Southeast Asia Market Sorting Hat

• BlackStorm Consulting was invited to a sharing session organised by Center of Industry Accelerator & Patent Strategy (IAPS) on how a start-up can decide on which country to land first in Southeast Asia
• The event was conducted by our Co-Founder, Mr. Paddy Tan and Ms. Jeslin Bay

May 22, 2020: As an emerging hotspot, Southeast Asia is a region with many potential business and expansion opportunities. At current growth rates, Southeast Asia is anticipated to be the fourth-largest market by 2030, after the EU, U.S. and China, aided by an increasingly well-educated population, abundant natural resources and favourable geographic features.

We are very honoured to be invited by our partner, Centre of Industry Accelerator and Patent Strategy (IAPS) to share our experience in this complicated region to the group of start-ups under IAPS.

This article will present some highlights covered in the event.

Singapore as a Regional Access to Southeast Asia

As a financial hub with intellectual property laws well-enforced, Singapore is a R&D hotspot with its billion dollar R&D initiatives, as exemplified by Grab’s investment of US$100 million in a Singapore R&D centre in hopes of using data analysis to match ride supply to demand and improve the accuracy of waiting times across Southeast Asia.

Similarly, Google has based its engineering pool in Singapore to be closer to the growing Southeast Asian market. Its Next Billion Users division, located in Singapore, works on bringing the internet to more people. Its projects include enabling Google Maps for offline use in places with limited mobile access.

Apart from this, Singapore also has sound infrastructural support, with an efficient transportation system and excellent connectivity with the rest of the world. This sets companies up for success, while the nation-state’s attractive taxation rates gives incentives for companies to set up in Singapore.

Due to the myriad of reasons presented above, many firms are setting up in Singapore to reach out to neighbouring Asian markets.

Thailand as a Gateway to CLMV

Another country which is also perceived as a good springboard into Southeast Asia is Thailand. Thailand often acts as a gateway to CLMV countries (Cambodia, Laos, Myanmar, Vietnam) due to its close geographical proximity and its new masterplan to boost trade and investment collaboration with CLMV countries.

Therefore, by setting up in Thailand, the customer base can be potentially larger than the Thai market, and extend to CLMV countries as well.

Factors to Consider When Making the Decision

“There is no hard and fast rule as to which country you should enter. It is made up of multiple factors,” asserts Jeslin.

However, there are also a few things to take note before entering developing countries such as Thailand. Its high income disparity and large sums of credit debt among households require entrepreneurs to rethink its global strategy. Its cheap manufacturing costs are also accompanied by relatively lower purchasing power of consumers.

The baseline is that there must be adequate preparation and research done before entering. An example would be knowing that red tape is very common in Indonesia and entry may be restricted without strong network of connections locally. In terms of delivery and logistics, due to rampant corruption, it is also advisable to work with the right logistics players who are established in the local port.

Some of the other factors that affect such decision are namely financial capabilities, suitability of target market, existing or potential partners, competitive landscape, ecosystem maturity, and market entry and exit strategy.

Even after deciding on a country to enter, there are various market entry strategies to decide on, which should be evaluated based on the company’s standpoint, including the nature of the company, which stage the company is at, and also the goals of the company. A few common market entry strategies are distributing, joint venture, franchising, acquisition, direct selling, and setting up a company.

However, Jeslin also pointed out that it is important to have the right target audience in mind when marketing your products, and to note whether the company is aiming for quantity, which is reaching out to as much of the general population as possible, or quality, which is targeting the affluent class.

As a one-size-fits-all approach does not exist, it is also crucial to consider the cultural differences in a different country, and do not just adopt the same approach which worked in one country, said Paddy.

The duo also provided valuable insights on the importance of adapting to local culture with the example of Grab Indonesia. Its original car-sharing model which worked in many other different countries failed in Indonesia, so they implemented GrabBike instead, which was a success.

Even before market entry, there is a need to think of a long-term strategy, such as if the initial plan was to sell cheap and good quality goods, there may be resistance when trying to raise the price due to newfound competition.

The event ended with a Q&A session. We had a great time collaborating with IAPS again and look forward to more collaborations in the near future.

IAPS is also recruiting Taiwan-based startups for its 2020 iCAN x TTA Batch #2 programme. The main themes for this year are Investment, Corporate Innovation and Global Market Entry. If you are a tech start-up in AI, IoT, ICT, AgriTech, FoodTech, Biomedical Tech, Green Energy Tech, Circular Economy, Digital Lifestyle Services or Sports Tech, join them to accelerate your growth.

Find out more here. If you are keen to apply for the programme, fill out your details in this form. The application deadline for this batch is June 15, 2020 (5PM, GMT+8).

About BlackStorm Consulting

BlackStorm Consulting (http://blackstormco.asia) is a boutique growth consultancy firm that specialises in corporate strategy, profit management and investment management. We mainly serve clients in four sectors: FinTech, Gaming, Technology, Media and Telecommunications (TMT), and manufacturing.

Our clients and connections are internationally present and range from small and medium sized businesses, MNCs, to government agencies.

Blackstorm consulting is also a proud founding member of MBAlliance, an interconnected regional platform to unite entrepreneurs with a network of experts, together with swem Consulting and Align Group.

About Industry Accelerator & Patent Strategy (IAPS)

IAPS (http://iaps.nctu.edu.tw/) is a university-affiliated and tech-focused startup accelerator. We are building the most diverse startup ecosystem that serves startups, investors and corporates on a global scale. IAPS’s acceleration services include investment, corporate engagement, global market development, deep mentoring, government resources, co-working space and more.