Expanding to Southeast Asia: challenges and options 

Tech Nation, December 10, 2021 5 min read

This article was written by Steve Dawson, Founder and CEO of Asia Market Entry.

When businesses are looking at expanding to Southeast Asia, they often have questions about the viability of the market. Let me share why we think you, as UK tech companies, should be prioritising Southeast Asia, as well as sharing some of the realities of being successful here.

The opportunity

The Southeast Asian market is vast, with nearly 700m people. And with such a huge number of people, it is ecommerce that is driving the region’s growth and technology adoption. Eight out of 10 people in the region have made at least one online transaction in the past year and with this level of digital adoption, the entire supply chain in the region is now investing in technology to be able to service their customers or back-office operations. Technology from the UK that can improve supply chain, logistics, or the way in which transactions are made is likely to land very well into the region.

And with this growing reliance on financial compliance, regtech has also begun to thrive, especially with regards to cross border credit scoring, KYC (Know Your Customer) and Anti-Money Laundering where each country has very different regulatory requirements that need to be handled.

Alongside ecommerce, other industries are also thriving. Edtech is huge across the region as governments race to train the people of their nations. Healthtech is also growing as consumers seek convenience and are more willing to pay for health products in the face of the pandemic. Environment, Social and Governance (ESG), as in most places, is also a large growth area in Southeast Asia with vast amounts of funding being put towards getting to Net Zero. Then, supporting all this technology adoption are of course cloud, infrastructure, and professional services.

The biggest challenge

Despite all this positivity and potential opportunity, the region has a very real problem – the number of available jobs is more than the available talent pool.

Over the past year in Singapore, the region’s hub, the job market has grown out of control – this is despite a state of semi-lockdown and borders largely closed. Tech giants like Google, Microsoft and Facebook continue to grow and local tech companies such as Grab, Razer and Lazada have also now emerged as global brands meaning that local candidates are spoiled for choice. Working for a big logo is attractive to most Singaporeans, so new companies coming into the market should expect to pay over the odds to secure first hires in the current climate.

Having hired, companies should ensure they allocate plenty of training and support to bring their  new team up to the standards expected from a new starter in the UK. It can take time to bring local hires into an international growth mindset since many have not had the international experience that is more normal when hiring in the UK.

Also bear in mind that Singapore now accepts fewer foreigners on work visas than previously. With the country’s best interests at heart, the government here is encouraging international firms to hire and upskill Singaporeans. The message from the government is clear – hire locally and plan for a small quota of “expats” in your team.

Unfortunately, this does mean that the talent problem is going to get a lot worse before it gets better, and I personally think that companies can expect this challenge to last for at least the next three years while the local talent market builds to the point that there are enough qualified people for all the available jobs.

The options for success

The hiring challenge can lead to bigger problems. Without a team on the ground, getting your first deal can be difficult in Southeast Asia. Yes it is more complex to set up an entity in region and hire staff on the ground, however this does have a major advantage in being a clear sign of your commitment to the region, something which is culturally very important in a place that is used to foreigners “Flying in and flying out” to do business deals.

There are however a few immediate solutions a company can take should they be in this position where hiring or setting up an entity delays this move.

Firstly, you can use an outsourced business development firm like Asia Market Entry that can assist in generating your first pipeline and revenue in the region. An active pipeline is also important to being able to attract talent, so there’s no reason you can’t start local business development efforts while in the process of hiring your local team.

In addition to this, if you don’t yet have an entity you can also find talent and hire through a Professional Employment Organization (PEO) that will take care of all the operational red tape of hiring people in new countries.

The other way to secure your first deal without people in place is to sell via the channel – via resellers or distributors. The pandemic has no doubt accentuated the channel model in Asia. With travel restricted and the inability to meet people to build trust, it is increasingly difficult to sell directly unless via a partner that has an established reputation and relationships with their customers in the region. Relationships are key to doing business in Asia, so if you are unable to make them yourself, finding partners that can is somewhat mandatory.

However, that does not mean you can just go out and sign some partners and that they will start selling for you. Partnering is complex, so before doing anything, you will require a well-thought-through partner program that you can take to partners in the region. You will need to recruit partners with a value proposition that is relevant to them. How will you help them build their business? Don’t make the mistake of making the conversation all about you – many do, and they fail.

Once partners are in place, you will also need to think about how you are going to ensure your partners are enabled and that your solution is top of mind amongst the field sellers. Resellers or Distributors will often have thousands of other products in their portfolio, so you need to do your homework as to how your solution helps your partners’ salespeople hit their quota. How will you personally help them from an incentive perspective? Once you crack that, that’s when you’ll see behaviour change and pipeline will begin to appear.

At that point pipeline starts to appear through the channel, you’ll need to support your partners on their opportunities – forecasting, demos, local sales support, contract negotiation, and general partner enquiries. This is when you need to be ready and have someone locally in place to assist.

Final words of advice

As you can see, there is more than one way to enter into Southeast Asia and win your first deal. We recommend that you do your research and choose the option that best suits your business and the stage you are at in your expansion plans. Asia Market Entry together with Tech Nation are here to help you with deciding what go to market plan will work for you.

About Steve Dawson:

Steve has 25 years of experience working in a variety of project implementation and business development roles. Moving to Singapore in 2012, Steve was tasked with setting up the Asia Pacific operations of a technology company as the first employee in the region. After experiencing the challenges of doing this first-hand, in 2016, he set up Asia Market Entry, with a vision of creating a company focused on helping international technology companies build a footprint in the Asia Pacific region without having to set up locally themselves.

Tech Nation International is helping UK scaleups de-risk and accelerate international growth – with a current focus on Asia Pacific markets. Through a range of activities, UK scaleups have the opportunity to accelerate access to capital, customers and talent, so that you can land and expand successfully in Southeast Asia.

This work is part of the UK government’s Digital Trade Network. If you are ready to take your company overseas, register your interest for support here.

Content Sources

  1. Google, Temasek and Bain, e-Conomy SEA 2021