Every country has its nuances, Europe or Asia. This article will touch on the reasons for entering the Asian market and why you should pay attention to it. Let’s look at the factors that influence investment activity in Asia: the high level of penetration of public markets, the rapid development of high technology, the prevalence of electronic payments, the propensity for gambling, and the high percentage of computer science graduates. In addition, Asia’s rise as a financial center has facilitated the development of fintech. The world’s top five stock markets participants are Japan, Shanghai, and Hong Kong.
At the beginning of 2020, six of the ten largest cryptocurrency firms in the world were based in Asia. As for 2021, 42% of market capitalization is based in Asia. Moreover, 98% of Ethereum futures volume and 94% of bitcoin futures volume comes from Asia.
Investments in several crypto-assets in Asia are much broader than those typically found in the West. Asia is also a hub for cryptocurrency mining, with more than half of the world’s hash rate concentrated there.
Asian countries are not only accepting investments in crypto-assets but are also embracing the unique uses of cryptocurrencies and blockchain technology, opening up exciting growth opportunities.
There are a lot of whales in Asia as well. Whales are those entities and individuals who own 1,000 to 10,000 BTC. China accounts for most of the Asian whales. Chinese miners were the first ones who started to mine BTC and many of these miners have accumulated large amounts of bitcoins. Several leading Chinese miners have more than six-figure shares.
Only a few coins top almost all markets, e.g. Bitcoin (BTC), Ethereum (ETH). However, the three major Asian countries (PRC, Japan, South Korea) have different investment preferences and this can be seen in their trading patterns:
- Japanese traders are more likely to invest in large tokens such as XRP and Cardano, as they tend to exhibit relatively risk-averse behavior.
- South Korean investors prefer local projects such as Luna Coin and Enjin.
- Chinese traders are known to be following the latest trends, and, for example, Filecoin has recently been popular in China.
It can be seen that the Japanese don’t like to take risks, while Korean investors mostly prefer risk.
China, South Korea, and Japan are considered to be as driving forces of the cryptocurrency market. Prices immediately fall, for example, when the Chinese government threatens to shut down cryptocurrency exchanges and ban the purchase of bitcoins. China’s rather gambling population, combined with Asia’s economic power, suggests that PRC, Japan, and South Korea are the best ones for crypto investors.
Consider the characteristics of these three countries.
China.
In 2017 Chinese government banned bitcoin trading, but as a decentralized network, bitcoin is difficult to effectively ban.
In China, retail trading is limited and often conducted on multiple exchanges via VPN. There is always the risk that China sees bitcoin as a threat to its national currency, the yuan, or the digital yuan. However, China is digitizing its currency ahead of the US.
The People’s Bank of China is taking a softer stance on bitcoin, stating that cryptocurrencies should be regulated as an alternative asset rather than a currency.
Two key aspects you should consider when it comes to marketing in China are branding and long-term planning. Chinese companies do not launch projects solely for short-term gains. They don’t take unnecessary risks, regardless of the potential benefits. And even if the risk is justified but goes against company policy and philosophy, no amount of money in the world will convince them to take the deal. It is a fundamental principle of all Chinese branding and the way Chinese companies operate. Also, the Chinese are not very keen on dealing with foreign businesses, usually preferring domestic companies. Therefore, if you are looking to enter the Chinese market, making local connections is not just desirable, but necessary.
South Korea
South Korea is in the process of approving a government-sanctioned cryptocurrency fund. Hanwha Asset Management is potentially forming a digital asset fund that will set an important precedent in South Korea’s cryptocurrency scene.
South Korea has capital controls, opening up opportunities for arbitrage, known as “Kimchi Premium”. Japan has a similar situation. In all three countries, bitcoin allows investors to reduce exposure and dependence on the dollar, which is certainly not a problem in Europe or the US.
The South Korean market is an important testing ground for cryptocurrencies, especially as it is more focused on altcoin and utility tokens. We see widespread adoption here as, for example, more than 30% of household appliances shops already accept cryptocurrency. Compared to China and Japan, the South Korean market is easier to understand because it is more similar to the European and American markets. Marketing planning, strategy, and promotion tools work roughly the same here as in the West. Local consumers like popular trends; it can be difficult for a western company to gain their interest and will require extensive advertising. On the other hand, if you succeed, you can be sure that you have a good chance in other Asian markets as well.
Japan
While Japan is more bitcoin-centric, it is increasingly turning towards altcoins. Asia has a much younger investment culture, which is more interested in active trading than the Western buy-and-hold (or HODLing) approach. In addition, the US and European markets are still quite conservative about altcoins. Altcoins also provide unique opportunities for investing in new projects, as more start-ups are launching ICOs – and new stock exchange listings are always popular with investors. Altcoins also demonstrate the region’s priorities: a focus on building apps rather than platforms.
Marketing is an integral part of any company’s existence in Japan because the phrase “the customer is always right” is not just a phrase. Japanese companies are constantly studying consumers, their motives, preferences, and requirements. This way, they can keep up to date with the latest trends and offer services that are in line with customer desires. While in many other countries, especially in the West, companies consider maximizing profits to be their top priority, this is not the case in Japan. The ultimate goal of Japanese companies is not to make profits, but to maximize customer satisfaction, which will naturally lead to increased profits. If you want to reach a Japanese audience, you will have to adapt and understand how your products or services can benefit them.
In the future, we are likely to see the following:
- Markets and innovations are more focused on blockchain technology and the use of crypto-assets.
- A shift in financial activity in Asia towards crypto-assets, such as financial holdings and storage, lending, and trading.
- A shift towards turning small assets, such as patents, copyrights, or online reputation, into crypto-assets that can then be tokenized and publicly traded on the blockchain.
- The passive income generated from owning cryptocurrencies would move into the public sphere.
- The destruction of payment systems, which will be replaced by cryptocurrencies.
- Unification and standardization of markets and corporate finance due to the borderless and decentralized nature of cryptocurrencies.
It is not hard to notice the most reasonable benefits of the Asian market but there are also some downsides for Western people of entering it.
The most obvious obstacle is the language barrier. To avoid misunderstandings with local partners due to not speaking English, you should always use professional interpreters. Also, you have a better chance of earning a person’s trust if you show that you are willing to communicate with them in their native language.
Another important element is a physical presence in the country. In most Eastern countries, interpersonal relations are a decisive factor for many things. It is often not enough to work remotely: you need to “get close” to your audience to succeed. Organize events, showcase your product, network and build trust with potential customers directly: they need to see that you exist.
Finally, keep an eye on Asia. It will be interesting to see how cryptocurrencies realize their many opportunities in this region in the coming years.