Making ASEAN businesses happen
In journalist and political circles lately there has been a lot of buzz over the launch of the ASEAN Economic Community (AEC).
The opportunity has been defined from the early days – a 600 million population, a significant youth component and a consumption culture. Thus, the AEC offers a sizeable growth alternative to the mega-economies of India and China within the Asian context.
In light of all these factors, one would have expected significant interest from the industry.
However, interest is not so big within corporate circles. The absence of a common ASEAN regulatory framework is seen as a hurdle in facilitating the growth of business within the AEC.
So the question remains, what will help businesses realise the opportunity from the AEC, or how can ASEAN businesses happen?
Before we get to answering that, let’s first track the journey of two companies that are currently going through the process of growing their business across ASEAN, i.e. ‘make their business happen’.
Both the businesses are brick-and-mortar and originated from the Philippines, and both are in the food sector. While there is no specific reason for choosing a specific country or sector, it just allows for a more like-to-like comparison.
One such company is Jollibee, a huge player in the fast food sector in the Philippines. It gives the mighty McDonald’s a run for its money in its home base. Over the years, Jollibee has spread its operations across ASEAN markets – Vietnam, Singapore, Indonesia, Malaysia and Brunei. However, it has not been able to achieve the kind of success it enjoys at home.
Jollibee has not been able to become a part of the social fabric and family tradition within the rest of ASEAN, the way it has been able to do in Philippines. Despite its presence across multiple markets in the ASEAN region, it is still primarily seen as a Filipino brand.
In contrast, the other Philippines-based food company is URC or Universal Robina Corporation. A company whose brands like Jack ‘n Jill, a snacks brand, or Nips, a confectionary brand etc. are well known in the markets of Malaysia, Thailand, Vietnam, Singapore and Indonesia.
However, in each of these markets, the brands are not seen as a Filipino brand. Most lay customers would see the brand to be local to their own market or would see it as a pan-ASEAN brand.
Having built a strong franchise across the region, URC is putting up a decent fight across all the categories it operates, competing against the likes of Pringles which is globally owned by Kellogg’s or M&M’s which is globally owned by Mars Inc.
Being headquartered within the ASEAN region allows URC to be more locally relevant, faster in response and flexible in its approach as opposed to its global competitors.
Similar trends can be seen in digital products and services where the products and services that have customized their pitch to the different markets have been more successful in gaining traction within the ASEAN markets.
However, some may raise the point that digital products and services are better equipped to expand across ASEAN markets rather than their brick-and-mortar peers since the on-ground operational requirements are lesser.
But this point does not hold much merit since the process of doing business in each market comes with its challenges and it does not really matter whether the product or service is tangible or virtual.
The classic case of a digital service expanding across ASEAN is GrabTaxi, known as MyTeksi in Malaysia. It is going through regulatory challenges in every ASEAN market it enters.
However, GrabTaxi has differentiated its proposition in each of the ASEAN markets based on their dynamics in order to increase the take-up of the service. Thus, it focuses its proposition on safety in the petty crime impacted Malaysia, while in fast-paced Singapore the proposition is about the speed of getting a taxi. It is that customised approach that helped GrabTaxi reach a dominant position within the ASEAN region. This huge success even resulted in the mighty digital behemoth Rocket Internet exiting the taxi hailing business in the region.
A similar customised and in-market approach is exhibited by iMoney, a financial education and comparison portal from Malaysia that currently scales up its business across ASEAN.
Understanding the difference in the growth patterns of the above mentioned companies, covering both brick-and-mortar and digital, across categories is important to provide an indication on what will make ASEAN businesses happen.
Summary
1. Building an ASEAN or local brand vs. country-of-origin brand
As reflected in the above case studies, there is a definite need to go beyond national brand associations to build either a neutral association (like URC brands) or build distinct propositions for each market (like GrabTaxi) or build an ASEAN-centric brand identity (like Go Asean, an new travel channel by Astro).
Unfortunately, there have been not been many brands yet that have built a ground-up ASEAN brand in order to grow their business across the region. The common cultural elements at least across Malay world provide a strong foundation to build a common ASEAN identity if organisations are willing to push the envelope.
2. Role of facilitators in managing operational requirements
It is clear that the differing regulatory requirements within each of the ASEAN markets will not be not be going away immediately, however, we may wish so.
Tapping into facilitator organisations that have existing presence across the ASEAN region will definitely ease the process of scaling business. Facilitator organisations include providers of distribution, legal, accounting services etc. Today, there are facilitator organizations that operate within multiple ASEAN markets. Partnering with such providers allows for tapping into their learnings and infrastructure from the point of launch.
For example, companies such as DKSH or aCommerce are logistic facilitators that have presence across multiple markets within ASEAN and have extensive experience in the consumer goods and e-commerce space while operating within regulatory frameworks.
Over time, with the rise of ASEAN-centric businesses, one would expect the regulatory frameworks to also change at a faster pace.
Based on my own personal experiences managing businesses across multiple markets within ASEAN, I have seen significant common elements within the business environments and operating formats despite outward differences. Leveraging those common elements will help navigate through the differing regulations that appear to stifle business growth.
3. Thinking ASEAN from the early stages
Most businesses look at ASEAN growth from an incremental perspective, market by market.
While that may be a prudent and risk averse way of managing the business, it definitely fails to tap into the potential scale that an ASEAN business can deliver.
Planning for an ASEAN-wide business from the early stage allows for building significant economies of scale in the business. It is this line of thinking that allows for differentiating and competing against global players that operate with a more cookie-cutter approach across all markets.
Executing this thinking requires a different approach to corporate culture and hiring practices and needs to replace national ego with a sense of regional pride and identity.
In journalist and political circles lately there has been a lot of buzz over the launch of the ASEAN Economic Community (AEC). The opportunity has been defined from the early days - a 600 million population, a significant youth component and a consumption culture. Thus, the AEC offers a sizeable growth alternative to the mega-economies of India and China within the Asian context. In light of all these factors, one would have expected significant interest from the industry. However, interest is not so big within corporate circles. The absence of a common ASEAN regulatory framework is seen as a hurdle...
In journalist and political circles lately there has been a lot of buzz over the launch of the ASEAN Economic Community (AEC).
The opportunity has been defined from the early days – a 600 million population, a significant youth component and a consumption culture. Thus, the AEC offers a sizeable growth alternative to the mega-economies of India and China within the Asian context.
In light of all these factors, one would have expected significant interest from the industry.
However, interest is not so big within corporate circles. The absence of a common ASEAN regulatory framework is seen as a hurdle in facilitating the growth of business within the AEC.
So the question remains, what will help businesses realise the opportunity from the AEC, or how can ASEAN businesses happen?
Before we get to answering that, let’s first track the journey of two companies that are currently going through the process of growing their business across ASEAN, i.e. ‘make their business happen’.
Both the businesses are brick-and-mortar and originated from the Philippines, and both are in the food sector. While there is no specific reason for choosing a specific country or sector, it just allows for a more like-to-like comparison.
One such company is Jollibee, a huge player in the fast food sector in the Philippines. It gives the mighty McDonald’s a run for its money in its home base. Over the years, Jollibee has spread its operations across ASEAN markets – Vietnam, Singapore, Indonesia, Malaysia and Brunei. However, it has not been able to achieve the kind of success it enjoys at home.
Jollibee has not been able to become a part of the social fabric and family tradition within the rest of ASEAN, the way it has been able to do in Philippines. Despite its presence across multiple markets in the ASEAN region, it is still primarily seen as a Filipino brand.
In contrast, the other Philippines-based food company is URC or Universal Robina Corporation. A company whose brands like Jack ‘n Jill, a snacks brand, or Nips, a confectionary brand etc. are well known in the markets of Malaysia, Thailand, Vietnam, Singapore and Indonesia.
However, in each of these markets, the brands are not seen as a Filipino brand. Most lay customers would see the brand to be local to their own market or would see it as a pan-ASEAN brand.
Having built a strong franchise across the region, URC is putting up a decent fight across all the categories it operates, competing against the likes of Pringles which is globally owned by Kellogg’s or M&M’s which is globally owned by Mars Inc.
Being headquartered within the ASEAN region allows URC to be more locally relevant, faster in response and flexible in its approach as opposed to its global competitors.
Similar trends can be seen in digital products and services where the products and services that have customized their pitch to the different markets have been more successful in gaining traction within the ASEAN markets.
However, some may raise the point that digital products and services are better equipped to expand across ASEAN markets rather than their brick-and-mortar peers since the on-ground operational requirements are lesser.
But this point does not hold much merit since the process of doing business in each market comes with its challenges and it does not really matter whether the product or service is tangible or virtual.
The classic case of a digital service expanding across ASEAN is GrabTaxi, known as MyTeksi in Malaysia. It is going through regulatory challenges in every ASEAN market it enters.
However, GrabTaxi has differentiated its proposition in each of the ASEAN markets based on their dynamics in order to increase the take-up of the service. Thus, it focuses its proposition on safety in the petty crime impacted Malaysia, while in fast-paced Singapore the proposition is about the speed of getting a taxi. It is that customised approach that helped GrabTaxi reach a dominant position within the ASEAN region. This huge success even resulted in the mighty digital behemoth Rocket Internet exiting the taxi hailing business in the region.
A similar customised and in-market approach is exhibited by iMoney, a financial education and comparison portal from Malaysia that currently scales up its business across ASEAN.
Understanding the difference in the growth patterns of the above mentioned companies, covering both brick-and-mortar and digital, across categories is important to provide an indication on what will make ASEAN businesses happen.
Summary
1. Building an ASEAN or local brand vs. country-of-origin brand
As reflected in the above case studies, there is a definite need to go beyond national brand associations to build either a neutral association (like URC brands) or build distinct propositions for each market (like GrabTaxi) or build an ASEAN-centric brand identity (like Go Asean, an new travel channel by Astro).
Unfortunately, there have been not been many brands yet that have built a ground-up ASEAN brand in order to grow their business across the region. The common cultural elements at least across Malay world provide a strong foundation to build a common ASEAN identity if organisations are willing to push the envelope.
2. Role of facilitators in managing operational requirements
It is clear that the differing regulatory requirements within each of the ASEAN markets will not be not be going away immediately, however, we may wish so.
Tapping into facilitator organisations that have existing presence across the ASEAN region will definitely ease the process of scaling business. Facilitator organisations include providers of distribution, legal, accounting services etc. Today, there are facilitator organizations that operate within multiple ASEAN markets. Partnering with such providers allows for tapping into their learnings and infrastructure from the point of launch.
For example, companies such as DKSH or aCommerce are logistic facilitators that have presence across multiple markets within ASEAN and have extensive experience in the consumer goods and e-commerce space while operating within regulatory frameworks.
Over time, with the rise of ASEAN-centric businesses, one would expect the regulatory frameworks to also change at a faster pace.
Based on my own personal experiences managing businesses across multiple markets within ASEAN, I have seen significant common elements within the business environments and operating formats despite outward differences. Leveraging those common elements will help navigate through the differing regulations that appear to stifle business growth.
3. Thinking ASEAN from the early stages
Most businesses look at ASEAN growth from an incremental perspective, market by market.
While that may be a prudent and risk averse way of managing the business, it definitely fails to tap into the potential scale that an ASEAN business can deliver.
Planning for an ASEAN-wide business from the early stage allows for building significant economies of scale in the business. It is this line of thinking that allows for differentiating and competing against global players that operate with a more cookie-cutter approach across all markets.
Executing this thinking requires a different approach to corporate culture and hiring practices and needs to replace national ego with a sense of regional pride and identity.
