As one of the most diverse regions globally, economies of various colors comprise Asia’s market. The continent envelops nations in all stages of growth—from emerging countries to economic powerhouses in the world market.
Asia’s economy anticipates shakiness thanks to recent geopolitical and economic crises. China’s slowdown and nearby Russo-Ukrainian conflicts slow the region’s growth. Over the following years, International Monetary Fund’s (IMF) World Economic Outlook anticipates Asia to expand below the two-decade average of 5.5%.
Nonetheless, the forecast is that the gross domestic product (GDP) of developing Asian countries grows by 4.9% in 2023. For instance, according to the IMF report, India’s forecast sees a rapid 6.1% growth. While the figure is lower than 2022’s 6.8%, it’s still greater than Asia’s average rate.
The continent’s trajectory makes it an attractive region for investments and expansions. With that, read on to discover essential considerations when leveraging the Asian market for your business’s growth.
Advantages of Tapping the Asian Market
The world’s most populated countries are in Asia, translating to a broader customer reach for your business. Over the past few decades, many Asian countries experienced massive economic, infrastructure, and technological boom—a growth you can leverage.
With that in mind, here are some advantages of expanding or moving your business to the East.
- Strong economic growth
Asian nations have witnessed exponential growth in the past half-century. Data from the Asian Development Bank (ADB) show emerging countries’ global GDP share growing from 4% in 1960 to 24% in 2018, boosting many developing nations’ economies.
While the region’s growth may slow down due to geopolitical and economic unrest, it should retain its trajectory in the following years. In fact, geopolitical strategist Parag Khanna claims that global economic and cultural power in the 21st century is slowly shifting towards Asia.
- Digitally-minded customer base
Asia is at the helm of the world’s shift toward digitization. South Korea, Singapore, and Hong Kong are renowned for their existing digital infrastructure and advancement capabilities. Moreover, Internet penetration in Asia reached 67.4% in 2022, a staggering jump from a meager 27.5% in 2012.
Google’s e-Conomy SEA finds that Southeast Asia has 440 million internet users. Moreover, Google’s study also shows eight digital customers for every ten users, demonstrating the opportunity to tap an enormous digital customer base. Based on this data, it’s in the best interest of ecommerce, transport, online travel, and online media industries to invest and expand in Asia.
- Growing tech talent
Urban centers in Asia have recently seen an increase in tech startups and professionals. For example, Southeast Asia’s digital and tech scenes are booming as one of the world’s most “wired” regions. The region’s tech startups have a combined value of $340 billion in 2021, which experts expect to triple by 2025.
Untouched tech prospects in some emerging countries are opportunities for foreign businesses and investors. One of the advantages of tapping the Asian market is the chance to work with emerging professionals eager to advance in their careers.
- Rising tourism industry
Asia is famous for its countries’ tourist destinations, from Japan’s natural and urban environments to Turkey’s historical sites. According to ADB and World Tourism Organization’s study, pre-pandemic international tourist arrivals in Asia steadily rose from around 200 million in 2010 to more than 350 million in 2019.
While numbers plummeted when the COVID-19 pandemic began, Asian tourism is starting to recuperate, albeit unevenly. Companies in the accommodation, airline, transport, and rental industries could leverage Asia’s recovery by expanding their business there.
Challenges of Expanding Your Business in Asia
Leveraging the Asian market presents many growth opportunities for your business. However, as with many endeavors, problems that could halt your goals may arise. Below are some challenges you might face when expanding your business in Asia.
- Lacking business connections
When expanding to a foreign country, you might not have any business connections present to help you start. Setting up a network of local and foreign investors is crucial to your growth since a lack of associates can hinder your progress. Establish local connections by attending seminars, workshops, and social activities with other investors.
Moreover, many Asian countries value tradition during interactions. For example, being physically and actively professional is a must when mingling with Chinese investors. Learning these cultural nuances can help you build lasting relationships with established businesspeople in your target country.
- Cultural and language barriers
An important consideration when growing your business is connecting with potential customers. However, this cannot be easy if you can’t understand their language and, by extension, their culture.
According to WorldAtlas, Asia is home to about half of the world’s population and 2,300 diverse languages. Fortunately, English is one of the major tongues with around 300 million speakers, so hiring local English-speaking professionals can help you tap the country’s customer base more effectively.
A simple way for ecommerce brands to connect with Asian customers is to translate their sites into various languages. Moreover, researching the country’s preferences, norms, and taboos can help avoid cultural misunderstandings in copies and transactions.
- Complex local laws and regulations
It’s crucial to remember that different countries have varying regulations and licensing requirements for foreign businesses and investors. While some can help you achieve your expansion goals easier, others could hinder progress.
For example, you’d need to meet local product regulations and standards if you sell goods. The Association of Southeast Asian Nations (ASEAN) requires adherence to the Handbook on ASEAN Consumer Protection Laws and Regulations, and these are just ten countries out of Asia’s 48.
Fortunately, most Asian economies are foreign business-friendly, with low taxes and seamless processes. So, research and choose your target country accordingly to avoid legislative issues you might face.
- Setting up a local entity
Many Asian countries impose restrictions on foreign business ownership, complicating the establishment of local entities. For instance, while countries such as China and Singapore allow 100% foreign ownership, the Philippines limits it to the renewable energy sector.
You can also maximize Asia’s resources by leveraging local talent. Hiring locals helps you mix employees from home with the country’s professionals, which helps build your brand’s reputation as a significant employment opportunity.
Economic Achievements of Top 3 Asian Markets
The past decades have seen significant changes in the world’s economy. Experts expect Asia’s global GDP share to exceed 50% by 2030, hence the saying, “The Future is Asian.” Here are some economic achievements of the top three Asian markets.
China has the second-largest GDP, following the United States. The country’s economy is open to international trade and permits foreign investors to own 100% of Chinese companies. Thanks to this, China received $163 billion worth of foreign direct investments (FDI) in 2020, cementing the country as an essential player in the world market.
Considered one of the world’s business hubs, Singapore provides investment opportunities for businesses. The country’s low corporate tax rates and business-friendly policies make it an ideal center for local and foreign companies. As a result, GlobalData rates Singapore as the third least risky country for investments.
Malaysia is one of the world’s most open economies, with a focus on exportation. The country’s workforce enjoys employment and income growth, while economic growth has averaged around 5.4% since 2010. Experts project Malaysia as a high-income economy by 2024, especially with less than 1% of the country’s population experiencing extreme poverty.
Growing Your Business in Asia
Expanding your business in a foreign land, let alone one as diverse as Asia, is a significant milestone for your company. However, while doing so has its advantages, there are some issues you need to consider.
Leveraging Asia’s business landscape can do wonders for your brand, given the region’s large customer base and growth opportunities.
While most Asian countries aren’t as developed as the West, their growth over the past decades proves that the East is close behind. Soon, Asia’s economies may dominate the world, so your business needs to leverage its prospects beforehand to maximize the opportunity for advancement.