Doing Business in ASEAN - 3 Tips to Follow
A Business Funnel to start selling in ASEAN
Doing business in ASEAN; this is what we will evaluate. We will give 3 tips to follow to doing business in ASEAN. We want to encourage the reader to consider and take into consideration in order to approach these markets.
ASEAN markets are a trade-driven conglomerate of 10 Countries, quick changing and fast to adapt to the new challenges of the future. ASEAN includes more than 660 mln potential Customers and partners, the economic zone had recorded (data pre-pandemic) a 5%+ average GDP growth.
In the following paragraphs we will list-out those few potential tips that most of the organization should follow or at least take into consideration:
- Market analysis via a Sales Representative
- Establishing a business unit in ASEAN
- Being active with digital marketing
Let’s see more in detail here below.
1 - Market Analysis via Sales Representative
Understanding the market and its specific needs is a key factor to consider whenever an outsider is willing to establish any form of relationship or business relationship in a foreign market. This is especially true when we consider Southeast Asian Countries. ASEAN is culturally, politically and economically very different from Western Countries.
This situation is particularly emphasized when foreigners are approaching ASEAN for the very first time, when they find unbreakable barriers between them and their counterpart. It is then becoming very tough to do business in ASEAN.
Foreign Companies need, then, updated and reliable info to consider investing in Southeast Asia. The Sales Representative is a key point in order to succeed. DB Business Development has published an entire webpage. The focus was firstly about the main activities to enforce to start doing business in ASEAN such as:
- Collecting info from the market
- Listing our potential Customers/Partners
The first action in order to step into these markets is selling products directly to the importer/distributor located in ASEAN. This is, mostly, what the Sales Representative is all about.
The export is the easiest and most economical way to start doing business. The process does not require the import process. It does not require warehouse/offices or any other stable presence in the market. It does not require to manage an entire organization in terms of staff.
This full mechanism is giving information back and helps the decision process whether to commit more in ASEAN or not.
2 - Business Unit in ASEAN
Supposedly the feedback from the export process is satisfying and positive so that the second step is to establish a business unit in ASEAN. This is resolving in setting up a local branch which needs:
- financial investment
- Company formation
- warehouse set-up
The Company will present itself as a local extension of the foreign HQ. It will be authorized to present and sell the products and services in the local market.
This implies an initial budget, as starting financial exposure, in order to connect the dots and set-up the local Company.
This new entity is, most of the time, already able to legally and directly trade in the market and it is the first and main step to create the organization that will be able to successfully run the business.
The set-up of the warehouse and the related organization must go hand in hand with the Company formation.
A "must do" to approach ASEAN markets
Whether you sell physical products to local distributors or final customers, or you are only selling in e-Commerce platforms, you always need to “build your house first”. Many ASEAN Countries have specific laws about labor regulation so another main step is to properly organize the staff (which is the “brick of your house”) to properly conduct the business.
In the normal day-by-day business you are approaching local Companies, often family-owned and small enterprises. We should focus on the fact that in order to do business with some of them, you shall have local staff to communicate with them to mitigate the “cultural impact”. This will help you to overcome the language issues.
Most of ASEAN Countries are ranking “low” or “very low” in English proficiency. Apart from Singapore and The Philippines, when you are dealing with the other Countries in ASEAN, you need local staff to help you run the business. This is a “MUST DO” and it represents the trade off between succeeding in the business or failing.
3 - Being active with Digital Marketing
ASEAN is catching up with digital literacy, investing funds and efforts to improve digital skills in any areas of each specific Country. Same as in other parts of the world, Southeast Asian Countries are getting more and more “social”.
As per our direct experience, the Consumers are likely to buy online for a couple of different reasons:
- better prices
- more purchase options
It has already been a few years that the marketing is shifting to digital, the trend is continuing (and there is no reason why it should not continue in the long run). This is something you should consider!
We have met a few Companies which are not really aware of the potential of digital in ASEAN and rely on more traditional marketing tools and this is slowing down your potential sales.
Going digital also means:
- more efficient budgeting
- traceability of the results
If we assume as a fact that the digital is the future trend compared to traditional marketing and you have more control in terms of audience targeting, budgeting and results we clearly understand that digital marketing is a tool that every new comers shall implement in ASEAN.
What we have just said above might seem an obvious statement but as per our direct experience… it is not!
Digital marketing shall be implemented either in the early stage when you are planning to approach ASEAN markets (via market research with a Sales Representative) or when you have established your own local branch.
You need to create brand awareness as soon as you are considering ASEAN as a potential market destination for your products or services. The Consumers will get to know you so that you can drive them bit by bit down the funnel until the action.
We believe that the best practice would be to integrate the digital marketing with your current business. You have to make sure that both are running hand in hand to avoid mismatching between your core business and the Clients perception.
This article does not want to be an “in-depth” analysis of the business in ASEAN, because clearly it is not.
We rather want to communicate a few tips that are coming from our own experience and day-by-day living ASEAN markets.
We hope that it might be useful for you to better understand these amazing markets.
If you want to know more you can contact us HERE.
Bangkok May 30th, 2021
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