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International Expansion Guide Part 1

Pat Thitipattakul
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June 07, 2021

When is the best time for your startup to go global?

Branching out to a new market is a major milestone in any business and with startups increasingly looking to branch into the Asia Pacific region –  home to one of the world’s youngest and fastest growing populations, we look at ways for young businesses to navigate the region’s cultural, economical and geographical diversity and expand their businesses successfully. 

Disrupt and 500 TukTuks collaborate with Greenhouse, Asia’s market entry platform, to create an international expansion guide for aspiring entrepreneurs who aim to take their companies abroad. Greenhouse’s marketplace connects entrepreneurs with service providers who can help them launch, operate, and commercialize their businesses across Asia. 

 

 

Before embarking on an expansion plan, do assess if your business has both the resources and domestic traction to pull off an expansion as a lack of funding and insights into your target market could jeopardise the success of your product before it has had the chance to take off.

Once your company is ready to expand, there are several frameworks your team can use to formulate and carry out your international expansion. B2B service marketplace Greenhouse’s seven-step framework for international growth (Research, Validation, Double down, Market-product fit, Compliance, Build a team, Repeat) is one such framework which has been used by over 100 startups in their quest for growth in Asia Pacific region.

 

 

 

Research and Validation

In the research phase, your team should first define your key market and target audience, considering factors such as market size, potential areas for growth as well as local competitors and where your product fits into the picture, addressing product gaps along the way. Do refine your framework along the way by considering challenges you may encounter and assessing what is truly important to your team’s success.

Once you have a clear idea of which market would be a good fit for your product and team, consider validating these assumptions by performing tests such as market research, in-market representation, business matching and lead generation. As many Asian markets are relationship-focused, get to know key decision makers early on and be strategic in how you use local service providers. 

Teams could also consider using lean strategies such as accelerator programmes and advertising at trade fairs to validate their ideas at a lower cost and risk before formally expanding into your target market.

 

 

 

Expanding to new markets

Greenhouse COO Viktor Kyosev shared that there are two schools of thought with regards to timing an expansion:

  1. Traditional expansion – launch your product, reach product-market-fit, scale the business in your home market, and only then start expanding.
  2. Test new markets early – with the rise of the internet, startups can reach international markets almost immediately.

He noted that while many US-based and European companies choose to employ the former method, Southeast Asian founders often prefer the latter and for good reason – Southeast Asian superapp Grab for example quickly expanded its ride-hailing services from Malaysia to Indonesia, the Philippines, Singapore, Thailand and Vietnam within a span of two years, enabling the team to quickly understand each of its target markets and roll out operations smoothly using a hyperlocal approach with marketing and engineering handled directly by teams from the target market while building relationships gradually as a smaller firm with local regulators.

In contrast, Gojek, which took 8 years to expand out of Indonesia, has struggled to gain significant traction beyond its native region, facing issues such as the early departure of the chief executive and chief growth officers of its Vietnamese operations. This could be attributed to Go-Jek’s Indonesian-focused approach where its product, team, and operational structure was tailored around its native market, leading to difficulties in adapting to new markets when the company decided to extend its operations in addition to the immense scrutiny of expanding as a regional unicorn with greater regulatory hurdles to overcome when entering new markets.

 

 

As illustrated by the Grab and Go-Jek examples, a market expansion strategy in Southeast Asia needs to be agile and adaptable when expanding to new markets as a poor product fit and failure to properly account for differences in regulatory practices could significantly hamper a company’s international expansion.

 

Structuring regional operations is a tricky challenge as a startup needs to balance both its growth in its home market as well as allocating sufficient resources to its target market. For instance, for a company whose product requires localisation such as Grab and its array of services, it is important to have a team which can speak the region’s native language and understands its culture to properly curate and execute region-specific lead-generation plans.

 

Once your team has settled on a market and has crafted a go-to-market strategy, it is now time to set up a legal entity in your chosen region. In the next post, we’ll cover the basics of setting up a foreign office in some of Asia-Pacific’s largest startup ecosystems. International Expansion Guide Part 2

 

For more information, please visit this link.

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