Making the leap to capture regional opportunities

Regionalisation is an important step towards bringing businesses to the next level of growth. With Asia becoming increasingly interconnected, the opportunity to enter new markets can lead to substantial growth in revenue and scale. It also helps firms diversify their revenue streams in an increasingly volatile operating environment.

Having lost momentum during the pandemic, businesses are now making up for lost time by seeking opportunities beyond their home shores. In 2022, Enterprise Singapore (ESG) estimated that some 2,000 Singapore businesses embarked on internationalisation, up 25% from the previous year.  

With more companies spreading their wings on the global stage, we explore the benefits and challenges of regionalisation. 

The Benefits of Going Regional

1. Expanding customer base: Entering new markets can help businesses tap into larger and more varied customer bases. Asia is a vast market with a population of around 4.75 billion, with ASEAN alone home to 650 million people.
   
   The continent’s consumer market is vast and diverse, providing ample opportunities for businesses to scale and boost their revenue. By diversifying into new markets, Businesses also mitigate the risks of operating in a single market.
    
2. Increased revenue: The ability to grow one’s revenue is another significant benefit of regionalisation. Sectors like e-commerce, digital services, and health-related industries have seen rising demand in many Asian countries, providing opportunities for businesses in these areas.
    
   For instance, China’s digital economy was valued at nearly US$7.3 trillion in 2022. 
   Companies that tailor their offerings to meet the local demands and preferences of their target markets can capture a significant market share, leading to increased sales.
    
3. Reducing Costs: Operating in countries with lower operational costs can help reduce overall expenses. This is particularly relevant in manufacturing and production, where neighbouring countries might offer lower costs due to cheaper resources and labour. For example, manufacturing costs in countries like Indonesia is often lower than in Singapore, which can lead to significant savings.

Barriers to entry

1. Navigating regulatory hurdles: Each country in Asia has its own set of business regulations, which can be daunting to newcomers. Some of these may not align with global standards, making it critical for businesses to thoroughly understand and adapt to the legal frameworks in their target markets.
    
2. Cultural integration: Understanding and integrating into a new cultural landscape is critical for success when entering new markets. The region is culturally diverse, and business practices vary widely from country to country. Businesses must navigate these differences to build effective local partnerships and customer relationships.
    
3. Language barriers: While English is widely used in business across Asia, local languages such as Bahasa Indonesia and Mandarin Chinese play central roles in their respective markets. Proficiency in the local language can significantly enhance communication and integration efforts.

Overcoming Challenges

1. Build Local Partnerships: Building strong local networks and partnerships can be an effective way to overcome cultural and other barriers. Local partners can provide valuable insights into the consumer behaviour and business etiquette of the region.
    
2. Language and Cultural Training: Investing in language and cultural training can facilitate smoother interactions and negotiations, building a more meaningful connection with local partners and consumers. Businesses can also leverage technology such as digital marketing tools to tailor products and messaging according to local preferences.
    
3. Understanding Regulatory Environments: It is critical for Businesses to conduct thorough due diligence before entering a new market, and possibly engage local legal and business consultants to navigate the regulatory landscapes effectively.

Bridging Business Horizons

Another initiative that businesses can tap on to help them on their regionalisation journey is the Bridging Business Horizons (BBH) Programme from DBS BusinessClass.

BBH leverages DBS’ extensive regional network to support companies in navigating expansions with insights, networks and tailored solutions in the discover, develop or deepen phase of their regionalisation roadmap.

In the discovery stage, it is crucial to gather insights and understanding about market landscape. To broaden their knowledge, the programme offers resources from factsheets to engaging events.

And as the company develops their strategy for market entry, the programme curates partners and solutions to help them make informed decisions and capitalise on the opportunities.

Finally, when companies are ready to deepen their presence in the new market, they can leverage on the programme to introduce local networks and strategic partnerships to scale their business.

To be part of Bridging Business Horizons, please visit here.