Developing an Asian Expansion strategy: Perspectives of a Market-Entry Specialist

The Asian Opportunity

There is currently no greater software market potential than in Asia. Two-thirds of the world’s population is now in Asia. According to Asia Market Entry, when fully operational within the next two decades, the Asia Pacific region is on track to account for 20-30% of global revenue for technology companies.

Asia Pacific’s large and complex geography means that things are rarely homogenous. Building partnerships and productive sales operations require commitment and a willingness to pursue multiple paths. Expanding from one customer to a regional presence requires adaptation and commitment to each country.

How to expand into Asia

Often businesses only consider one way to enter a new market – opening a physical office with on-the-ground staff; a method often favoured by large multinationals. However, small to medium sized businesses may benefit from alternative international expansion methods. James Kwa, Senior Business Development Advisor from Asia Market Entry shares the risks (the exposure to factors that ultimately hinders a company’s ability to successfully expand overseas) and costs of the three following methods, summarised below. Click on each option to read more.

Fly In – Fly Out is a useful method for accomplishing early tasks such as establishing product-market fit. The method entails high travel cost and uncertain results as a company may not be able to acquire certain customers without a physical presence in the market.

Relocation and Incorporation is a popular method that should be undertaken only after extensive research has been performed on both set-up costs and long-term factors that would affect a company’s ease of doing business in a certain location.

Proving the Market by Partnering is a low risk method that can help a company build their customer pipeline quickly and effectively through partnering an expansion specialist team that has established channels and is well-versed in the market’s nuances.

Fly In – Fly Out
Risk Level: Medium
Cost Level: High Travel Costs/ Low Recruitment and Set Up Costs

Tasks to accomplish in the early stages of international expansion, such as scoping a market and building a pipeline, can be accomplished from your home geography with regular trips to Asia.

The trips may be taxing in terms of physical endurance and financial cost. Additionally, in Asia, customers may perceive that a company without a full physical presence might not be fully committed to setting up operations for the long term in the new geography. Often in government-based Request for Proposal (RFP) processes in countries such as Singapore, a company is required to be incorporated in that country to bid for projects.

This method is also a great way to understand whether your product or service has a good product-market fit. One of Asia Market Entry’s clients, a New Zealand-based executive from a Workplace Safety & Health (WSH) company, flew into Singapore and saw that there was much interest from businesses and government in their product but their product required adaptation for it to fit into the regulatory and compliance environment in Asia. While in Singapore, they met relevant WSH experts from the transport, health, education and construction sectors with the help of Asia Market Entry and representatives of the Singapore Institution of Safety Officers (SISO). Upon flying back to New Zealand, they were able to make the necessary changes to their product, launched a Singapore-specific customer-facing platform and won the World of Safety & Health Asia (New & Innovative Solutions) Award 2020 award in the succeeding months.

Relocation and Incorporation
Risk Level: Medium
Cost Level: High

Relocation and incorporation is one of the most popular methods for expanding into a new country. Incorporating in a new geography can be relatively easy in some Asian countries – especially Singapore, but more difficult in others, such as Vietnam. With legal costs, regulations and tax implications to consider, the location for an Asian headquarter requires some research. Once set up, a legal presence can make business transactions much easier. The table below gives a comparison in terms of procedural time and expense needed when incorporating in some of Southeast Asia and Oceania’s main business cities.