Successful Strategy to Entry ASEAN Market

by | Nov 14, 2023 | Fulfillment

Southeast Asia is one of the fastest-growing regions in the world, having a population of around 600 million people. Increasingly more companies, both in the B2C and B2B sphere, target the market to capitalize on its expanding manufacturing activities and booming middle class. Yet, the region is also comparatively complex, comprising eleven countries with different languages and levels of development. Each market also has different demands in terms of product categories and price levels. In this article, we review the most interesting countries for market entries in the ASEAN market and what successful strategy to expand your business.

The Most Interesting Countries for Market Entries in Southeast Asia

Southeast Asia comprises eleven countries with different levels of development, languages, ease of doing business, and import regulations. This makes the region comparatively difficult to enter as pre-assessments are required to find the most suitable markets.

Compare this to China which is a single market and where the same language is spoken nationwide. Once you’ve managed to register your products locally, you have no obstacles to selling your products to local businesses or consumers.

Besides, not only do we have to consider country-specific characteristics when choosing an ASEAN market, but also your products. Selling machines and equipment for the wood industry is undoubtedly more suitable for Vietnam, considering its large exports of furniture and wooden raw materials.

At the same time, Singapore might be more suitable for exclusive skincare brands, as the market is more developed, and citizens have a stronger purchasing power. Luckily, not all eleven countries are interested for market entries in Southeast Asia, which makes the assessment easier. The countries we will review in this article include Singapore, Vietnam, Thailand, Malaysia, and Indonesia.

1. Singapore

Despite its small size and population of just 5.8 million, Singapore has built a modern and diverse manufacturing base in industries like electronics, aerospace, precision engineering, and biomedical sciences.

It’s also renowned for its manufacturing capabilities in chemical manufacturing, having more than 100 global petroleum, petrochemical, and specialty chemical companies present.

Manufacturing contributes to a whopping 20% of the country’s GDP, totaling SGD 372.4 billion (USD 270 billion) in 2020. That’s considerably high and on par with many of its developing neighbors.

In Hong Kong, for instance, the manufacturing output is less than USD 4 billion and 1.5% of Singapore’s.

What attracts businesses is the skilled and educated labor pool, English-speaking population, transparent juridical system, and ease of doing business. Singapore has continuously been ranked on top of the World Bank’s yearly reports on ease of doing business.

Moreover, it’s a tax haven with a flat corporate income tax rate of just 17% (with part of the first 300,000 SGD exempted) and no capital gain tax.

With that said, what makes Singapore a less attractive country for B2B sales is the small population, developed economy, and its focus on advanced manufacturing. Even if its neighboring countries are less developed and harder to navigate, the large populations, booming manufacturing industries, and developing economies make them more interesting for market entries.

2. Malaysia

Malaysia shares many advantages with Singapore such as the close distance to global shipping lines, its ease of doing business, and the English-speaking population. Disposable incomes are also higher on average here compared to other Southeast Asian countries.

Electrical products, electronics, machinery, and related equipment contribute to much of the country’s manufacturing industry. Chemicals and petrochemical production also accounts for around 10% of the output.

Just keep in mind that its population of just 33 million and lower economic growth is a disadvantage. Upcoming markets, like Vietnam, have a highly active manufacturing sector, including electronics, furniture, machinery, agriculture, and more. This allows for market entry opportunities as local companies seek to buy foreign products.

Another challenge for Malaysia-based businesses is its taxation system. The corporate income tax is currently 24% which makes Malaysia one of the countries that have the highest tax rates in the region. By comparison, Vietnam has a corporate income tax of 15% to 20%, Singapore 17%, and Thailand 20%.

3. Indonesia

Indonesia is the second-largest beneficiary of foreign direct investments in Southeast Asia, accounting for around 14%. The manufacturing industry is a large contributor to the economy with a focus on the production of textiles, electronics, automotive, palm oil, petroleum, minerals, and coal.

Contrary to Malaysia, Indonesia also has a major benefit thanks to its big population and future growth prospects. This allows companies to access a wide and well-diversified pool of consumers.

As a result, market entries with a focus on selling products related to the above industries should be a priority. Besides, worth highlighting is the growth of Indonesia’s digital economy, which offers opportunities for FinTech companies, digital banking, and SaaS solutions.

Looking at consumer goods and B2C sales, companies now also seek to target Indonesia’s growing upper and middle class, especially high-end goods and services.

Indonesia also has the highest number of Unicorns in Southeast Asia, including GoJek, J&T Express, and Traveloka. The ease of doing business has been improved in recent years, the corporate income tax reduced, and we’ve also seen an introduction of a single submission system for business registrations.

Manufacturing in Indonesia is one of the most challenging issues when doing business on bureaucratic inefficiency and red tape. Regardless of the attempts to simplify business procedures, companies still struggle with different regulations and required clearances.

4. Vietnam

Vietnam is the third-largest FDI recipient in Southeast Asia and benefits much from the recent trade tensions globally.

Various multinationals in the electronics and technology industries have relocated manufacturing facilities here, including TCL, Foxconn, and Sharp. Its growing trade relationship with the EU, especially after the execution of the EVFTA in 2019.

As a result, companies that sell machinery for production tend to have many benefits from these factory relocations. Apart from industrial production, the agriculture sector relies heavily on imported machinery, particularly from the EU, Japan, and South Korea. It’s estimated that 70% of the agriculture machinery used in Vietnam is imported.

Some companies also face challenges when entering the Vietnamese market. Foreign ownership is strictly limited in some industries, like logistics and banking. This impacts inbound merger and acquisition (M&A) activities.

The government’s attempt to introduce simpler and clearer regulations has also failed at some stages. Current regulations still overlap and are often opaque, as these are regulated by different governmental agencies.

6. Thailand

Sharing the same geographic advantages as other Southeast Asian countries, Thailand has been attracting foreign companies thanks to the continuous improvement of its business environment.

Thailand is now among the top three countries in Southeast Asia in terms of ease of doing business. Different advantages allow foreign businesses to reach their expansion targets by selling consumer goods or investing in local businesses.

Products with the highest growth rate are medical goods and F&B products. This is boosted by the increased middle class and as citizens become more health-conscious and more willing to pay for high-quality international brands.

However, companies expanding to Thailand should be aware of the political uncertainties within the country. Its politics has been volatile over the last two decades, with the involvement of many military coups.

In addition, imported products typically face strong competition from domestic Thai products. Thai consumers are relatively price-sensitive and mainly served by local suppliers. Hence, companies might face issues to remain competitive and profit-making at the same time.

7. Philippines

The Philippines is known for its strong reliance on the service sector, which accounts for more than 50% of the GDP. Business process outsourcing (BPO) is one of the key drivers of the service sector.

Hence, foreign companies are strongly recommended to take advantage of this foundation in the Philippines. This, firstly, provides foreign players access to a well-established BPO market. Also, international experience is a competitive advantage over local businesses when it comes to providing services to multinational companies (MNC).

Tourism is also another strength of the Philippines. This has opened the door for businesses in the hospitality industry, such as F&B, traveling, and more. With a long history as an agricultural country, the Philippines allows global F&B manufacturers to have cheap and locally sourced ingredients to lower the cost while taking advantage of its original international brand name.

However, companies expanding to the Philippines also need to consider some common foreseeable challenges there. Infrastructure inefficiency is at the top. Regardless of the Government’s growing spending on infrastructure, it’s common with overcapacities in the international airports, port congestion in many major seaports, and slow and costly internet services.

The Philippines is usually ranked below its neighbors in terms of basic infrastructures, such as roads, railroads, ports, and more.

What Are the Best Strategies to Enter the ASEAN Market?

The Association of Southeast Asian Nations (ASEAN) is a dynamic and diverse region that offers many opportunities for international business development. However, entering the ASEAN market requires careful planning, research, and adaptation to the local context. In this article, you will learn some of the best strategies to enter the ASEAN market, such as:

1. Understand the market diversity

ASEAN consists of 10 member states with different levels of economic development, political stability, cultural diversity, and legal systems. Therefore, you cannot adopt a one-size-fits-all approach to the region. You need to understand the specific characteristics, needs, and preferences of each target market and segment. You also need to be aware of the regional integration initiatives, such as the ASEAN Economic Community (AEC) and the Regional Comprehensive Economic Partnership (RCEP), that affect trade and investment rules and opportunities.

2. Establish a local presence

One of the most effective ways to enter the ASEAN market is to establish a local presence, either through a subsidiary, a joint venture, a franchise, or a local partner. A local presence can help you build trust and credibility with your customers, suppliers, regulators, and stakeholders. It can also help you access local resources, networks, and insights that can enhance your competitive advantage. Moreover, a local presence can help you adapt your products, services, and marketing strategies to the local context and culture.

3. Leverage digital platforms

Another key strategy to enter the ASEAN market is to leverage digital platforms, such as e-commerce, social media, and mobile applications. Digital platforms can help you reach a wider and more diverse customer base, especially in emerging markets where internet penetration and smartphone usage are growing rapidly. Digital platforms can also help you reduce costs, improve efficiency, and enhance customer experience and loyalty. However, you need to ensure that your digital platforms are compatible with the local infrastructure, regulations, and preferences.

4. Focus on value creation

A third essential strategy to enter the ASEAN market is to focus on value creation, rather than price competition. The ASEAN market is highly competitive and price-sensitive, but it also offers opportunities for differentiation and innovation. You need to identify and communicate your unique value proposition and how it can solve the problems or meet the needs of your target customers. You also need to invest in quality, reliability, and after-sales service to build long-term relationships and loyalty.

5. Learn from best practices

A final strategy to enter the ASEAN market is to learn from best practices, both from successful local players and from other international entrants. You can gain valuable insights and lessons from observing and analyzing how they operate, market, and innovate in the region. You can also seek advice and feedback from experts, mentors, and peers who have experience and knowledge in the ASEAN market. And you can also join industry associations, trade missions, and networking events to expand your connections and exposure.

Factors critical to success

Before you execute the strategies above, you need to understand what critical factors are to be successful in entering ASEAN market. These are five factors you need to know.

1. Know your market

Not only do the different countries in Asia present differing market opportunities and challenges, but there can be numerous market characteristics within one particular country, for example, in China and Indonesia which are vast markets spanning a large geographical area. You need to analyze where your product will sell best and the strategies that you need to adopt in the various markets to ensure traction for your products. You need to have the right organizational capabilities and appropriately skilled personnel on the ground to navigate the local market.

2. Know the local culture

Asian markets are not necessarily receptive to the Western way of doing things – from marketing through to pricing and dealing with local staff, cultural issues play a large role. Spend time getting to understand the local culture of the markets that you intend to enter. This will save time and frustration in the longer term.

3. Find the right partners

The right partners in your business journey will make a huge difference to the potential success of your business when expanding into Asia. Reliable partners in your business such as your distributors, marketing agents, and corporate services providers are critical to success. In looking at potential partners, a business should examine its strengths and weaknesses and choose partners that complement their strengths and fill the gaps in the company’s capabilities. There may be bureaucratic hurdles to face, and finding a partner that has successfully navigated similar hurdles in the past can be an invaluable asset. Equally, your business model needs to be adaptable to changes in the landscape of the market as those changes occur. Once the right partners are found, communicating with them effectively is vital to ensure the business evolves in the way needed to be successful.

4. Understand non-trade barriers

There are many barriers and obstacles of a non-trade nature that can be thrown up in the markets in Asian countries. Complying with local licensing regulations is a must. You need a thorough understanding of local supply chains, not only for the importing or manufacture of your products but also for the logistical issues of getting your product to market. Comprehending the local customs can be the difference between success and failure – in this respect, a local partner is essential to give you a thorough understanding of the culture as well as to potentially overcome any language barriers that may exist.

5. Patience

An important quality to possess when expanding into Asia is patience. This is required in setting up your operation, obtaining licenses and work permits. Things don’t necessarily move as quickly in many countries in Asia as they do in a company’s home country. Also, patience is essential in establishing your products and services in the market. Market acceptance of what you have to offer may take some time. Not being discouraged in the short term and having the resilience to overcome the short-term challenges should be rewarded in the longer term. Another key part of patience is possessing sufficient capital to give the business the chance to overcome the shorter-term challenges. This is all part of the planning process before entering the market.


Southeast Asia boasts a population of around 600 million people and is one of the fastest-growing regions globally. Foreign investments and diversifications from the Chinese supply market will allow for growth, increased disposable incomes, and expanding manufacturing activities in the coming years.

As a result, increasingly more foreign companies seek to enter and expand in the markets, either for B2C or B2B sales. You must also consider whether your products are suitable to sell offline or online. For instance, bulkier products for B2B are often more suitable for B2B sales offline and with the help of distributors.

Smaller products such as fashion items can be more suitable to sell online, sometimes cross-border from overseas. The most popular eCommerce platforms, Lazada and Shopee, allow cross-border sales and is something they prioritize.

The most interesting countries that foreign companies should target for market entries in Southeast Asia include Vietnam, Indonesia, Malaysia, Thailand, and the Philippines.

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