics, and channel management. Acer’s strategy is to focus its investment on those bottlenecks through the use of a combination of global brand building, advanced logistics and distribution, and highly efficient design and manufacturing of components. The goal is to participate in the most profitable parts of the chain and to control the key inputs into competitors’ businesses simultaneously.

Build Walled Cities

At the core of most of the large emerging Asian multinational companies lies a walled city: one or more industries in which the company holds a dominant position. The Indonesian company Salim Group, for example, dominates Indonesia’s cement industry, controls more than 60% of flour milling, and has an estimated 85% of the market in noodles. (See the insert “Profile of a Leading Asian Conglomerate.”) Charoen Pokphand of Thailand controls more than 50% of large-scale production of animal feed in its home country. Those positions are strongly defended against competitive incursions, often with the aid of exclusive licenses or concessions granted by governments. Walled cities provide a strong and reliable source of free cash flow for investment in international expansion and a base of experience from which to build up systems, staff, and know-how that can be shared across activities.

As trade barriers between Asian markets come down and the process of cross-border economic integration continues, however, the nature of these walled cities is changing. Traditionally, walled cities were built around dominant positions in a national home market. Now, however, emerging Asian multinationals have their sights set on the dominance of specialized, pan-Asian product segments. (See the chart “Where 30 Leading Asian Multinationals Do Business.”) Salim Group’s plan to build a pan-Asian and ultimately global position in oleochemicals involves, for example, a $450 million facility in the Philippines, a $230 million plant on Batam Island off Singapore, major plants in China and Malaysia, the acquisition of 50% of the leading Australian producer of oleochemicals, and the purchase of a controlling interest in an existing operation in Germany.

Such actions are motivated by more than a simple desire for market share. The attitude is perhaps best summed up by the Chinese proverb “Better to be the head of a chicken than the tail of a cow.” The objective is to choose a defensible segment defined by product group, technology, or geography (the head of the chicken) and to shape its future by setting the rules of the game and taking advantage of emerging opportunities. In a fortunate few cases, the defensible segment also will be large. But growth through dominance in multiple smaller opportunities will always be preferable to being a follower in a large business driven by others (the tail of the cow).

Bring Market Transactions In-House

The Asian preference for controlling the sources of supply, distribution, and even ancillary services has been a powerful force behind the high levels of vertical integration in the region and the formation of conglomerates. It reflects the fact that markets for inputs (such as raw materials and energy) and services (such as distribution, logistics, and financing) are poorly developed in many Asian nations. The billion-dollar Taiwanese food company President Enterprises, for example, has its own farms, food processing, one of the world’s largest tin-plate operations for making cans, and an extensive in-house distribution network for its products—a structure that current Western management thinking would usually dismiss as unwieldy inefficiency. Yet President Enterprises is one of the fastest-growing and most profitable food companies in the world, with hopes of rivaling General Foods, Nestlé, and Unilever in the next decade.

With more than $4.5 billion in sales, Formosa Plastics, one of Taiwan’s biggest companies, offers another good example. It is vertically integrated in the polyvinyl chloride (PVC) plastics industry from basic feedstocks right through to finished goods. As for conglomerates, consider the multibillion-dollar empire of Chinese Malaysian entrepreneur Robert Kuok, which extends into areas as diverse as sugar plantations, tin mining, the Shangri-La luxury hotel chain, TV broadcasting, and Hong Kong’s major English-language daily newspaper, the South China Morning Post.

Vertical integration and horizontal diversification are prospering in Asia at a time when most Western companies are nearing the end of a long and sometimes painful process of refocusing on core activities. To support a high degree of focus on core activities, Western corporations must rely on suppliers and service providers to undertake those activities that are necessary but noncore. Many companies are reluctant to take on such noncore activities even when there is no suitable local source for them—an unwillingness that leaves their competitiveness impaired.

Emerging Asian multinationals, by contrast, actively seek involvement in upstream and downstream industries, either directly or through partnerships. They prize the greater security that comes from internalizing upstream or downstream activities: vertical integration can insulate them from the instability of fluctuating prices of inputs or intermediate goods. (For a detailed discussion of this topic, see “Why Focused Strategies May Be Wrong for Emerging Markets,” by Tarun Khanna and Krishna Palepu, HBR July–August 1997.) More generally, in a world in which recourse to the law can be difficult and trust plays a pivotal role, these companies prefer to rely on an interdependent network, often bolstered by cross-shareholdings and family or ethnic ties, than on impersonal markets.

As more and more Asian companies expand beyond their home nation, the desire to bring market transactions in-house is being reflected in the increasing number of cross-border Asian alliances. In 1996, for example, intra-Asian joint ventures outnumbered U.S.-Asian deals by almost four to one.¹

Leverage Your Host Government’s Goals

Asian governments typically see themselves in a long-term race to accelerate their economic development in the face of competition from highly developed economies on the one hand and from countries with lower labor costs on the other. Although they recognize the benefits of taking advantage of the “invisible hand” of the market to drive growth, they are far from convinced of the advantages of opening their markets to unfettered competition. Frequently the proverbial hand needs very visible guidance. Datak Seri Mahathir Mohamad, prime minister of Malaysia, put it this way in a 1996 speech given in Bangkok: “But for the right and the ability to regulate the economy in favor of locals in certain areas, while allowing and even providing incentives for foreign investment in other areas, it is doubtful that Malaysia would be as prosperous as it is today… Without these powers to give unequal treatment, it is likely that Malaysia will become another basket case.”

As a result of this mentality, Asian governments commonly award monopoly rights, concessions, and protection to companies whose investment commitments are carefully aligned with national goals. Emerging Asian multinationals are keenly aware of the advantages of aligning their strategies with those of their hosts. As one CEO of a large Asian corporation says, “Western delegations keep coming here talking about free trade and opening up our markets as if this must be good for us. Frankly, we aren’t convinced. We have clear national goals to grow certain new, strategic industries. Asian multinationals often have a better understanding of how to align their investments with those goals.”

Charoen Pokphand’s successful entry into the poultry business in China illustrates the dovetailing of corporate and governmental goals. Since the late 1970s, the Chinese government has sought to maintain employment and provide economic growth in rural areas to stem the tide of people migrating to the cities. By creating income opportunities in the countryside, the government also wants to moderate disparities that might lead to political unrest. In addition, it hopes to improve protein intake and general health among the population. Given those policies, it is not surprising that more than 80 Chinese regions have welcomed the expansion of Chia Tai (as Charoen Pokphand is called in China) and its efficient poultry operations.

Over the past 25 years, industrialization of chicken farming has pushed up the per capita consumption of chicken tenfold and driven down the real (inflation-adjusted) cost of processed chicken by 65%. Urban consumers now get better nutrition and higher quality at lower prices, and China has a new source of exports that subsistence farmers could never have created. Western investors, meanwhile, have shied away from investing in agriculture, which has attracted just 4% of all foreign direct investment in China over the past 15 years. But with the right relationships established, Charoen Pokphand’s agribusiness has spawned invitations to establish new ventures as diverse as motorcycles and telecommunications. The message is clear: making the government your silent partner is an important part of the new Asian game.

Organize Your Company Like a Network of Personal Computers

In ethnic Chinese capitalism, out of which the majority of the new Asian competitors have sprung, the extended family has been at the core of a cooperative business network. As businesses have grown, the core group has been extended to include loyal lieutenants who are treated as quasifamily for the purposes of managing more complex and dispersed corporate empires. Even today, such families as Hsu of Taiwan’s Far Eastern group, Wang of Formosa Plastics, Li of Cheung Kong, and the Quek and Kwek families of Hong Leong Industries in Malaysia and the Hong Leong Group in Singapore are running their companies like family dynasties, often under a powerful patriarch. Even when the demand for funds necessitates public listings, these are engineered to maintain family control.

As the millennium approaches, business based on family ties is giving birth to a new type of organization. Instead of building either a centralized bureaucracy or a set of independent, far-flung subsidiaries to manage increasing complexity and geographic spread, Asia’s new competitors are building extended networked organizations that rely on continual sharing of information among all their business units. In such organizations, information flows in many directions between nodes, each of which may act as an information supplier at one moment and a receiver at the next. The process of information sharing is similar to the process by which data flow in a network of computers as opposed to in a centralized mainframe computer system. This style of sharing is especially important for Asian companies, for which key technologies and market intelligence are relatively hard to come by.

One of the companies that typify this new style of organization is Acer, which is driven by the vision of its chairman and CEO, Stan Shih. The structure of Acer’s client-server organization is familiar: strategic business units (SBUs), each responsible for a group of products, and regional business units (RBUs), each responsible for a geographic area.

At Acer, each SBU and RBU has independent capabilities. RBUs, for example, are not simply distributors. They have the capability to assemble a product that has been locally customized to meet local needs, augmenting standard technologies and components in what Acer calls the fast-food model of the computer supply chain. Shih believes that as they develop, RBUs should move from being wholly owned subsidiaries of Acer to becoming minority-owned affiliates of the network, thereby ensuring that they develop as truly local competitors. In addition to acting as clients for the SBUs’ products, the RBUs act as servers, providing local market intelligence and informing the SBUs and RBUs of local best practices.

Maintaining excellent multilateral communication among different groups within a company becomes more difficult when the groups are linked to the parent company only by minority shareholdings. But according to Shih, the advantage in such situations is that each group must continually prove the worth of its role in the network, an effort that reduces the risk of complacency. If the benefits of the linkages do not justify the costs, the subsidiary organization will be spun off.

The primary Hong Kong affiliate of Liem Sioe Liong’s Salim Group, First Pacific Company (FPC), offers a good example of successful management of a network of affiliates. The Liem investors hold a 59% controlling interest in FPC, a $4 billion business that is listed on the Hong Kong and Amsterdam stock exchanges. Liem provided the initial capital commitment from which FPC acquired its core of international trading and commodities groups and financial services businesses. FPC serves as Salim Group’s window on the world and is managed by an independent-minded, multinational management team led by Manuel Pangilinan, a Filipino with an M.B.A. from a top U.S. business school. As FPC developed, it built a major presence in the Asian telecommunications industry. The company was structured as a network of majority interests and minority participations, including Pacific Link in Hong Kong, IndoLink in Indonesia, SMART in the Philippines, and Escotel in India. Each acted as a client and a server within the network, despite the differing levels of FPC’s equity stake and the diversity of the participants. Pangilinan has observed that codifying and putting to use the experience gained from dealing with all the partners will gain FPC a considerable competitive advantage.

Make Commercialization the Equal of Invention

A decade ago, the most advanced technologies were out of reach for many Asian companies. The Western technological lead was often large enough to guarantee sales—even if customers had to put up with high prices, poor service, or prototype-style products. Today the technological gap between Europe, Japan, the United States, and the rest of Asia has closed. Increasingly, leading Asian players are developing direct links with companies on the technological forefront. In recent years, for example, Korea’s Samsung Electronics Company has acquired 51% of the CAD/CAM software company Lux (which is based in Japan) and 42% of U.S. personal-computer maker AST Research. In addition, Samsung has purchased two U.S. companies: Harris Microwave Semiconductor, which specializes in optical semiconductors and gallium arsenide chips, and Integrated Telecom Technology, which is a leader in technology for automated teller machines.

The emerging Asian competitors excel at bringing technologies pioneered at cutting-edge technology companies into development and production—and doing so at a very low cost. A spokesperson for a leading Taiwanese electronics company puts it this way: “We are not in a position to set standards and take huge risks, but we have the capacity to develop leading-edge products faster and at lower cost than our competitors here or overseas once standards are set.” Sim Wong Hoo, chairman of Creative Technology in Singapore, expresses the same idea when he says, “We did not invent sound in PCs, but we managed to standardize sound in PCs.”

What You Don’t Know, You Can Learn

Because today’s competitive game in Asia is won by the speedy, it is essential for companies to master new skills, understand new technologies, and build new capabilities more quickly than their rivals. In order to succeed, companies need to seek not only share of market but also share of knowledge—knowledge of cutting-edge products and processes.

Traditionally, industry analysts placed their Asian bets on the companies with the largest existing market shares or the biggest war chests of resources. Yet by those criteria, many of today’s budding Asian multinationals would have been overlooked even recently, because their origins are quite humble. Although some have grown gradually, others have become leaders in their sectors with astonishing speed. In 1989, First Pacific of Hong Kong did not have any experience in telecommunications; today more than 25% of First Pacific’s profits come from that sector. How was this achieved? First Pacific concluded that technical know-how was not the main barrier to entry in telecommunications; rather, it was learning how to navigate through the regulatory and competitive environments in Hong Kong, Indonesia, and the Philippines and how to build a base of business contacts. Because First Pacific already had experienced people and an extensive network in place, it had only to learn the “hard” technology before Western competitors learned the “soft” side of regulatory and industry dynamics. As it turned out, learning the “hard” technology was the more straightforward task—and that gave First Pacific an advantage in the race.

Competing on the basis of their capacity to learn is fundamental to the way Asia’s emerging competitors do business. Sukanto Tanoto, chairman of the Raja Garuda Mas group in Indonesia, one of the world’s largest wood-pulp producers, says, “They underestimated our learning capacity; originally we knew little about pulp, but we learn fast. We asked endless questions of our consultants and suppliers, so by the end of the day we knew—and adapted—it all.”

An obvious response for Western companies faced with the new and often unfamiliar rules of the Asian competitive game is to enter into some form of joint venture with an Asian company. But as Asian companies have grown, they also have begun to rewrite the ways in which joint ventures are formed and managed, presenting Western competitors with yet another challenge as they try to gain a foothold in the fast-changing region.

Traditionally, Western companies formed joint ventures with Asian companies in order to gain access to local markets, and the partnerships were often unequal. The Asian partner provided access to local distribution and political networks. The foreign company contributed the products, systems, technology, manufacturing expertise, and the majority of the cash investment—and therefore expected to be dominant in the relationship. Today, having accumulated formidable stocks of capital, resources, systems, and technical skills, large Asian companies no longer need to play second fiddle in joint ventures. Not satisfied with being merely distributors and local representatives, they are seeking new roles in their partnerships with Western and Japanese companies.

Asia’s new style of partnerships falls into one of two basic categories: specialized infilling and operating partnerships. In a specialized-infilling relationship, the Asian company already has a strong base in a business, often focused on the standard, mass-production end of the market. But for the business to grow its profits, it needs to expand its offerings and add more value—which requires access to specialized designs, systems, or specific technologies that can be used to fill in the gaps in existing capabilities. For such purposes, Asian companies seek partnerships with smaller Western or Japanese companies that have a unique technology or a differentiated product to offer. And whether its partner is large or small, Asian infillers will favor a licensing arrangement or other specific agreement over a full-blown joint venture, with the Asian company typically being the lead player.

In operating partnerships, the large Asian company’s goal is to expand into new businesses, new geographical regions, or both. It requires a Western partner with a full range of technologies, products and systems, and extensive operating experience. The Asian partner will provide access to a pan-Asian network of relationships with suppliers, buyers, and other Asian alliance partners; experience in operating with different governments and market environments; and probably a significant investment stake. The operating structure is likely to be an ongoing joint venture in which the parties are equals.

Sime Darby, for example, has a strong base in electronics and basic manufacturing, and has pursued licensing agreements and other types of in-filling partnerships with a number of small Scandinavian companies. By contrast, in oil, gas, and technical services—areas in which it needs partners with a depth of operating experience—it has entered into full joint ventures with major international players. Likewise, Charoen Pokphand and Honda have agreements whereby Honda provides in-filling capabilities for some of CP’s core manufacturing businesses. In brewing and telecommunications, however, where CP is a relative newcomer and needs to access both breadth and depth of experience and technology, it has operating partnerships—in these cases equity joint ventures—with Heineken and Nynex Corporation.

Increasingly, Asian companies also look beyond the borders of their home country and no longer restrict the ambit of their joint ventures or partnerships to the domestic market. This means that Western companies will more and more frequently face the challenge of selecting an Asian partner to work with in multiple countries. Rather than dealing with a series of subordinate local partners, they must learn to build strong cross-border synergies with a single Asian multinational partner.

Because established Asian players are now engaging in specialized infilling, often through licenses or technical agreements, Western companies are finding it more difficult to profit fully from Asia’s ongoing boom. Licensing offers Western companies only a small portion of the new wealth being generated in Asia because much of the added value—and the profits—lie elsewhere in the overall supply chain. In order to make Asia contribute significantly to their company’s bottom line, Western managers must decide either to bundle their technology and systems with operating experience that can add real value to an Asian partnership (thereby allowing their company to demand a greater share of the returns) or to go it alone as direct competitors in the Asian game. The former strategy places increased pressure on the employees of the Western company, who must learn to transfer their experience and knowledge to a new market. The alternative strategy—becoming a direct competitor—means deciding how, as a Western company, one can add something unique to today’s new Asian game.

There is hope, however, because despite their formidable competitive strengths, emerging Asian companies have yet to catch up with their Western competitors in some critical areas—areas that can be a source of leverage for Western companies competing in the region. Many emerging Asian companies have brands that are poorly developed outside the boundaries of their home country—a problem exacerbated by the lack of attention being paid to marketing in some industries. Furthermore, because many Asian markets were dominated until recently by standard, mass-produced products, many indigenous companies have limited experience in handling high levels of variety, customization, and differentiation. And although some cutting-edge Asian companies such as Acer are learning to decentralize their operations, other companies in the region tend to be highly centralized and hierarchical—a fact that impedes their ability to build effective multinational organizations. Furthermore, although those same companies have access to the most modern technologies and can set technical standards, most companies are much more limited in that regard. Finally, many Asian companies possess poorly developed logistics, distribution, and service systems, especially across borders.

Those shortcomings should be a source of encouragement for Western managers intent on improving their performance in the region. But these managers must recognize that competing does not mean simply transferring technology, assets, and know-how into Asia. The issue is not Can we supply booming Asian markets? but rather How do we win share against an increasingly powerful set of locals with the inside track? Historically, many Western managers have been unwilling to consider the potential benefits of “unorthodox” Asian business tactics. But in the future, winning share in Asia will depend on understanding—and then changing—the unique dynamics of Asian industries. Western companies will have to set new rules of competition, reach previously excluded consumers, attack Asian control of value-chain bottlenecks, offer more product variety and customization, and leverage pan-Asian brands and operating scale. Regardless of whether Westerners try to go it alone or form partnerships with local companies; they will be forced to learn the rules of the new Asian competitive game. Then they will have to decide whether to keep or break them.