Are you a multinational company — or aspire to become one? If so, you are likely to be exploring new markets in Asia.
Exactly what, and where, is Southeast Asia?
Maritime Southeast Asia comprising
For anyone unfamiliar with the region, the following map may help.
More background about Southeast Asia
The population of this entire region is close to 620 million, or about double that of the United States,and larger than Europe’s.
- The three largest countries are Indonesia (254M citizens), the Philippines (101M) and Vietnam (93M).
- A majority are young, under 35 years of age.
There are many ethnic groups, religions, and languages.
- TheJavanese(in Indonesia) are the largest ethnic group in Southeast Asia, with more than 100 million people.
- Islam is the most widely practiced religion (61%), followed by Buddhism (20%), and Christianity (9%).
- There are many times more languages spoken than there are countries.
Why does Southeast Asia present so much opportunity?
To begin with, nearly every country in this region (except for Singapore) has an emerging and growing economy. Despite their geographic proximity, the countries in this region are different in other ways beyond just culture and religion, and therefore each should be entered with a separate strategy.
- Singapore & Malaysia have the most mature markets and might be a good entry point for this region. Most of the other 10 countries have markets that offer longer term opportunities.
- Singapore,which is both a city-state and an island country, is a major global commerce, transportation and financial hub and has a reputation for being an easy place to do business. At about $52,000, it has the highest per capita income in this region.
- Brunei has the second highest per capita income in this region, at roughly $37,750.
- Malaysia, with a per capita income near $12,250, ranks third, significantly behind both Singapore and Brunei.
Since much of the young population has many years ahead to earn greater incomes, they will no doubt increase their purchasing power as well. Already, their profile is attractive:
- There is high usage of the internet, computers, mobile devices.
- Those connected to the internet have greather purchasing power.
- Online purchases range from electronic devices to fashon, HBA and household items.
Then there is the Association of Southeast Asian Nations (ASEAN). This is an alliance promoting economic and political cooperation among its ten members: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. This organization is very anxious to facilitate doing business with other countries around the world and is seeking investments from, and trade with, international businesses.
With opportunity there is also risk.
What is your plan to maximize reward and minimize failure?Have you done your research?
Of course you understand that this is a large and growing market, but may have little ability to speak the language or know of the customs of people that may be as much as half way around the world from you. So what should you do?
In order to determine which countries and/or market segments make the most sense for your company to enter in this region, it would be advisable to conduct not only secondary, but also some primary research to gain the insights you need to support your decisions.
- You need to know not only about your potential customers but your competitors as well.
- Find out whether your product or service will have consistent appeal across the region. If not, what adjustments will be necessary?
- Learn what prices can be justified in each country where per capita income may vary considerably.
- Identify potential suppliers (of materials) and distribution channels. Infrastructure and logistics can present a challenge due in part the seas and mountains which makes the cost of delivery relatively higher, and should be factored into any pricing decisions.
- Without local talent or partners, entry to this market can be quite challenging. So hire local speaking people to help understand any nuances due to language, culture or other factors.
- Make sure you fully understand about the government, the economy, regulations and policies, the infrastructure and other key factors that impact your entry into this market.
In sum, the opportunity presented by this large, relatively youthful, emerging region of the world is very attractive, and with the proper planning, research and entry strategy, it can help your company to reach its growth objectives.