Corporate Expansion in Southeast Asia: Things to Consider

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In recent years, Southeast Asia (SEA) has been gaining the attention of businesses all around the world. Its large population, swift urbanisation and advances in technology have all made it known as a powerhouse for both rapid growth and development. Even with the current economic slowdown in China caused by the COVID-19 Pandemic, the region as a whole, is predicted to grow at a rate of 6.1% every year. If you want to open an entity in China, you can use EOR China to help you expand faster and easier

  While many businesses are looking to expand their operations into the SEA region, there is still much to consider. If you are considering expanding your business into the SEA region, here are some things to consider.

1. The Diversity

While it is indeed one region, SEA as a whole is not a monolith. Simply put, this one region is home to an entirely different range to cultures, languages, currencies and workplace regulations. When expanding into SEA, it should not be considered a single market.

  With 11 countries in the region, each one poses a unique set of challenges and opportunities. N

  Needless to say, no two will be exactly alike. For example, businesses might not face the same challenges they face in Singapore as they would in, say the Philippines. Buying power and preferences will also differ greatly not just across each region, but across the sub-groups in each region.

  For example, China is home to some 33 different states, each with its own unique culture.

  Companies looking to expand into the region should hence avoid grouping demographics in the region in broad categories. This is due to intrinsic cultural differences and preferences in each region. If you are thinking about expanding your business into the SEA region, it is important to do your research on each region’s laws, regulations and cultural norms before taking the leap.

2. Embrace Partnerships

Forming partnerships may perhaps be one of the most integral parts of expanding your business into SEA. Considering restrictions on Foreign Direct Investments and certain regions requiring partnerships with local firms and shareholders, partnerships are a key strategy for breaking into the SEA market.

  However, it is also important to note that these regulations are more common in particular industries and regions than others, so prior research is key.

 Forming partnerships and leveraging on the experience that local businesses already have would give businesses a significant head start, rather than building from the ground up. Partnerships facilitate rapid market growth on both ends and allow companies to produce more functional, beneficial products and services in the long run. 

3. Understand the Challenges

As discussed earlier, Southeast Asia should not be regarded as a monolithic market. While SEA is often praised for its rapid urbanisation and economic growth, there is still plenty of economic disparity, amongst other challenges that corporations will have to face. Higher taxes on profits, underdeveloped foreign investment environment in lesser developed countries, as well as corruption and bribery are some of the setbacks and major risks that companies will have to keep in mind when thinking of expansion. Furthermore, each country has its own set of regulations regarding working conditions, payroll, taxes and intellectual property registration. 

  In order to have a more seamless transition, companies thinking of expanding into the region need to have a good understanding of the challenges they may face in whichever country they are looking to expand into. Moreover, solid solutions and contingency plans need to be thought of. 

In Conclusion…

Expanding into new markets is no doubt a large and exciting leap for many companies. However, proper research is needed in order to prepare one for the challenges that they will face during the expansion process.

  When one wants to expand overseas, they have to tailor their products, services and culture accordingly. AYP Group is well-versed in markets all over the SEA region, and how they work. Get in touch today to see how we can better help you adjust to and enter new markets all over the region.

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