Five reasons why companies will expand globally

Asia remains an attractive destination for many businesses. The Regional Comprehensive Economic Partnership (RCEP) – the world’s largest trade deal is expected to boost the region’s post-pandemic economic recovery.

International expansion

RCEP, signed by 15 Asia Pacific countries, will cover a market of more than 2.2 billion people or 30 per cent of the world's population. According to market research firm Euromonitor, Asia Pacific's e-commerce sales are expected to double by 2025, reaching $2 trillion.

There are clearly significant growth opportunities for businesses embarking on international expansion in 2022. In this article, we cover five reasons why going global should be a part of your business plan.

1. Increase revenue potential

The world's largest companies are global. International expansion offers the chance to explore new emerging markets, expand the customer base and thus, increase revenue potential.

Cross-border e-commerce is rapidly becoming the new norm. The rise of the platform economy has made it easier for big or small brands to sell directly to the customer without a traditional storefront.

The internet economy is expected to triple in size to $300 billion in Southeast Asia by 2025. Lazada, Southeast Asia's e-commerce owned by Alibaba, recorded over 90% year-over-year order growth for the 2021 Q1 quarter. Even with lockdowns lifted in some countries, many shoppers continue to shop online.

2. Diversify your supply chain to overcome disruptions

The supply chain shock that first started during COVID-19 has exposed vulnerabilities in the production strategies of many businesses.

According to an April 2020 survey by the Institute of Supply Management (ISM), 95% of US organisations experienced supply chain disruptions across their supply chain due to the COVID-19 pandemic. China reported a 222% uptick in the average time for materials to be delivered. Korea followed closely behind at 217%. As companies can no longer rely on a small group of suppliers, diversifying the pool ensures resilience in case of a similar global shock.

For example, manufacturing multinationals, such as Infineon technologies and Micron, base their regional and global supply chains out of Singapore. These businesses leverage Singapore's global network of logistics multinationals to build resilience in their supply chain. At the same time, they can cater to regional customers with speedy fulfilment and faster response time.

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 first emerged in 2009 and had over 4,587 stores worldwide in 2020. By focusing on low-cost aesthetic items, it was able to transcend cultural barriers and target value-conscious customers in over 70 countries.

The main challenge MINISO faced was to target a market that existed across diverse countries. By partnering with brand ambassadors that are recognisable in their target markets, MINISO was able to increase social media interaction by 300% and boost online and offline sales in the middle of a pandemic.

Building an international brand presence can also act as a strategic boost for businesses, allowing them to overcome dependency on domestic markets while effectively addressing their overall market position.

4. Gain a competitive advantage

A competitive advantage can distinguish a company from its competitors and build stronger brand loyalty.

Thailand, for instance, is actively promoting technology-driven innovation.

In the first nine months of 2020, Thailand's electronics and electrical (E&E) industry has attracted 106 new investments, rising from 94 projects in 2019. Companies with an appetite for innovation can benefit from the privileges offered by the Thai government to grow their innovation arm. Firms spending more than 1% of total sales on research and development (R&D) in the first three years will be eligible for corporate income tax exemption for up to five years.

5. Balance out seasonal fluctuations

Foreign markets can counter dips in demand in your home market. Going global allows companies to tap into additional revenue streams and normalise the production peaks and troughs to meet varying seasonal demand in different markets.

While going global brings attractive market diversification and expanding market share, there is an added layer of complexity with new regulations, administrative requirements, and overhead costs.

There are many reasons why companies may look to go global. To do it successfully, however, it requires strategic planning, time, resources and on the ground partners.

Hawksford, can provide you with the local expertise to address your in-country and around the clock needs, while supporting your business as it grows internationally. Through a combination of offices in major financial hubs and an extensive network of partners in established and emerging APAC locations, we can advise you on all aspects of business set-up and management, from market entry to keeping your business compliant with the changing regulations in multiple jurisdictions.

Hawksford is an established facilitator of market entry and business expansion into Asia-Pacific.

Our experts enable you to enter, establish and structure your business in new and diverse markets, through our alliance of vetted partner firms. Whether you are testing a market, or expanding at a rapid pace through joint ventures, investment projects or M&A, we help you manage the risks & complexities of business expansion.

International expansion solutions:

• Expansion Advisory
• Corporate Structuring
• Accounting & Tax
• Business Immigration & Mobility
• International Payroll
• Corporate Governance & Compliance

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