SEA 2030: Why Southeast Asia Is Writing the Next Big Chapter for Modern Businesses

When I think about the most exciting projects of recent years, a mid-sized company from the DACH region immediately comes to mind. With 140 employees, it had the courage to embark on the adventure of Southeast Asia to achieve sustainable growth. Initially, the company established a small sales office with just one local employee - a market-testing experiment. Within months, the potential became crystal clear: the market was vast. Together, we planned the next steps.

The result? In just two years, the office grew to 30 employees, and the company successfully established itself in Southeast Asia. Mission accomplished.

Why Not Expand to the US or Europe?

Let’s take a global perspective:

In an era where economic growth in Europe is declining, companies face enormous efforts to maintain their growth strategies. Australia, while stable, is a relatively small market and thus not very appealing. North America currently offers no significant growth opportunities, and while there’s been much talk but little action in South America over the past 25 years, I see potential in Africa - but it’s distant. It will take another 30 to 40 years for the African continent to fully realize its potential - a timeframe I won’t witness as a consultant, to be realistic.

Southeast Asia, on the other hand, is ready. The next 5 to 10 years promise remarkable development, dynamic markets, and enormous expansion opportunities.

Why Southeast Asia?

From my perspective, the facts speak for themselves, and this is just a snapshot:

• The region is home to around 650 million people, exceeding the population of Europe, and unlike Europe, it won’t shrink in the coming years. This demographic advantage makes Southeast Asia a significant growth market.
• The population is relatively young, with an average age of 33 (compared to around 45 in Europe).?
• Whenever I visit the office there, I’m struck by how motivated and committed the people are. This young, well-educated generation is driving the region’s rapid development with incredible dynamism.
• The rapid advancement of artificial intelligence in countries like Malaysia, Vietnam, and Singapore will continue to strengthen the electronics industry.
• The IT services market in Vietnam has highly positive forecasts. Between 2024 and 2029, it’s expected to grow at an annual rate of 9.34%, reaching a market volume of USD 3.11 billion by 2029.
• In Indonesia, Microsoft is expanding with cloud services and AI, planning new data centers and AI training for 840,000 Indonesians. This $1.7 billion investment, announced by Satya Nadella in May 2024, will yield significant technical and economic benefits.
• Additionally, the EU has been strengthening ties with Southeast Asia for years, promoting collaboration with ASEAN - the EU's third-largest trading partner outside Europe. This benefits European companies looking to expand into Southeast Asia.
• Lastly, the ASEAN Economic Community (AEC) eliminates major tariff barriers. The AEC Blueprint 2025 aims to create a more connected, competitive, and globally oriented ASEAN, fostering innovation, connectivity, and people-centered approaches.

Is Southeast Asia Better for SMEs or Large Corporations?

It doesn’t matter because everyone goes through the same processes. Time and again, I’ve seen both mid-sized companies (as in the example above) and large corporations succeed in Southeast Asia. For instance, a friend of mine, the General Manager of a pharmaceutical group, has demonstrated how global players can gain a foothold in the region.

This year, I also had the opportunity to visit the LEGO factory in Binh Duong. Its scale and what the company has built there left a lasting impression.

But before companies take the leap into Southeast Asia, they need to ask the right questions:

• What products do we offer?
• Should we stick to production and export or diversify our approach?
• Is Southeast Asia, with its demographics, a suitable sales market?
• What local or international competitors are already established in the market, and how can we differentiate?
• What logistical challenges exist?
• Where can we get the legal and bureaucratic support we need?
• Are there enough qualified professionals in the region, or should we set up training programs?
• How do we adapt our marketing and branding to local cultures?

These and other considerations are essential for sustainable success.

Moving To Southeast Asia To Save Costs? Please Dont!

What I often emphasize is that Southeast Asia is not a place for companies solely focused on cost-cutting. As a recruitment consultant, I do not work with businesses that exploit their employees or prioritize short-term profits over long-term stability.

Instead, I view the region as a market that demands sustainable investments from Western companies, respect for cultural differences, and fair workforce treatment – fostering and expecting these qualities. Only this approach can lead to lasting success.

I prefer to explain these points in a personal conversation. Still, I'll summarize them here: For an expansion to succeed, companies should incorporate these key aspects into their strategic planning:

1. Establishing a Legal Entity or a Business Representative Office: Creating an appropriate legal structure on-site is crucial for successful expansion. Representative offices can be flexible and cost-efficient in establishing initial business contacts and accessing the market.
2. Locals and Expats: A company's success lies in the tailored and optimized composition of its management team.
3. Network Partners: A company's success heavily depends on having the right contacts, including recruitment consultants, lawyers, and banking advisors.
4. Local Access: Experts on-site often have excellent connections to local authorities.

Southeast Asia offers immense opportunities for companies willing to invest thoughtfully and responsibly. Let's talk about how to make that happen! How can I assist?