3 Steps to expanding your Business into Southeast Asia

But unlocking that promise isn’t always straightforward for any multinational companies based in the region that may be looking for wider opportunities to produce, invest and sell there. One reason is Southeast Asia’s sheer diversity. Markets and business environments differ greatly, from local consumer habits to regulatory frameworks and geographies. As a result, what works in one country may not work in another.

So, how are Southeast Asia’s most successful global enterprises overcoming these challenges? What should companies with established – but still fairly limited – operations in the region do to ensure success as they begin the challenge of expanding into new markets? Read on to find out three vital considerations.

As a first step, companies should seek to convert any existing set-ups in Southeast Asia into a fully-fledged regional headquarters. With a centralised view of operations, they can optimise liquidity across the group and better achieve capital efficiency. They can also look forward to streamlined and better cash, trade and risk management via a single global digital platform.

At the same time, companies will need to adopt skills and tools to ensure they can rapidly assess cash and financial risk exposures and redeploy liquidity quickly across countries, if required. Implementing more structured and robust treasury processes across the region can deliver just that – helping companies ensure they can minimise operational risk due to any disruptions in business operations.

When it comes to selecting a location for their centralised hub, many global businesses choose Singapore. A regional headquarters in the city-state is ranked as one of the best places in the world to do business by the World Bank and widely recognised as a prime location for accessing Southeast Asian markets.

Along with a sophisticated financial and banking ecosystem, Singapore is anchored in political stability, a strong economy, low corruption rates and transparent public institutions. It has also negotiated a network of 21 free trade agreements (FTAs) with 32 trading partners, allowing businesses to enjoy lower export tariffs. These include the Regional Comprehensive Economic Partnership (RCEP), the world’s largest FTA in terms of gross domestic product. Once RCEP is in force, Singapore-based companies will be able to make use of regional cumulation to enjoy greater flexibility in sourcing from a larger pool of suppliers in the region.

There are other benefits as well. As one of the world’s most digitally advanced cities, Singapore hosts a vibrant technology ecosystem consisting of companies and organisations across sectors that are seeking to create, test and export cutting-edge solutions to Asia and beyond. All are able to tap on a diverse pool of talent, draw on cutting-edge research from top universities and connect with thought leaders in their industries.

And with ambitions to be the region’s green finance hub, the city-state is actively encouraging its financial sector to promote sustainable development opportunities,

Given all these advantages, it is perhaps not surprising that of the 37,400 international companies located in Singapore, which includes 7,000 multinational corporations, more than half use the city-state as the regional headquarters for their Asia Pacific operations.

The rollcall includes global lifestyle and travel bag leader Samsonite, which recently announced the establishment of a brand development and sourcing hub in the city-state. Other household names include technology giants Zoom, Apple and Intel, Danish toy company The Lego Group, consumer goods corporations Procter & Gamble and German engineering and technology firm Bosch, which has based its global in-house innovation and start-up incubation network here.

Drawing on Singapore’s strengths as a regional hub means these companies are well positioned to reduce costs with enhanced operational efficiency and increase their ability to forecast liquidity and financing needs.

More recently, Singapore has become an attractive choice for international companies considering a ‘China Plus One’ strategy, where China remains the main supply source or consumer market but businesses diversify certain operations to other countries. This trend is spurring many companies to set up Singapore-based “control towers” – hubs of operational and technical expertise that can help them capture growth opportunities and manage their expansion in the region.

Given Southeast Asia’s diversity, establishing solid business and banking partnerships is fundamental. Each market across the region is unique, making it impossible for a new entrant to know and build everything optimally. Identifying the right support can help businesses optimise their finances, tap on regional opportunities and navigate the tax and regulatory environment in the new market.

To support businesses’ growth in the region, HSBC has an ASEAN desk network that includes China, US and three European desks – Germany, France and the UK – all located within our Singapore hub.

We currently serve 500 regional headquarters here in Singapore, providing customised solutions that cover treasury and process optimisation, risk and working capital management.