How Does the Digitalization Shape Doing Business? Evidence from the Asia-Pacific Region

  The report is the outcome of the student research project “Doing Business in Asia-Pacific in the Age of Digital Transformations” (2020/2021 academic year) carried out by the School of International Regional Studies, HSE University, for presenting at the Eastern Economic Forum. 

Preface  
  The National Research University Higher School of Economics (HSE University) is a globally renowned center of academic and teaching excellence. HSE University professors analyze in depth the most important trends shaping the global development, as well as the pivotal processes in different regions around the world. 
  Apart from expertise, creative teaching methods based on academic mentoring account for HSE University’s unique competitive advantages. In line with this focus, student projects under the supervision of the distinguished professor are an important part of this activity. The report presented below discusses the main results of the project “Doing Business in Asia-Pacific in the Age of Digital Transformations” carried out by the School of International Regional Studies (SIRS) in 2020/2021 academic year. Concerning the report, several preliminary yet interrelated remarks are necessary. 
  First, as the report presents the results of a student project, it does not focus on specific sectors or industries. On the contrary, the report takes an integral approach, reviewing a vast range of issues relevant to doing business in the Asia-Pacific region from a broad perspective. For teaching purposes, this analytical approach is the most rational, as it enables subsequent general-to-specific proceedings and extrapolations. 
  Second, the specificity of doing business in the Asia-Pacific region, with some issues covered in the report and others remaining outside its scope, is seen as a work in progress. In future, the School of International Regional Studies plans to carry out and supervise other student projects focusing on related issues: corporate governance in Asia-Pacific companies, legal aspects of doing business in the region, as well as on other major research topics. As training competitive specialists in International Regional Studies is a long and complex process, a gradual and systemic approach is the key prerequisite for success. 
  Third, the report builds on earlier student projects supervised by the SIRS Professor Evgeny Kanaev. More specifically, the results of the projects carried out in 2017-2020 academic years[i] were taken into consideration while assessing the processes that shape the business landscape in the Asia-Pacific region. This factor provides the report with the narrative continuity and eventually makes it in-depth, insightful and comprehensive. 
The report offers neither novel theoretical approaches, nor innovative solutions (amidst the remaining restrictive measures and the ever-increasing COVID-19 pandemic, both are meaningless). Instead, it sets the general backdrop against which fundamental issues of doing business in the Asia-Pacific region are discussed, and the most recent developments are assessed. 
 
Introduction
  The Asia-Pacific region as a promising business-friendly area with breathtaking prospects is a trendy buzzword. This is hardly surprising since the Asia-Pacific region has three distinct commercial advantages. First, the consumption perspective matters, since the urbanization coupled with the ever-increasing digitalization offer tremendous sales opportunities. Second, the Asia-Pacific region offers remarkable business success stories, as the regional brands are growing in significance, the startups are on the rise, and the Asia-Pacific companies are constantly improving their positions in global rankings. But most importantly, Asia is ready to export its model of development, with enormous business implications, to the rest of the world. 
  Notably, the Asia-Pacific companies are ready to substantiate their ambitions by hard evidence. In the third quarter of 2020, the Chinese Tech Company Xiaomi overtook Apple as the world\'s third-biggest seller of smartphones. Samsung, Huawei, and Xiaomi are ranked as the three-largest smartphone manufacturers by the market share. Likewise, the Asia-Pacific digital platforms have experienced skyrocketing demand in recent years. For instance, the e-commerce market in Southeast Asia rose by 63% in 2020. Now it accounts for 62 billion dollars. Alibaba Group reported a 30% jump in the quarterly revenue in September 2021. Another huge Chinese B2B platform JD.com\'s revenue surpassed the Wall Street estimates, it rose 39% to 203.2 billion yuan ($31.57 billion) by the end of March 2021. This figure exceeded the analysts\' expectations, as the average estimate had been no more than 191.83 billion yuan, according to IBES data from Refinitiv. It was accompanied by a marked expansion of numerous internet services like digital payment, video-streaming, ride hailing, etc. Among the competitive advantages that the Asia-Pacific region has and the opportunities it offers, the most precious asset is simple. It is the scale factor. 
  Not surprisingly, the scale factor generates considerable interest in reaping commercial benefits from doing business in the Asia-Pacific region, as well as incentivizes to analyze its specificity. Notably, concerning the priorities of the Asia-Pacific grass-root consumer, the pandemics intensified the shift from brick-and-mortar to e-commerce retail. The on-going changes in consumers’ behavior, as well as disruptions of regional supply chains, have profound implications for intra-company, intra-industry and transnational commercial activity. As lockdowns become the new normality, the fundamental transformations of business practices in the Asia-Pacific economies require nuanced policy responses and effective marketing strategies.  
  Consumer sentiments in the Asia-Pacific region are driven by a variety of factors. They range from rise of Asia’s pride and confidence to changes in discretionary income per capita. Across the region, consumer sentiments differ considerably, which highlights the importance of understanding their constantly changing specificity. 
 Amidst the imposed lockdowns, e-commerce platforms have experienced a surge in demand. An insight into the transformations of these platforms, as well as into the challenges they are encountering and the solutions they offer, is another timely and relevant exercise. 
In the Asia-Pacific region, the cultural specificity is especially important since its shapes the relationship marketing models. In light of this, the report makes a step forward in broadening knowledge of guanxi, kankei, inmaek, as well as of their transformations under the influence of the ever-increasing COVID-19 pandemic, to the best advantage of companies that explore the Asia-Pacific markets. 

I. Evolving Consumer Sentiments and Responses from Companies 
Factors Shaping Consumer Behavior and the COVID-19 Pandemic Impact  
  The rapid economic growth of the Asia-Pacific economies over the past years has produced considerable changes in the consumption behavior across the region. To grasp its specificity, the purchase drivers in the Asia-Pacific and the Western countries should be traced. 
  First, in the Asia-Pacific region the Confucian values matter a lot. An individual’s behavior depends on the collective values and the face-saving motivation, the latter being “a reflection of one\'s own role in comparison with others”. This factor can explain a wide popularity of luxury goods among the Asian consumers. The face-saving stands for high social status considerations, which is typical of collectivist cultures. The study made by Lee and Green illustrates the importance of considering face-saving concepts while targeting Korean consumers. They take the view that the \'group acceptance of specific products will often be an essential forerunner of acceptance in the marketplace\'.
  Second, an emphasis on collectivism, as compared with the Western individualism, plays an important role. The group identification is among the key purchase motives, which influences upon the perception of advertisement and promotion strategies. Specifically, the social harmony considerations incentivize the Asia-Pacific consumers more strongly than self-actualization. In its turn, the collectivist self-identification contributes to inter-dependent orientation. As a result, group-marking goods (like T-shirts with the logo of a specific brand or a university) are highly popular.
  Third, the Asian consumers are driven by the prevention orientation, which incentivizes them to be more selective in making purchasing decisions. Higgins (1997) suggested that there are two types of self-regulatory orientation: prevention and promotion. People with the prevention orientation prioritize their social responsibilities and duties, they are focused primarily on safety and protection. In contrast, people with a more pronounced promotion orientation are driven by their aspirations and goals, they are focused mostly on accomplishment and advancement. It is common knowledge that Asian consumers are incentivized by the prevention orientation more than their Western counterparts, who are driven by the promotion orientation. If so, the Asia-Pacific consumer is less inclined to impulse purchases, as compared to the Western consumer.
  Last but not least, in the Asia-Pacific region consumers try to synergize their purchase decisions with opinions of influencers of all sorts, no matter state authorities or pop stars. In China, brands use celebrities as an instrument to shape consumer preferences. About 40% of advertisement targeting young audience uses at least one celebrity. A lot of companies consider celebrity endorsements as an indispensable component of success. 
  As the Asia-Pacific middle class growth, the scale factor makes the region a commercially promising area. 
Source: McKinsey & Company
  The role of the Asia-Pacific countries in shaping the global luxury market is increasing. In 2020, notwithstanding the negative impact of COVID-19 on the global luxury market (it shrank by 7%), the Asia-Pacific share of global personal luxury goods reached 37%, increasing by 5% from 2019. With the growing number of wealthy consumers and their increasing purchasing power, the Asia-Pacific markets are becoming the key destinations for luxury brands. 
  Before the outbreak of the COVID-19 pandemic, the luxury goods market experienced a steady rise. In 2019, the growth engines were China with the market growing by 26% at constant exchange rates reaching €30 billion, and Japan’s growth by 4% at constant exchange rates to €24 billion.
Source: Asia-Pacific Luxury Goods Market (as of 2019)
  Luxury goods presented in the Asia-Pacific market are segmented into various types: clothing, footwear, bags, watches and jewelry.
  Amidst the COVID-19 pandemic, the luxury market sees China’s dominance. According to Bain & Company, the mainland China’s luxury goods market witnessed 48% growth in 2020, reaching nearly RMB 346 billion. This doubled China’s overall share of the global luxury market. The main reasons for this rapid growth account for the PRC’s reduction for import duties, as well as for the imposed travel restrictions. 
Luxury Spending in Asia Pacific beyond Coronavirus: Key Strategies for the Future

  The second trend accounts for the ever-increasing digitalization. Before the pandemic started, personal luxury goods purchases made by digital channels were gaining momentum. However, the COVID-19 pandemic contributed to a significant increase in the luxury online penetration. Luxury brands have successfully adapted to selling their products online. Companies now see online channels not only as sales instruments, but also as marketing possibilities. Revealingly, due to clients’ needs in sustainable consumption, luxury brands are actively using digital channels to express their positions on climate change issues. Online channels have become an essential instrument to both build up connections with consumers and illustrate brand values. 
  The third trend shaping the market of luxury goods in the Asia-Pacific countries is the localization of the products. Despite the ongoing process of globalization, which in turn leads to unifying norms and purchasing habits in countries all over the world, producers of luxury goods view localization of their products as an effective marketing strategy in Asian countries. The power of “big names” strongly influences on most of the countries where luxury products are sold. At the same time, however, brands have to take into consideration expectations of the Asia-Pacific consumers. For instance, about 43% of affluent consumers prefer buying brands that represent their values. As an example, Gucci and LVMH took into account the rising preference for collaborations and limited editions to target the Japanese consumers: Gucci used famous manga characters in its collection, while LVMH focused on Hayao Miyazaki’s animation. 
Sources: Gucci “Doraemon” collection; LOEWE x My Neighbor Totoro, a poetic and comforting collaboration
  Younger generations are considered to be the engines of consumption growth. Generation Y (also known as millennials, born between 1980 and 1995) are the core consumers of luxury goods in the Asia-Pacific region. 70% of Tmall’s luxury products are purchased by millennials. Their main motivation to buy luxury goods is “a reward for myself”.
  Generation Z (born in the mid-1990s to early 2000s) is another potential source of growth. Currently, their annual spending is less than half of millennials, but in future, they are expected to spend more due to the natural income increase. For Gen Z “a pursuit of fashion” is among the key reasons for buying luxury goods. Between January and October 2020, the cross-brand collaboration and limited editions grew from 300% to 400%.
The market of luxury goods in the Asia-Pacific region is rising despite the on-going COVID-19 pandemic. China remains the key growth engine for luxury goods, while the main consumers of luxury goods in China are primarily young people who make purchases mostly through online-channels. 

How Companies Work with Customers: Selected Examples   

  The Asia-Pacific region is the area where building and cultivating relationships is a crucial part of doing business. Personal and reciprocal relationships are often valued over contractual and transactional ones. It has become especially relevant nowadays, as digital technologies are gaining in significance.
  To maintain a long-term and sustainable engagement with customers, companies tend to establish strong, even emotional, connections. Since they traditionally take place in the face-to-face interaction, the imposed lockdowns incentivized companies to produce creative solutions. The experience of companies from China and the countries of Southeast Asia is representative.   
  With respect to China, the following points are worthy of note. Due to the introduced restrictions, the Chinese customers actively test new brands and products online. Based on a survey conducted by McKenzie & Company, more than a quarter of shoppers have shifted away from their primary stores before the pandemic, with 47 percent not intending to return. The Chinese digital advertising market has experienced a significant increase in value growth, which was predetermined based the social media. 
Source: McKinsey& Company 

  In the context of store closures and the limitations of engaging in-person with the sales and service staff, marketers in China have been adapting novel strategies with the emphasis on on-line communication. The main instruments are WeChat, social media, software. For instance, WeChat (the most popular mobile app in China) launched the so-called support external group chat and friend circle functions to provide shopping advice and guidance. Through a customized WeChat micro program, a renowned real estate company has created virtual showrooms and holds online consultations. In addition, the Chinese corporations have immediately launched new, customized offerings aimed at cooperating with existing and new partners, which allowed expanding the customer outreach. WeChat Service accounts already include a variety of marketing instruments. Specifically, WeChat CRMs provide users with more diversified possibilities to sell products and improve segmentation, such as loyalty programs, customer service, data collecting, WeChat advertising campaign management, etc. 
Source: WeChat provides a variety of CRMs (2021)
  Overall, in spite of the COVID-19 realities, the Chinese enterprises have made use of digital platforms, short-form videos, KOL, newsfeed, and performance-based ads to optimize the customer relationship management and eventually increase the volume of sales. 
  As for the countries of Southeast Asia, the first-hand experience of its companies is also valuable.  Unlike Europe, there is no one-size-fits-all marketing when it comes to ten different economies of ASEAN member states. 
  Regarding the customer service in Southeast Asia, based on the CX Trends Report by Zendesk in 2020, the self-service is playing the pivotal role. Singapore and Thailand are pioneers in adopting the AI-enabled customer support. Additionally, messaging as a form of customer support is also beginning to take root across the region. This trend is led by the Philippines, followed by Malaysia and Thailand. Finally, AI and automation are elevating CX performance. When it comes to service, the customers’ top priority is speed, which means they want their issues solved quickly and effectively. The AI-enabled customer support is making progress in reducing the length of the first reply time from 11.8 hours to 2.6 hours, and the resolution time from 16.4 hours to 4.8 hours. For example, Singapore experiences a +5.3% in CSAT score.
  As the central purpose of marketing is retaining customers through long-term mutual satisfaction between businesses and customers, it is crucial that companies should maintain long-term communication and interact with their customers. In light of this, social media increase in significance.  
Source: ASEAN Post, Facebook
  As mentioned above, the characteristics of Southeast Asian customers differ by country. However, there is one similarity among the Southeast Asian customers: they all “love” social media, especially the young generation. Of the top 10 countries worldwide, that spend the most time per day using the internet, four are from Southeast Asia (Philippines, Thailand, Indonesia, and Malaysia). Logically, this predetermines a high level of social media penetration in the ASEAN member states.
Source: Statista
  Among the ASEAN countries, Singapore has its specificity. The Singaporean consumers prioritize a high level of data security, so companies need to guarantee that customers’ personal data is completely protected. In these circumstances, the Singaporean companies are increasingly investing in advanced customer authentication methods such as behavioral biometrics or identity data from mobile wallets. For example, DBS’ Singpass Face Verification service makes mobile sign-ups more trustworthy by using the customer’s biometric data for online bank applications. In light of this, consumers not only feel safe when their data is protected, but also increase trust in online banking. The Singaporean company Oxley Holdings provides another example. The company discarded the usual offline working structures and applied new virtual methods, as well as built new online communication instruments in order to maintain enduring friendly relationships with customers.
  The Singaporean consumers are among the most demanding in the world regarding customer service. In turn, they are highly rewarding to companies that offer excellent services. For this reason, as long as companies invest constant effort in ensuring the customer’s rights and interests, their relationship with customers will be close and harmonious.  

II. The Digital Dimension of Doing Business in the Asia-Pacific Region
The Digital Landscape of the Asia-Pacific Region
  The digital economy and the electronic commerce (e-commerce) are looming all the larger in the Asia-Pacific region. With the widespread use of e-wallets and other local payment methods (LPMs), as well as a rise of incomes, the accounts for two-thirds of the global e-commerce market in 2021, with a value of over US $3 trillion.
Specifically, the Asia-Pacific region has become the fastest growing region from the global e-commerce perspective. China is known as a country which has the world\'s largest e-commerce market. Last year at the “Singles Day” in China, Alibaba and JD.com recorded sales of about 115 billion dollars with 583000 transactions per second, which is a world record. The platform Lazada also had more than US$100 million in sales in the first hour of the sales during the “Singles Day”. To compare, the Americans spent US$136 billion in a five-day period between Thanksgiving and “Cyber Monday” in 2019.
  In 2019, the digital platform revenue was $3.8 trillion representing 4.4% of global GDP. Asia accounted for 47% of the total revenue ($1.8 trillion), while the US and the EU shares were 22% ($836.7 billion) and 12% (445, $3 billion) respectively. Tellingly, China stood at 68% or $1.2 trillion of Asian revenue (8.8% of the China’s GDP). The total revenue of e-commerce platforms comprised about $1924.9 billion. 
  Although the future evolution of e-commerce requires an individual nuanced and comprehensive analysis, the general trends of the COVID-19 pandemic suggest an ever-increasing growth. Due to the scale factor, the share of the Asia-Pacific region is likely to rise. As online trade platforms can scale up faster and at lower costs than traditional companies, China will use its scale factor to its best advantage. The more so since breathtaking examples are in place already: Alibaba reached 1 million users in 2 years, and the company generated annual sales of $700 billion in 15 years. In contrast, it took over 70 years for Swedish IKEA to generate $42 billion in global annual sales. 
  As customers become more digitally aware, the globally renowned companies like Amazon and Alibaba develop the customer-oriented strategy. Specifically, they aim to build and upgrade a multi-dimensional ecosystem that closely follows the customer’s buying journey. For the Asia-Pacific economies, this is may be a good example to follow.
Source: Accenture (2019). Insight Digital Commerce. An APEC Perspective. Accenture, Dublin. 
  In accepting this underlying reality, the companies like Grab and Gojek are also trying to build the customer-centric ecosystems. By establishing partnerships with the companies OVO (a payment platform), HOOQ (a Singaporean video streaming service) and Tokopedia, an Indonesian marketplace, Grab is evolving into a super app that will provide local entrepreneurs with valuable assistance. Even though Amazon is increasing its market share – most visibly, in Singapore and the Philippines – the Asia-Pacific companies still dominate the local ecommerce landscape.
 
  The top 10 most visited Southeast Asia ecommerce sites 2020

Source: Campaign Asia
  Amidst, the COVID-19 pandemic, the Asia-Pacific consumers are spending more time online scrolling the online showcases. Southeast Asia is again a case in point. In 2020, in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam people spent 4.2 hours using mobile phones daily, which is 1.2 times the global average. 

The Asia-Pacific E-Commerce Platforms: Main Features 

  The Asia-Pacific region sees an active development of e-commerce platforms. The most popular are presented below.

Alibaba

the largest Chinese and the world’s largest B2B e-commerce marketplace;

covers 80% of online sales in China;

operates in 200 countries;

also operates other huge e-commerce sites such as AliExpress, TMall and Taobao.

AliExpress

Alibaba-owned marketplace that targets buyers outside China;

offers international shoppers goods at factory prices without a minimum order size;

has users from over 220 countries;

has a global English site and operates in 15 other languages.

Flipkart

India’s largest marketplace with over 10 million customers and 100,000 suppliers

HipVan

Singapore-based e-commerce platform

offers goods from design studios and independent designers

its aim is to fight with low quality goods from China

JD.com

the second-largest Chinese B2C marketplace with over 300 million users.

Kaola, Tmall, Taobao are also huge Chinese marketplaces. Taobao is listed as the ninth most visited website in the world.

Lazada

is also called “the Asian Amazon”

operates in Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam

Qoo10

Singapore-based marketplace operating in China, Indonesia, Malaysia, and Hong Kong

accounts for more than a third (32.6%) of Singapore’s ecommerce market

Rakuten

Japanese marketplace selling over 18 million products

has over 105 million members in Japan, it has the largest market share in the country – around 80% of Japan’s population buy from their site

Shopee

one of the leading mobile e-commerce platforms in Southeast Asia

operates in Singapore, Malaysia, Thailand, Taiwan, Indonesia, Vietnam, and the Philippines

Snapdeal

India-based marketplace with over 40 million users, 300,000 sellers and 35 million products

Source: Ecommerce Germany, TechCrunch
  Apart from the marketplaces presented above, there are numerous niche platforms specializing in selling particular categories of products. While entering any market, a company needs to study the local online platforms in all their forms.  

  Most of the Asia-Pacific e-commerce platforms share distinctive features. Firstly, the products on almost all the online platforms are advertised in the same way: bright photos have colorful frames, sometimes stickers and animations are added, as well as provocative headlines like big discounts or 100% eco in the photos. The product design is crucially important. A company that advertises its products has to study the style of a particular platform. As a rule, the Asia-Pacific platforms are bright and attention-grabbing. 
Source: Taobao
  Secondly, almost every product has a video with its description attached. Even if there is, for example, an apple, a short video for 15 seconds will be posted, and the apple will be demonstrated from all sides, with the area where this apple grew, the person who is eating this apple, as well as everything that can attract the customer’s attention. Therefore, if a foreign company does not produce a video, then its product immediately loses. In addition to videos, numerous photos taken from all angles are added to each product. On Russian marketplaces like Wildberries and Ozon, for example, sometimes only 1-2 photos are posted. That does not work in the Asia-Pacific region: all the smallest details should be amply demonstrated. Regarding food or cosmetics, ingredients should be shown as well. More than that, the quality of the photo is crucial. Companies can be advised to hire professional designers and photographers, since no consumer looks at the usual photo made on the phone.
  Thirdly, the Asia-Pacific websites should necessarily be adapted to the mobile phone format. Since the number of mobile Internet users is growing every year, this factor is increasing in significance. In contrast, in Europe and in Russia, not all the websites are convenient for using from the phone. A detailed description is also important: on the Asian websites, sellers post detailed photos for almost every product. For example, wine producers even take photos of the bottom of the bottles. If sellers have licenses, certificates or any stamps of approval, they also attach these assets to the description of the products. The principle “the more details the better” is central.  
Source: Taobao, Alibaba, Flipkart, Technode 
  Last but not least, the role of social networks and collaborations with influencers is expanding. Although this trend is typical for the whole world, the Asia-Pacific countries can multiply the scale effect. Nothing can be sold without advertising on social networks, as well as without well-known bloggers and live streams. On the largest live streams that were established in China in November 2020, there were bloggers who were selling different goods, and 30 million people were watching that broadcast. Two-thirds of the Chinese consumers say they buy products after watching live streams.
Tmall Live stream in China, 2020
Source: Forbes
Live stream in China, November 2020
Source: Entreprendre

Digital Platforms in the Asia-Pacific Region: Factors to Consider
The online trade in services: new developments and engrained limitations
  The pandemic highlighted a significant shift in economic activities, specifically, the growth of trade in services. A close examination reveals that trade in services is concentrated as the same countries and territories are both leading services importers and exporters. Paradigmatic examples include China, Hong Kong, the Republic of Korea, Singapore and India. A notable trend is the process of synergizing services and goods, which is known as the «servicification». This is a value-adding factor and a definite competitive advantage. 
  At the same time, serious limitations are also in place. Without going into detail as the problem needs an individual in-depth research, the overall picture is presented in the graph that follows. 
Source: OECD

  The growth of the digital economy over the last several decades has caused a state of disarray regarding the taxation of companies that do not need a physical presence in target countries. In the Asia-Pacific region, attempts to cope with this problem are made, as for instance, Malaysia and Singapore were the first two countries in Southeast Asia to impose a tax on imported digital services in 2018-2019. Other countries, namely India, Japan, New Zealand and the Republic of Korea, have also introduced regulations concerning online suppliers that sell registrations in their national domains for the VAT benefit.   Another example is China that adopted a law according to which any foreign company selling goods or services in China must pay the corporate income tax. In case of non-payment, heavy fines are imposed on the client company operating in China. The measures introduced by Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam and Cambodia aim to regulate the regional e-commerce landscape too. Vendors are required to register and account for the VAT in the jurisdiction of importation, obliging non-resident digital B2C suppliers to register and account for the VAT in the customer’s jurisdiction. The VAT on e-commerce is imposed in case foreign goods and services are delivered to and used in those countries through e-commerce platforms.  

Superapps and closed ecosystems 
  Serving as online trade drivers, Superapps are used to sell products and services. Interestingly, there is even a culture of creating the shop on WeChat and giving people a calling card with the QR-code to access the shop’s channel with all the discounts and offerings available. 
  With the development of e-commerce with numerous e-commerce platforms, notable developments are in place. The platforms are continuously evolving from electronic catalogs to multi-faceted systems in which a wide range of operations can be performed. Most of the platforms currently provide all the services. To be more specific, they advertise and sell products, as well as conduct payment transactions. Concerning suppliers, such platforms are helpful in providing them with appropriate storage facilities and performing the delivery function. Some companies carry out all the essential functions, removing the need to address to other partners. This option is attractive to companies with considerable amounts of resources, mostly to market leaders. 
  Other firms need to cooperate with partners and to create ecosystems. There are four types of such ecosystems. First, companies can participate in open ecosystems. For example, Walmart joined the Tencent ecosystem and invested in JD.com, which helped the company to gain access to the WeChat users and the WeChat payment system. This model also allows companies to make use of appropriate storage facilities and ensure fast and guaranteed delivery. Second, companies can build their own ecosystems through partnerships, alliances, and joint ventures. Starting from a small trade platform, companies start looking for partners and build up alliances of all sorts, which help them to find new clients, provide different services including logistics, integrate the company into the existing payment systems. This resembles a pyramidal structure, and the company steadily moves up enjoying the ever-increasing scale benefit.   
  The third option is to make a company an open ecosystem. This is fairly typical of market leaders which other companies want to join. Major players provide all the system participants with the necessary information, assets, and capabilities. This is exemplified by Tencent: the company has built its own ecosystem, and it has an access not only to all the WeChat users, but also to the WeChat Pay system and the social network. Not surprisingly, many companies are willing to join this ecosystem.
  The fourth option is to sell part of a company to a potential ecosystem participant. Arguably, it can significantly increase the capabilities of a company. As an example, the Chinese company Sun Art sold 36% of RT-Mart to Alibaba, and after the deal, 400 stores of the company were reformed, the RT-Mart site was linked to one of the Alibaba platforms, which considerably expanded the company’s client base and other opportunities. As stated earlier, some platforms cooperate with partners and integrate into the existing payment systems, but large players increasingly opt for creating their own payment systems. QR codes become the fastest and the most popular payment method in the Asia-Pacific countries, as users just need to scan the code, after which the transaction takes place immediately.  This model of payment is created by China\'s Alibaba (Alipay) and Tencent (WeChat Pay), the leaders in the mobile payments market in China that also conduct international transactions. Although influential platforms develop their own payment systems, they have to cooperate with other companies, which help them to ensure fast and safe delivery. Platforms usually integrate with logistics companies and services, giving the consumer an opportunity to track their orders, choose a convenient delivery time, and receive their orders as quickly as possible and with minimal risks. 
  At the same time, although large international logistics companies offer services for the delivery of goods within one country, platforms usually prefer local partners for reasons of convenience (fast delivery, high safety, low prices). Even the company Alibaba cooperates with logistics companies to reduce the costs and the time for delivering goods abroad. For example, in 2017, Alibaba announced a partnership with UPS and FedEx for express delivery, Maersk for container shipments, and DHL and Kuehne + Nagel for airfreight to reduce costs in cross-border trade. Both Alibaba and its logistics partners that hugely expand their client base benefit from this cooperation. No less representative is another example. In 2019, WeChat announced a new logistics API, which helped to connect WeChat mini programs with numerous logistics companies. This has facilitated the process of placing and tracking orders, as well as monitoring the delivery stages inside the app. For sellers, a range of opportunities for choosing a reliable logistics company have expanded, while for buyers, this method of gathering information has become more centralized and eventually, more convenient. 
 
The Asia-Pacific Digital Platforms and the Pandemic Challenge
  The COVID-19 pandemic strongly encouraged the development of e-commerce and digital platforms. Interestingly, the rise of Chinese giant JD.com was amidst one of the strongest outbreaks of pandemics in the past, namely, SARS that hit the Asia-Pacific region in 2002-2004. In broad terms, the Asia-Pacific business-to-consumer platforms enjoyed the rise of 20% in 2020, especially in the countries with the highest rate of internet penetration and level of infrastructure development. For instance, in China the share of online retail rose from 19.4% in 2019 to 24.6% in April 2020, and the retail giant JD.com experienced an increase in net revenue of 33,8% compared to the previous year. 
  One of the determining factors that helped the traditional offline Chinese businesses to shift their sales and customer services online relatively quickly accounted for the national digital ecosystem infrastructure. China\'s robust digital infrastructure ensured that online efforts in response to the COVID-19 pandemic provided quality service, not least in delivering orders in hours or days rather than weeks that less developed economies could offer. The companies that were already undergoing digital transitions were able to seize the opportunity and successfully meet the rising demand for online purchasing.
Sources: UNCTAD, UNCTAD Technical notes on ICT Development
  Inevitably, the spread of COVID-19 pandemic and the lockdown measures affected not only the demand for the online platform services, but the way they are organized and operate. For instance, Shopee advanced their interactivity with customers by increasing the number of live streams.
  With the cross-border exchange disruption, the task of maintaining the existing supply chains has increased in significance. In light of this, the Asia-Pacific digital platforms introduced a set of measures: from supporting producers to updating storage conditions. For example, Alibaba supported merchants by, inter alia, reducing the platform fees, providing its clients with logistics and personnel support services. Alipay launched the program aimed at incentivizing developers to create mini-programs and offered MSMEs low-interest loans. Taobao focused on supporting local communities and farmers, while Lazada lowered fees for cross-border transactions.
Source: Global-e, COVID-19: The Impact on Cross-Border Ecommerce 

E-Commerce Sales in China: the Current State and Projections

Source: China Internet Watch
  The logistics-focused measures are especially noteworthy. In March 2021, Alibaba introduced measures aimed at ensuring fast-track shipping. It was followed by other e-ecommerce giants, for instance, JD. Com and Tencent. A number of e-commerce platforms developed the multi-carrier shipping approach that enables companies to optimize the process of shipment and returns. Overall, the adopted measures amidst the surging demand for quick and safe delivery contributed to a spectacular rise of e-commerce in the Asia-Pacific region. 
  Nevertheless, limitations to the sustainable development of e-commerce in the Asia-Pacific region are also significant. Although their detailed analysis is beyond the scope of the paper, the main relate the huge infrastructure gaps, the continuing reluctance for cashless payment and the legal obstacles. The latter are especially serious since many Asia-Pacific states are not signatories or parties of the United Nations Convention on the Use of Electronic Communications in International Contracts (New York, 2005). If so, the legal framework of how cross-border exchanges is not established. Arguably, China uses it to its great advantage as the BRI gains traction. China develops its commercial dispute resolution centers with an emphasis on Hong Kong International Arbitrage Center. China is actively involved in developing the international mediation, while simultaneously, the Chinese policy-makers raise the question of delegating China’s e-commerce companies with considerable grass-root experience the privilege of standard- and norm-setting. Another impediment to digital trade lies in the field of electronic transferable records acceptance, which enables companies to avoid transferring paper-based contracts. To date, Singapore is the only country in the Asia-Pacific region that adopted Model Law on Electronic Transferable Records (MLE TR) by the United Nations Commission on International Trade Law. As a result, the developments of the efficient legal ecosystem for digital trade in the Asia-Pacific region may take much time and effort. 

III.   The Relationship Marketing: Traditional Patterns and New Focal Points  
  The Asia-Pacific practices of building up corporate connections between and within companies are rooted in the cultural specificity of each country. The main patterns of those connections, as well as points of their resemblance and difference, merit special attention.   

China and Singapore
  Guanxi (关系) is a category which implies “interpersonal relations”, mostly informal personal linkages between individuals. It rests on a diversified foundation.  On the one hand, it can be family or friendship interpersonal ties. On the other hand, guanxi can be based on instrumental connections stemming from business communication. For example, by establishing business contacts and maintaining a reciprocal exchange of gifts and other favors, the parties create a warm emotional atmosphere of mutual trust and respect.
Experts distinguish three basic aspects of guanxi: normative, affective, and instrumental. The first one describes a moral obligation stemming from close interpersonal relations. The second sort of guanxi refers to kinship or friendship – building long-term relations based on emotional support. And the last one is a “quid pro quo” kind of relations, specifically, mutually beneficial cooperation based upon synergy of moral duty and convenience. 
The concept of guanxi is inherent to the Confucian tradition. Confucianism, whose profound impact on Chinese society is undeniable, highlights moral categories like loyalty, seniority, duty, and respect. Reciprocity is a constituent part of people’s relationships. That is why making gifts is considered as an indication of respect and perfect harmony. 
  At the same time, guanxi is criticized for a distinct lack of transparency, as well as for a huge cost of maintaining long-term relationships, especially for foreign investors.  
Long-term interpersonal connections are a major feature of the Asian corporate culture. The influence of the Confucian tradition is strong, mainly, in the economies with the predominant Chinese population, for instance, in Taiwan or in Singapore. However, some points are important. In Taiwan, whilst guanxi is still an essential part of the managerial process, it is being extruded by a more meritocratic and mercantilist approach. The same is relevant to Singapore, where the influence of Western values is fairly big. A widespread practice of strengthening ties between companies in Singapore is a symbiosis of the Chinese guanxi, which is closely associated with Confucianism, and the mainstream Western business culture. In the meritocratic Singapore, there is negative attitude towards guanxi due to a lack of transparency and corruption practices, but the components of ancient Chinese culture are visible. But from the broad perspective, meritocracy, personalism and paternalism are at the core of the Singaporean model of relationship marketing. Amidst the COVID-19 pandemic, the traditional ways of business communication are undergoing a profound transformation. However, as maintaining guanxi networks implies broad mutual support, strengthening and diversifying guanxi has become an instrument for mitigating the negative effects of the COVID-2019 hardships. Notwithstanding the imposed lockdowns and restrictive measures, possibilities to build up and develop business connections are still in place. Currently, the so-called “swift guanxi” is gaining momentum: the computer-mediated communication enables the Asia-Pacific companies to ensure mutual trust “by enhancing the buyers’ perceptions of interactivity and presence”. Along with word of mouth, the social networking sites (SNS) have become channels of establishing long-standing interpersonal relations and then transforming them into business partnerships. The Asian SNS should not be underestimated since they encourage the ever-increasing online communication: chatting, up-to-date information sharing, liking, as well as other activities.

Japan
  One of the core pillars of Japan’s corporate culture is the concept of harmony (wa, 和). This term encompasses harmony as a consensus-building process, as well as the importance of informal connections. 
Firstly, wa means a deep sense of security that comes from teamwork commitments. Once entering a company, the employee is protected for the rest of his lifetime. Although this system is undergoing a substantial change, many of its components remain in place. Various forms of professional associations and clubs are in overabundance, while teambuilding practices are encouraged. In light of this, of special note is the concept of madoguchi that refers to managers who are appointed to establish and develop informal networks. 
  Another term that describes the Japanese business communication traditions is “nomification”. The concept originates from nomu, which means “to drink”, and refers to the nomikai process （飲み会）. Nomikai is an informal meeting of the company’s personnel organized in a bar or karaoke. During these meetings, the company’s members relax and build the team atmosphere. 
  This atmosphere is essential to the process of decision-making. Due to the Japanese collectivism and paternalism, while discussing operational details within a company, it is not common to argue and insist on something. On the contrary, every discussion aims to reach a compromise. The positions do not always converge. In these cases, a conversation starts with topics everyone agrees on and then proceeds to discussing points of disagreement. This system, known as nemawashi (根回し), helps to mitigate contradictions and underlies the principle of mutual compliance. It also indicates how important for the Japanese is to create emotionally comfortable conditions so as not to hurt other people\'s feelings. 
  Interestingly, amidst the COVID-19 pandemic the traditional forms of communication in the Japanese corporate culture are being transformed. Highly hierarchical Japanese companies started to modify established decision-making processes based on informal face-to-face communications. Videoconferencing set a level of distance between those engaged in the dialogue, and the traditional practice of privately discussed points started to appear in open virtual meetings. This is the reality of the new digitalized “nemawashi”.
  The traditional group orientation and teamwork that was behind meetings outside working hours, as well as a poor balance between professional responsibilities and private life, are being replaced by more specific tasks and a bigger responsibility of individual teams. However, the old habits of socializing the personnel are still present when it comes to “nomikai”. The Japanese companies have succeeded in changing it for the so-called “on-nomi” (“online-nomikai”) that usually ends with making a group screenshot. At present, virtual signatures and the electronic document management systems are replacing the process of agreeing on documents and projects (“ringisho”). This is typical of large and medium-sized companies. 
  Foreign companies that are exploring possibilities to enter the Japanese market find new trends favorable, as the decision-making process is getting more transparent. The confrontation between one’s real opinion (“honne”) and the one expressed (“tatemae”) has always been a controversial issue in negotiating with the Japanese partners since they avoid saying the direct “no”. Arguably, in the era of digitalization spurred by COVID-19 pandemic outbreak, there are good chances that reading between the lines will become outdated and eventually unnecessary.  

The Republic of Korea
  Like in other Asia-Pacific countries and economies, informal relations play a prominent role in managerial practices in Korea. The three broad terms usually mentioned in this regard are yeongo (연고) , yeonjul (연줄) and inmaek (인맥). 
  At their core, all those types of relationship have a concept of “yeon” (“tie”). The three major components of yeon are hagyeon (학연, “educational ties”) hyeolyeon (혈연, “blood ties”) and jiyeon (지연, “land ties”). The first one refers to bonds acquired through affiliation to the same educational institution, mostly high school and university. Former fellow students often form close and stable relationships based on the seniority-determined hierarchy. Among other advantages, this allows the younger members to benefit from a position of their seniors (e.g., while getting a job) in exchange for loyalty. The second component describes family ties – blood relatives and their spouses. This relationship is hierarchical as well, with priority given to males in order of age. The third component refers to ties based on the person’s birthplace or home region. Sharing the same origin is often considered as part of a quasi-family. 
  All of those ties are irreversible and provide a sound basis for informal interpersonal relations in Korea. Among those three types of ties, two (the blood and the regional ones) are predetermined, which leaves very little space for voluntary participation. More than that, this accounts for another reason for high competition in the Korean education system since bonds formed by means of education are basically the only chance for people with no strong blood or regional ties to build up useful connections. 
  The broad term to describe social connections in Korean is inmaek. It refers to any type of social network. Although all three of the terms mentioned above are inter-related, both yeongo and yeonjul can be considered as parts of a broader inmaek network. Inmaek is often premised on the three types of bonds mentioned above (though this precondition is not obligatory). Unlike inmaek, yongo is mostly derived from one of the three types of the afore-discussed connections. Therefore, it is steady and constant. Both inmaek and yeongo usually have a neutral connotation since they basically mean people-to-people networks. In both cases, however, the level of closeness varies considerably. Importantly, both of these ties are rarely used for making commercial profit. 
  In its turn, yeonjul is usually regarded as ties that entail corruption and weaken formal institutions. In the case of yeonjul, ties can be premised on factors different from the ones indispensable for yeongo. At the same time, the level of trust between the yeonjul members is significantly higher. The yeonjul members’ dedication to each other is very strong, while outsiders are not welcome. Yeonjul generally has negative connotation in Korea.  Although it is believed that informal ties weaken along with sustainable economic growth, the influence of these networks remains strong. 

India
  Before discussing the specificity of relationship marketing in India, it should be stressed that the Indian companies are not involved in the regional or global value chains (at least, to the extent the Chinese, the Japanese, the Korean or the companies from Southeast Asia’s states are). India is not member of regional formats and initiatives of economic regionalism, for instance, of APEC, ASEAN+3 or RCEP. For this reason, contrary to the examples presented above, the Indian model of relationship marketing is “inward” rather than “outward” oriented, and the emphasis is placed on the communication within rather than between companies. 
From the organizational perspective, India is characterized by vertical hierarchical social structures. The uneven distribution of resources in the Indian economy and the remaining widespread poverty shape the practices of business communications.  
  The intra-company hierarchy and the vertical process of decision-making are at the core of Indian culture of business communication. This is seen across various fields. In contrast to other traditions of corporate culture and relationship marketing in the Asia-Pacific economies, where a problem that needs a solution passes through all the stages in the decision-making hierarchy, it is common in India to skip many of the levels of intra-company procedures and reach the final decision.  
  Along with the vertical and centralized decision-making process, the Indian business practices can be described by the Hindi word “jugaad”. It means creativity and innovation: a company or an employee manages to find an ergonomic solution to deal with a complicated problem. This is highly appreciated by the company’s top management, which exerts a strong impact on the business communication culture. Amidst the COVID-19 pandemic, jugaad became the synonym of creativity and even a sort of national response to the pandemic challenge. Nevertheless, foreign producers seem to be apprehensive about jugaad. Simultaneously with the “creative improvisation” aimed at reaching the most economical solution, the Indian companies produce cheap equivalents for expensive imported goods. As an example, the American drug makers in India find numerous analogies of their generics at more affordable prices offered by the local pharmaceutical companies. Since the COVID-19 pandemic started, jugaad has become a kind of national idea, with an increasing number of local companies working towards cheap and effective solutions.
  Simultaneously, the concept of family fully penetrates corporate communications in India. In light of this, the Indian way of doing business, as exemplified by the measures taken by the main business houses, is considered to be more closed for foreigners and for “outsiders” of all sorts. Predictably, the intra-family ties have strengthened since the COVID-19 pandemic started. 

***
  The foregoing analysis reveals that the development of business ties is broadly similar in Japan and China: the emphasis is placed on informal meetings after work at a karaoke studio or in a bar, while business ties in Korea are predetermined mostly by the birthplace and the education factors. Another feature shared by the afore-described models stands for “saving face” phenomenon. It is behind the practice of resolving conflicts: the emphasis is placed on mitigating contradictions and reaching rational compromise decisions. All parties concerned try to avoid aggressively defending their positions, even if it may prolong the negotiation process.
  An essential point of divergence is that in contrast to China, in Japan social networks are closely connected with the firm. Leaving the firm, a person often loses the network. In China, however, guanxi belongs to a certain person even after changing the workplace. More than that, in the Japanese and the Korean business culture, there is a firmly established trajectory of the problem-solving and the decision-making process. In its turn, the Chinese business culture favors both horizontal and vertical approaches. 
 
Concluding Remarks 
  Providing an interdisciplinary account of the contemporary specificity of doing business in the Asia-Pacific region, the report did not aim to model itself on a “classic” research paper like those prepared by think tanks or international organizations. Instead, it aims to invite experts, practitioners and students to join the more detailed and in-depth discussions that, hopefully, will follow. In light of this, several final remarks are worthy of note. 
  First, the report is seen as a starting point for a series of further discussions on the specificity of doing business in the Asia-Pacific region. This responds to the priorities of the School of International Regional Studies that is developing a new International Regional Studies methodology. The latter aims to contribute to promoting Russia’s interests and possibilities in different regions, among which the Asia-Pacific region is of special significance. In light of this, the report, as well as other discussions on related topics, collects the empirical material that will be used to develop an efficient IRS methodology, and eventually to make the training of IRS specialists really advanced and comprehensive. 
  Second, the projects that will follow should increase the participation of foreign scholars, experts and students, as it will strengthen their practically-oriented dimension. The SIRS professors welcome a closer dialogue with foreign colleagues. In this regard, the international catalogue “PostgradAsia 2020/2021”, which makes the information about the SIRS Professor Evgeny Kanaev and the possibilities of HSE University available to the audience from Southeast Asia, is a remarkable event. Student projects and reports like those discussed above, must include a broad international participation as their integral component. 
  Third, for companies to participate in these projects, as well as to supervise and assess their outcomes, would be highly beneficial. As the projects gain traction, solid foundations for an effective public-private-expert partnership will be built and eventually strengthen, to the best advantage of Russia and its Asia-Pacific partners. 
  In sum, the ever-increasing digitalization offers excellent commercial prospects. The Asia-Pacific region has good chances to become its major beneficiary.  

[i] Business Success in the ASEAN Market: Perspectives for Russia (2017/18), Russia-ASEAN Cooperation: the Map of Business Activity, Marketing Strategies and Practices in Southeast Asia (2018/2019), Institutions of Multilateral Cooperation in the Asia-Pacific Region: the Business Dimension (2019/20).