From making quick connections, navigating local requirements and collaborating across a global network, having a partner with deep expertise and a long history aids entrepreneurs’ entry into Asia.
For all the uncertainty and turbulence arising from the Covid-19 pandemic, one thing is sure: this is still the Asian century.
The term was coined in acknowledgement of the region’s rapid economic growth; if the 19th century belonged to Europe and the 20th to the US, the 21st century is all about Asia.
The health crisis has underlined the challenges, particularly given the staggered trajectory of the post-pandemic recovery. Over the longer term, however, the global centre of gravity continues to shift east.
The entrepreneurs we work with see upside in these international opportunities, and a business case for expansion into the region. But in order to succeed, there are important considerations you should know about, which can affect not just the future of your business, but your personal wealth as well.
The effect of the pandemic on growth and trade will be seen in Asia for some time to come; while forecasts have slowed, they remain striking. Asia ex-Japan is projected to grow by 7.4 per cent this year and 5.3 per cent in 2022.1
And despite concerns over the pace of the recovery from the pandemic, our 2021 growth forecasts for India and mainland China stand at 7 per cent and 8.5 per cent respectively. That compares with our global growth expectations of 5.8 per cent in 2021 and 5.4 per cent for advanced economies as a whole.2
Asia is now home to more than half the world’s population and is predicted by 2040 to account for around 60 per cent of global growth. It will also be responsible for 90 per cent of the 2.4 billion new members of the middle class entering the global economy.3
In the ASEAN region – comprising Southeast Asian countries including Singapore, Malaysia, Vietnam, Thailand and Philippines – around 65 per cent of the population will be classed as middle income by 2030, taking spending up to USD2.3 trillion.4
It’s this burgeoning middle-class demographic that presents many of the opportunities for entrepreneurs seeking to expand in the region. There is increased scope for overseas companies not only to serve those growing middle-class markets in Asia, but also to supply domestic firms with the in-demand high-value goods and services they need.
For businesses looking to enter Asia or expand their existing operations in the region, government policies and sector incentives can play an important role. Not only does a supportive trade programme provide reassurance and inspire confidence, but it can be a source of practical value too.
World Bank research ranks Singapore, Hong Kong, Malaysia, Taiwan and Thailand as the easiest Asian countries in which to do business.5 It cites favourable government regulations, tax incentives and a growing talent pool among the reasons why more companies are expanding into Asia.
More broadly, government economic plans can support both strategic sectors, such as technology, and the wider trade infrastructure. Perhaps the clearest example is China’s latest Five-Year Plan, focusing on areas including the green economy, technological innovation, boosting the domestic economy and improving well-being and health through investment in education and healthcare.
For those seeking to unlock the many opportunities presented by Asia, an understanding of the regulatory, cultural, legal and practical differences that can affect their business and their personal wealth is essential.
For instance, rules around foreign ownership of businesses vary between different countries and are subject to change. Full foreign ownership is permitted in some countries, while in others it’s possible for specific types of companies or certain industries. In still others it’s common to require at least some level of local ownership in most sectors.
Capital requirements, governance standards, licensing rules, intellectual property protection, labour laws and tax legislation are among the other ‘need-to-knows’ in different countries.
Consumer preferences and trends vary widely across the region too, not least in the wake of a pandemic that has forced some sectors to make rapid changes that may or may not endure.
Then there are the cultural considerations. Companies can tick all the other boxes, but failure to observe certain ways of doing things can seriously damage their prospects of success. Cultivating relationships can be more fundamental to getting business done in Asia than in Europe, for example. Failure to observe what might seem trivial differences, such as etiquette on greetings, gifting, eye contact and exchange of business cards, can prove similarly costly.
In other words, it pays to partner with someone that knows the pitfalls to look out for as well as the opportunities available – someone who not only understands Asian markets but has an established local presence. It can make all the difference when you are eyeing expansion into the region.
As the world changes as a result of the Covid-19 pandemic, it’s more important than ever to know what’s happening on the ground in different countries and markets. This is where HSBC Global Private Banking’s worldwide network and Asian roots become a true asset.
If the business case for expanding into Asia is a compelling one, so too is the need for a banking partner that can make it happen: one than can draw upon the breadth and capability of its large global network as well as people who can speak the local language, navigate different cultures, read the competitive landscape, overcome potential barriers and understand what businesses and customers are looking for.
HSBC Global Private Banking is subject to financial and other eligibility criteria.
To learn more, contact us or your Relationship Manager.
1HSBC Global Private Banking, 26 August 2021 ↩
2HSBC Global Private Banking, 26 August 2021 ↩
3“More than half the world’s population is now middle class”, Financial Times, 2018 ↩