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Asia remains an attractive destination for many businesses. TheRegional Comprehensive Economic Partnership (RCEP) – theworld's largest trade deal – will take effect in January2022 and is expected to boost the region's post-pandemiceconomic recovery.
RCEP, signed by 15 Asia Pacific countries, will cover a marketof more than 2.2 billion people or 30 per cent of the world'spopulation.
According to market research firmEuromonitor, AsiaPacific's e-commerce sales is expected to double by 2025,reaching $2 trillion.
There are clearly significant growth opportunities forbusinesses embarking on international expansion in 2022.Inthis article, we cover five reasons why going global should be apart of your business plan.
#1 Increase revenue potential
The world's largest companies are global.International expansion offers the chance to explore newemerging markets, expand the customer base and thus, increaserevenue potential.
Cross-border e-commerce is rapidly becoming the new norm.The rise of the platform economy has made it easier for bigor small brands to sell directly to the customer without atraditional storefront.
The internet economy is expected to triple in size to $300billion in Southeast Asia by 2025. Lazada, Southeast Asia'se-commerce owned by Alibaba, recordedover90%year-over-year order growth for the 2021 Q1quarter. Even with lockdowns lifted in some countries, manyshoppers continue to shop online.
#2 Diversify your supply chain to overcome disruptions
The supply chain shock that first started during COVID-19has exposed vulnerabilities in the production strategies of manybusinesses.
According to an April 2020 survey by theInstitute ofSupply Management (ISM), 95 per cent of US organisationsexperienced supply chain disruptions across their supply chain dueto the COVID-19 pandemic. China reported a 222 per cent uptick inthe average time for materials to be delivered. Koreafollowed closely behind at 217 per cent.Ascompanies canno longer rely on a small group of suppliers, diversifying the poolensures resilience in case of a similar global shock.
For example, manufacturing multinationals, such as Infineontechnologies and Micron, base their regional and global supplychains out of Singapore. These businesses leverageSingapore's global network of logistics multinationals to buildresilience in their supply chain. At the same time, they can caterto regional customers with speedy fulfilment and faster responsetime.
#3 Build your brand presence and grow your footprint
Social media has eased brand recognition across borders.
MINISO is a Japanese-inspired Chinese retail brand, which firstemerged in 2009 and had over4,587 storesworldwide in2020. By focusing on low-cost aesthetic items, it was able totranscend cultural barriers and target value-conscious customers inover 70 countries.
The main challenge MINISO faced was to target a market thatexisted across diverse countries. By partnering with brandambassadors that are recognisable in their target markets, MINISOwas able to increase social media interaction by300percentand boost online and offline sales in the middle of apandemic.
Building an international brand presence can also act as astrategic boost for businesses, allowing them to overcomedependency on domestic markets while effectively addressing theiroverall market position.
#4 Gain a competitive advantage
A competitive advantage can distinguish a company from itscompetitors and build stronger brand loyalty.
Thailand, for instance, is actively promoting technology-driveninnovation.
In the first nine months of 2020, Thailand's electronics andelectrical (E&E) industry has attracted106newinvestments, rising from 94 projects in 2019. Companies with anappetite for innovation can benefit from the privileges offered bythe Thai government to grow their innovation arm. Firmsspending more than oneper centof total sales onresearch and development (R&D) in the first three years will beeligible for corporate income tax exemption for up to fiveyears.
For more information about business expansion into Thailand,pleasedownload our guide.
#5 Balance out seasonal fluctuations
Foreign markets can counter dips in demand in your home market.Going global allows companies to tap into additional revenuestreams and normalise the production peaks and troughs to meetvarying seasonal demand in different markets.
While going global brings attractive market diversification andexpanding market share, there is an added layer of complexity withnew regulations, administrative requirements, and overheadcosts.
There are many reasons why companies may look to go global. Todo it successfully, however, it requires strategic planning, time,resources and on the ground partners.
Hawksford, can provide you with the local expertise to addressyour in-country and around the clock needs, while supporting yourbusiness as it grows internationally. Through a combinationof offices in major financial hubs and an extensive network ofpartners in established and emerging APAC locations, we can adviseyou on all aspects of business set-up and management, from marketentry to keeping your business compliant with the changingregulations in multiple jurisdictions.
The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circ*mstances.
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