A blueprint for scaling successfully in Southeast Asia

I’ve always found it very encouraging when startups roll out their services in a new market. It’s a testament to the company’s growth, and it’s the first step to them becoming regional or even global players.

But expanding abroad is no easy task.

Recently, Tech in Asia held a panel discussion in conjunction with employer-of-record (EOR) firm Globalization Partners, which helps businesses hire from anywhere without having to set up costly overseas subsidiaries. Titled “Blueprint for Success: Scaling Operations across SEA,” the event explored the different aspects of expanding one’s business in the region.

We heard from three speakers at the event – Paul Meyers, director of business consultancy firm Acumula, Charles Ferguson, general manager of Asia Pacific at Globalization Partners, and Rajesh Sreenivasan, head of technology media and telecoms practice at law firm Rajah & Tann Singapore. During the panel discussion, the three speakers shared their insights into expanding abroad.

It’s about due diligence

Founders need to think long and hard before making the decision to expand into a new market. Just because a country looks like it has potential doesn’t mean it’s a good fit for their business.

Vietnam, for example, is coming up as an exciting market. According to Globalization Partners’s Ferguson, founders should definitely consider expanding into the country, but before diving in, they need to be sure that it’s the right place for their company.

“Make sure that you’re doing due diligence and you’re checking the boxes on what is required in order to be successful there,” said Ferguson. “[You have to] ensure that the rationale behind your desire to enter into the market is based on pragmatic, business-oriented levers that are going to ultimately deliver growth.”

Photo credit: Tech in Asia

Why this particular market? Is there a demand for your product? Do you have product-market fit? Who are your competitors? According to Acumula’s Meyers, these are some important questions founders need to ask themselves to make sure the basic business fundamentals are in order before making any steps toward expansion.

Businesses also need to look at the nitty-gritty details. Consider things such as whether you have the money to fund the expansion, how it will affect your primary operations, and whether, as a founder, you can afford to spend your energy on expansion efforts.

Meyers’ advice for founders is very straightforward: Spending time and money before expansion on research can spare you a lot of grief later.

Feet on the ground

As part of the research process, businesses need to have people situated in the market who understand the country’s ins and outs and can build the necessary relationships for a successful expansion.

“Having somebody there to visit potential customers, distributors, partners, competitors… [it] is an invaluable way to help ensure success,” explained Ferguson.

In order to hire employees in compliance with local labor laws, though, companies usually need to go through the process of becoming a legal entity in the country in question. But this creates a chicken-and-egg scenario: You shouldn’t set up as a legal entity until you’re certain this market is the right place for your business, but you also need to have a legal presence in the country in order to hire people on the ground.

There are ways to manage this, however. It is possible, for instance, to hire employees as contractors or build partnerships with local businesses who can help you understand the market better. Companies can also consider using EOR companies like Globalization Partners.

EORs serve as an employer for legal, tax, and compliance purposes while the employee performs work at a different company. Essentially, these companies are listed as a worker’s employer in local government records and manage all key human resource functions for the client company.

“It’s a really fast way for you to test a particular market,” said Ferguson. In the event you decide that the market isn’t right for you, EORs make winding down operations easier, as the company handles the termination process.

Photo credit: Nik Macmillan / Unsplash

But if you decide to go ahead with the expansion, using an EOR to get established and hire the people you need makes becoming a legal entity much easier – if that’s what makes the most sense for the company.

Every country has its own set of rules and regulations that businesses need to account for – there are many religious and cultural factors at play, some of which are incorporated into a country’s laws.

“Consider the cultural sensitivities of the jurisdiction that you’re in because you’re not creating pieces of paper assigned by two parties; you are creating a partnership,” said Rajah & Tann’s Sreenivasan. “[It’s] a relationship [that is] intended to last for a long period of time for the mutual benefit of both parties.”

When it comes to expanding into a different country in Southeast Asia, for example, it is likely that contracts will have to be bilingual. There are also different rules around the enforceability of contracts – in the ongoing pandemic, electronic signatures are seeing a surge in use, but not all jurisdictions recognize them.

As such, having people who can work with local lawyers to develop the right processes for your business is vital.

Scaling for success

When it comes to scaling a startup, if you fail to prepare, you prepare to fail. Businesses need to do their research and build relationships with people in order to ensure that the company’s expansion efforts pay off.

If you focus on the fundamentals and ensure plans are in place to handle whatever challenges expansion throws at you, the endeavor will lead you down the path to growth and new opportunities.

Globalization Partners enables companies to quickly and easily expand internationally across six continents and 187 countries. Its global employer-of-record model allows companies to hire employees quickly, enabling businesses to manage compliance and mitigate risk without having to navigate complex international legal, tax, and human resource issues.

Watch the full replay of the webinar on the Globalization Partners website and download this worksheet highlighting key points from the panel discussion to help you on your expansion journey.

This content was produced by Tech in Asia Studios, which connects brands with Asia’s tech community. Learn more about partnering with Tech in Asia Studios.