Five Reasons Businesses Will Go Global in 2022 – Economic Analysis

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Asia remains an attractive destination for many companies. The Regional Comprehensive Economic Partnership (RCEP) – the largest trade agreement in the world – will come into effect in January 2022 and is expected to boost the region’s post-pandemic economic recovery.

RCEP, signed by 15 Asia-Pacific countries, will cover a market of more than 2.2 billion people, or 30% of the world’s population.

According to market research firm Euromonitor, e-commerce sales in Asia-Pacific are expected to double by 2025, to $2 trillion.

There are clearly significant growth opportunities for companies embarking on international expansion in 2022. In this article, we discuss five reasons why globalization should be part of your business plan.

#1 Increase earning potential

The biggest companies in the world are global. International expansion provides the opportunity to explore new emerging markets, expand customer base and thereby increase revenue potential.

Cross-border e-commerce is quickly becoming the new normal. The rise of the platform economy has made it easier for brands big or small to sell directly to the customer without a traditional storefront.

The internet economy is expected to triple in size to reach $300 billion in Southeast Asia by 2025. Lazada, the Southeast Asian e-commerce company owned by Alibaba, saw order growth of more than 90% year-over-year for Q1 2021. Even with lockdowns lifted in some countries, many shoppers are still shopping online.

#2 Diversify your supply chain to overcome disruption

The supply chain shock that began during COVID-19 exposed vulnerabilities in the production strategies of many companies.

According to an April 2020 survey by the Institute of Supply Management (ISM), 95% of U.S. organizations have experienced supply chain disruptions in their supply chain due to the COVID-19 pandemic. China reported a 222% increase in average material delivery time. Korea followed closely with 217%. As businesses can no longer rely on a small group of suppliers, diversifying the pool provides resilience in the event of a similar global shock.

For example, multinational manufacturing companies, such as Infineon and Micron Technologies, base their regional and global supply chains in Singapore. These companies are leveraging Singapore’s global network of multinational logistics companies to build their supply chain resilience. At the same time, they can cater to regional customers with fast execution and faster response time.

#3 Strengthen your brand presence and grow your footprint

Social media has facilitated brand recognition across borders.

MINISO is a Japanese-inspired Chinese retail brand, which started in 2009 and had more than 4,587 stores globally in 2020. By focusing on low-priced aesthetic items, it has been able to transcend cultural barriers and target value-conscious customers in more than 70 countries. .

The main challenge that MINISO faced was to target a market that existed in various countries. By partnering with recognizable brand ambassadors in their target markets, MINISO was able to increase social media interaction by 300% and boost online and offline sales in the midst of a pandemic.

Building an international brand presence can also act as a strategic boost for companies, allowing them to overcome dependence on national markets while effectively addressing their overall market position.

#4 Get a competitive edge

A competitive advantage can distinguish a company from its competitors and build brand loyalty.

Thailand, for example, actively promotes technology-driven innovation.

In the first nine months of 2020, Thailand’s electronics and electrical (E&E) industry attracted 106 new investments, compared to 94 projects in 2019. Companies eager to innovate can benefit from the privileges offered by the Thai government to develop their innovation branch. . Companies that spend more than 1% of their total sales on research and development (R&D) in the first three years will be eligible for corporate tax exemption for up to five years.

For more information on business expansion in Thailand, please download our guide.

#5 Balance seasonal fluctuations

Foreign markets can counteract declines in demand in your home market. Globalization allows companies to tap into additional revenue streams and standardize production peaks and troughs to meet varying seasonal demand in different markets.

Although globalization brings attractive market diversification and increased market share, there is an added layer of complexity with new regulations, administrative requirements and overhead.

There are many reasons why companies may seek to go global. However, to do so successfully requires strategic planning, time, resources and partners on the ground.

Hawksford can provide you with the local expertise to meet your needs in-country and around the clock, while supporting your business as it expands internationally. Through a combination of offices in major financial centers and an extensive network of partners in established and emerging locations across APAC, we can advise you on all aspects of starting and running a business, from entering the market to bringing your company into compliance with the evolution of the regulations in force. several jurisdictions.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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