While the year 2020 and the impact of the coronavirus (COVID-19) will have lasting effects on the way that we do business, it’s still important to reimage business goals as we move forward into 2021. Asia is still home to some of the most powerful markets. Despite the near-term challenges, the region’s economies are progressively capable of producing innovation and higher-end services. Asia has invested more in digital than their counterparts around the world. With around 60% of the world’s population, Asia and ASEAN remain at the top of the list for companies looking to expand their business and services.
Reasons to Expand your Business to Asia in 2021
1. Asia has the largest market
The Asia-Pacific is responsible for the majority of the new members entering the middle class and a vast population in Asia create a large consumer market for foreign businesses. One of the biggest developments in the last few decades has been Asia’s booming consumption along with the integration of global trade and talent. For 2021, Asia’s economies will continue to be vital in this development especially with the region expected to contribute roughly 60% of global growth by 2030. This will play a big role in shaping the global economy. Asian countries also tend to have a high consumption rate when it comes to foreign products and services.
2. Achieve a high level of diversification
Expanding to Asia comes with opportunities to expand a business’s area of investments. As your business explores new markets across Asia, it will get the chance to fine-tune operations and allow for more operational sustainability. For example, businesses that transition and scale in this way can balance any negative growth in a market by operating successfully in the new market. Asia also has a large talent pool to choose from. International labor can offer your company distinct advantages in terms of advanced language skills and diverse educational backgrounds. With the growth that Asia is experiencing, expanding to the region can add an additional layer of stability as compared to companies that are limited to one country.
3. Asia’s startup scene is on the rise
In the last few years, Asia Pacific’s startup economy has gone through a major transformation as many rising tech unicorn startups are being valued at US $1 billion or more. The region has grown to having 30% of the world’s top startup ecosystem. Cities such as Seoul and Tokyo have broken into the top 30 ecosystems for global startups. China has four cities in the top 30: Shanghai, Beijing, Shenzhen, and Hangzhou. Countries like Singapore and Vietnam are in the race to become the next big tech scene with the support of their governments offering major incentives for investments. International investors continue to pour money in the region due to the rise in consumer purchasing power and the rapid growth of the region.
4. Benefits of the free trade agreements
The Association of Southeast Asian Nations (ASEAN) have taken major strides when it comes to reducing obstacles for all the organizations involved with their trade agreements. ASEAN has also signed 5 other major free trade agreements with other countries in the region. These agreements have led to a streamline of regulations and lower tariffs on goods at rates between 0% and 5%.
By taking advantage of these agreements, firms can have an easier avenue for finding new markets for products and possibly increasing the overall output of the business. The Regional Comprehensive Economic Partnership (RCEP) which was concluded amongst 10 ASEAN countries, China, Japan, South Korea, New Zealand and Australia, is now the biggest trade agreement in the world, further enhancing the trade pool in the region. SMEs can grow their businesses, create new job opportunities, offer their customers more services, and generally help to promote economic growth and sustainable development across the region.
5. Tax incentives and special economic zones
With tax incentives and special economic zones, the ASEAN region presents new opportunities for foreign businesses and investors. Asian governments have been promoting and encouraging special economic zones in order to facilitate greater trade. These zones include industrial parks, technology parks, export processing zones, and different types of innovation areas. Incentives are set up for all foreign entities that set up shop and many governments have been creative with their incentives.
For example, Indonesia operates 13 economic zones that offer opportunities in manufacturing, tourism, natural resources, and agriculture. Furthermore, Thailand has tax holidays for car manufactures, and Singapore has expanded their incentives to oil refining and chemical manufacturing companies. Each country has its own incentives that you can use to make sure that you get the most out of your business efforts and investments.
What to Consider When Expanding to Asia
Various market opportunities
Since Asia is one of the most sought out markets, identifying the market that makes the most sense for your business is one of the first essential steps that you should consider. It is vital to understand how the market in different countries operates. Whether you are interested in the growing markets of Southeast Asia or prefer to setup in the more established markets of Japan, China, or South Korea, it’s crucial to properly conduct your research. It’s also important to consider how the market can effectively increase your growth objectives through the available opportunities and resources.
Available foreign talent
Finding the right specialized talent for the Asian market or any foreign market for the matter can be hard to find in your home country. One of the main benefits of turning to the Asian region is the large and diverse talent pool that it offers. Your business can leverage local talent to achieve your expansion goals. Employing the local talent helps with language barriers and business customs. This will also help with reducing the costs of bringing employees from your home country and the training that comes with it. Talent within the local market have a better understanding of the industry and business ecosystem as well as the ability to provide global service in the same time zone.
The Asia Pacific region is the only region that is expected to recover to pre-COVID levels in 2021 and there are still a wide range of opportunities there for businesses to take advantage of. Asia will continue to showcase high growth rates and the opportunity of growth within these regions are usually a first-come-first-serve opportunity. As previously mentioned, each country has its own regulations regarding employment and compliance, so finding a well-informed partner can be the key when entering the Asian market.
How INS Global can Assist your Business
INS Global is a human resource consultancy that is able to assist your business in its expansion. We offer a range of services that can assist your business and reduce its administrative burden, our services include PEO, invoicing, recruitment and many more. Get in contact with INS Global today and let us provide your business with the best possible solutions, to simplify your business expansion.