Doing business in Southeast Asia

Southeast Asia have long been tagged as one of the world’s most promising and dynamic economic region of the 21st century and as such is high on the priority list of countries to explore when a company wants to expand its business activities. The Association of Southeast Asian Nation’s (ASEAN) $330 billion consumer market equals that of China’s booming coastal region in value and is bigger than any other market in Asia. The group’s ten member countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) are amongst the fastest growing economies in the world. Southeast Asian economies can be fragile, corrupt, and so frustrating when doing business that some days you may wonder why you ever decided to do business there. However, if your willing to invest the time and resources necessary to succeed in securing business in the region, your efforts will be rewarded by tremendous opportunities and long-term buyer commitment.

The market

With a population of 560 million people with a growing purchasing power, opportunities in Southeast Asia abound in the infrastructure development, information and communications technologies, environment, and power sectors. The member countries of the Association of Southeast Asian Nations (ASEAN) comprise Canada’s second-largest emerging market export destination after China, thanks to robust economic expansion—expected to average 4.5% this year—and strong domestic demand. So far this year, Canadian exports to the region have experienced explosive growth. The economies range from resource- rich but still largely agricultural Indonesia, with a per capita gross domestic product (GDP) of $505, to the highly industrialized city-state of Singapore, with a per capita GDP of $12,720.

IMPORTANT ELEMENTS FOR CONDUCTING EFFECTIVE BUSINESS

• Personal Connections
  • Having the right connections is crucial – personal relationships and connections are often more important than economic criteria in making government and business decisions
    
    
• Third Party Intervention
  
  
• Tap the resources and energy of a third party who is respected by both parties in order to help relieve strained ties and solve problems in negotiations
  
  
• Negotiating
  
  
  1. Bargaining is a way of life to people in Southeast Asia – they bargain daily for purchase of groceries and other goods, and it has become an automatic response to bargain and negotiate for more favorable terms in the business world
  2. Join in the bargaining – don’t make concessions quickly, but be ready to use a concession to extract a better bargain for yourself
  3. Never lose your temper, shout or become overly demanding at delays in decision-making or bureaucratic procedures
  4. Saving face is the rule – let your local representative or partner monitor progress and problems. If you must criticize, do so gently and indirectly

CCC’s expertise is valuable at all phases of the procurement process. In the last 5 years CCC has been involved in $67.5M in exports sales in Indonesia, Malaysia, Philippines Singapore, and Thailand. Southeast Asia is a positive environment for CCC’s line of business for many reasons:

• CCC’s involvement provides your potential buyer with an unique government-backed guarantee of contract performance, which is sought by the region’s procurement officers who tend to favour tools that allow them to save face if any major problems or conflicts arise during the contract, which would be regarded as a failure of the procurement officer.
  
  
• Southeast Asia centralized decision-making processes are mostly favourable to Government - to - Government arrangement, which brings you the added credibility of having a Canadian government agency on board with your company for your deals.
  
  
• CCC’s ability to procure on a sole-source basis offers both the foreign government buyer and the Canadian supplier a cost-effective, efficient alternative to a lengthy international bidding.
  
  
• Finally, the official protocol of the Government of Canada that CCC can bring to the negotiation provides your potential buyer with a greater level of comfort; as procurement officers for both the government and private sector buyer. in those countries will prefer to deal with their counterpart in other governments as opposed to actors in the private sectors.

To learn more about selling to the South East Asian countries and how the Canadian Commercial Corporation (CCC) can assist you contact CCC’s information line at 1-800-748-8191 or CCC’s regional representative for your province. You can find out the coordinates of the officer assigned to your region at http://www.ccc.ca/eng/abo_whoWeAre_locations.cfm.