Our Strategic Insight Global team recently published a detailed report on the rapidly growing middle class investor in emerging markets. The report describes the rapid growth in markets such as China and India and the need for asset managers looking to grow to find ways to enter these markets and to be sure to not underestimate the differences and potential obstacles these markets pose versus their home markets.
The report reminds me of the classic story of Kellogg trying to enter India with breakfast cereal. The story was described to me by a good friend and business partner in Mumbai, Prakash Iyer. There were so many potential eaters of breakfast cereal and the market was virtually un-penetrated, so Kellogg entered. However, there was a big cultural obstacle that was missed. There was a general preference in India for hot breakfast. Cold cereal was a foreign concept and not very appealing.
However, with Prakash, I also saw firsthand an ultimately more successful, more culturally centered rollout with my experience at a McDonalds on the highway between the Taj Mahal and New Delhi. (As a side note, I make it a point to try McDonalds in every country I travel to my favorite for its irony is the outdoor McDonalds in Red Square in Moscow. Some of my colleagues tend to dread this tradition of mine.) The McDonalds menu in India, as some of you may have experienced, is very different from the menu you find in the U.S. or anywhere else in the world I have seen, for that matter. For one there is no beef. And there is a big focus on vegetarian options as well as chicken. I tried the McAloo Tikki (potato and pea patty) and did get to have the signature fries. They also have the same golden arches and style in the restaurants. This struck me as a great combination of taking what you do well and integrating it with elements that make it uniquely appropriate for the countrys tastes and culture.
I generally defer to my Strategic Insight colleagues on the details and nuances of asset management around the world. However, there is an example from China that I find particularly relevant. From some conversations I had in China, I found that there is a general desire from investors in China to control their own investment decisions. This is partially due to distrust of asset managers (especially for a large group of people who have had investable wealth only in the past few years of financial turmoil around the world), There is also the desire to have the thrill and excitement of placing bets on specific stocks. People enjoy going to their brokers office, making trades, watching the stock ticker, and feeling part of the excitement. Thus, a traditional asset manager has some cultural hurdles to overcome to build assets under management. Trust and excitement are two key values they need to get across to the retail investors.
Overall, these cultural nuances can make or break a companys expansion into new countries (just ask Kellogg). Beyond the regulatory hurdles, the cultural hurdles need to be a primary driver in determining the product and service offering in a country. Assume nothing that is a given in your home country applies to your global footprint. Keep in mind the McAloo Tikki as you begin your global journey.<
About Jason Cassidy, Asset International’s Senior Vice President of Strategy and Development.
Prior to joining Asset International, Mr. Cassidy was Vice President of website solutions for Register.com, where he oversaw sales, operations, customer service, marketing and product management with the primary focus on small business customers. Previously, as Vice President of Reed Business Information, he was actively involved in global strategy and development, including M&A initiatives and international development, and managed a portfolio of websites. Mr. Cassidy earned an M.B.A. from Duke Fuqua School of Business (2007) and an A.B. from Harvard University (1998). Originally from Boston, he and his family reside in Staten Island, New York.