For many developing economies, the cost of doing business has fallen over time. As a result, far more entrepreneurs are breaking into global markets. Generally, more entrepreneurs enter a market where it is easier to conduct business.
Asia is proving to be very attractive to Western businesses looking to expand. Its ongoing urbanization and industrialization, rising demand, and dynamic corporate sector are some of the factors that make doing business there lucrative for many Western businesses.
A rapidly developing environment
Asia accounts for about half of the world’s internet users and is very innovative and tech-focused. The young people are digitally savvy and world-class hubs are growing in many cities, such as Beijing.
Online spending is being driven by the use of mobile technology and improving logistics networks. This creates more opportunities and a better environment for all types of business. Government support and tax breaks also help to create a favorable business environment.
Over the past decade in China, changing demographics, increasing incomes, more consumer spending and a positive business environment have attracted Western businesses across different industries. Western Businesses do need to be aware that there are some challenges with how to do business in China.
A huge potential customer base
Asia offers great potential for consumer-focused companies. It is a huge market with well over four billion people living in the Asia-Pacific region and it accounts for more than half of the people in the whole world. It, therefore, offers a huge market of potential customers.
Every Asian country has its own way of life and of doing business. Western entrepreneurs need to appreciate the differences and use this understanding to inform them when making business decisions, such as where in Asia to set up shop.
China is one of the most popular places for Western businesses and one of the challenges they face is to know whether products or services will appeal to Chinese consumers.
Rapidly increasing consumer spending
The middle class is growing in Asia. In China, new consumers are quickly moving beyond making basic purchases – they are forming brand loyalties, and reaching the point where their purchases express their improved affluence.
McKinsey reports that less than 30 million Chinese consumers account for a third of global spending on luxury goods and predicts that this outlay will almost double by 2025.
A large talent pool
Asia is a source of upcoming talent in the form of entrepreneurs, engineers and designers. With experienced talent readily available, businesses can jump in and hit the ground running.
In China, there are many talented professionals accustomed to the responsibilities of working for Western businesses. One of the challenges in China is that there are a number of sub-markets defined by different demographic, cultural and economic characteristics.
Western companies may find their success in China stymied if they do not have sufficient local understanding. This is why it makes sense for them to employ local professionals.
Room for innovation
Unlike established markets in the West, emerging economies offer more opportunities and more room for innovation. Developed economies grow at a slower rate and getting in on the ground floor in emerging economies is exciting as there’s the chance to benefit from new opportunities.
Asia is currently home to many startups valued at over $1 billion and a lot of them are in China. Foreign market knowledge, innovation capabilities, and international networks are some of the factors that make Western businesses successful when doing business in Asia.