by Frank Bomers, Partner, AccelerAsia

Throughout my 17 years doing business in Southeast Asia, I’ve been constantly impressed by its can-do attitude. People here genuinely believe that the future is theirs and tomorrow will be better than yesterday. This positive mindset might explain Southeast Asia’s remarkable post-pandemic resilience, remaining one of the bright spots globally, with ASEAN economic growth in 2023 set to outstrip most major western markets by 10x or more.

Southeast Asia’s forward-looking, growth-hungry environment has helped accelerate the region’s digital economy quicker than anyone predicted, increasing its total value of transactions by 20% year-on-year to reach US$200 billion in gross merchandise value (GMV). The enormous growth in e-commerce, digital payments and the digital economy, in general, brings exciting opportunities to technology companies worldwide, including Israel. For example, there’s an urgent demand for B2B software as a service (SaaS) solutions for cybersecurity, martech, adtech, big data, AI, predictive analytics, and customer data management.

While some might think Southeast Asia is a hard place to do business for Israeli companies, I beg to differ. Since 2013, when AccelerAsia started working with Israeli companies that wanted to grow their business in Southeast Asia, we’ve found people here are very open to Israeli technology and like to do business. The secret to successful market entry to Southeast Asia is a good strategy built on deep local insights and experience.

In this article, I’ll discuss the top considerations for Israeli startups entering the Southeast Asian market.

1. Diversity of the Market

Home to an estimated 650 million inhabitants, ASEAN’s ten member states represent one of the most diverse regions on the planet, with economies in various stages of development and a rich melting pot of languages and cultures. When we look at Singapore, Indonesia, Malaysia, Thailand, the Philippines and Vietnam, all these countries speak different languages. While the general understanding of English is good among senior business leaders, conversations with mid-level management and below would benefit from understanding the local language.

Another important difference is the regulations between the various countries. Unlike the EU, for example, ASEAN is not a single market, as each country has its own data privacy laws, tax systems and procedures for dealing with SaaS companies. All these countries also have their own set of special incentives to attract foreign businesses.

With multiple markets to cover, it’s a struggle for an Israeli business manager to know where to start, especially with no in-depth network knowledge. There’s no one-size-fits-all here, so It’s vital to identify which markets are ready for a specific kind of solution.

2. Local vs Remote Team

This is often a difficult decision for foreign companies when entering Southeast Asia. You could hire a local with better network knowledge, but finding a good quality candidate takes time, and it’s not easy for anyone operating independently. In addition, they’ll be difficult for you to control from your company headquarters located halfway across the world. We often see that the local hire fails because there is too much of a cultural gap – a very direct Israeli executive and a very indirect Southeast Asian manager are not always a match made in heaven.

Sending over one of your best people from Israel is another idea, but they still need to build a network and learn the regional nuances. This process takes time and is often an expensive route.

Others might try flying in and out, the business equivalent of speed dating, dashing from one meeting with prospects to the next, hoping one of these interactions will result in a deal. But while face-to-face meetings are crucial in Southeast Asia, building long-term relationships takes time, and such brief exchanges fail to deliver the number one commodity – trust. This is the main reason AccelerAsia has established local offices with all the different nationalities to ensure that we understand the client and the end customer.

3. Trust is Vital

Today, a customer in Southeast Asia can purchase a software solution from anywhere in the world, but having a sales and support team sitting in the region is getting more critical. Compared to senior management, their IT teams might not be English-speaking, so getting expert local assistance is essential. Working with partners, such as agents, resellers or other tech vendors, is a good additional channel to have in the mix. This also brings challenges; besides needing to be locally managed, they often lack deep knowledge of your products and have little incentive to go the extra mile in selling your solution. At the beginning of a company’s Asian expansion, with not many local clients on board, it’s often too hard for partners to sell. A dedicated team that can do direct sales, as well as partner management, is proven to be much more effective.

4. Find the Right Use-Case

It’s essential to be open to finding the right use case for the technology you are selling in any particular market, which may differ significantly from the ideal or successful use case in Israel, Europe or the US. First movers can vary drastically in different geographies. For example, your company may be very successful in catering to the customer onboarding process in Israel’s telco and utilities sectors. In Southeast Asia, instead, you could be phenomenally successful with insurance companies – and we’ve seen this happen. It’s important to be open to the differences between the various Asian countries by starting with a clear market assessment to discover the opportunities the different countries and industries offer.

5. Think Long-Term

Companies sometimes forget how long it took them to get their first deal in their home market. After several years, they say, “Let’s go to Asia”, without realising that building a new market takes time and sales cycles in Southeast Asia won’t be shorter than anywhere else. It’s most important to get the right clients on board, even if you have to be more flexible than normal on its terms. It may sometimes be better to be more flexible on the terms in the early stages to learn fast and get these initial local use cases. These initial learnings and early credibility in the market will provide you with new clients quicker, as most Asian companies prefer to be an early adopter rather than a first mover. Because markets are big and companies large, upsell opportunities with existing clients, which will often easily make up for the initial discount later.

Southeast Asia is a large, dynamic market open to Israeli technology, and the B2B software market is growing fast, offering tremendous future opportunities if you play your cards right.

AccelerAsia can navigate these challenges for Israeli companies expanding into Southeast Asia. Like to discuss the exciting opportunities? Chat with our team today.

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