How to grow a tech business in Asia

Why Asia and why now

The Asian market is home to 60% of the world’s population and has grown into a tech powerhouse in the past decade. With some of the world’s most advanced economies and many promising emerging economies, the continent is increasingly a key growth driver for multinational companies. 

In the three years from 2016 until 2018, Asia contributed 52% of global revenue growth for technology companies, as well as 87% of global growth in patent output, 51% of global growth in R&D expenditure, and 41% of global growth in science and engineering articles. These numbers show the extent of the technological revolution that is taking place in Asia.

Perhaps even more exciting for companies seeking expansion is the fact that Emerging Asia will contribute 57% of global GDP growth from 2021 to 2025. Simply put, if you wish to grow, look East! 

For many, expanding into the Asian market can be a daunting process. On the one hand, the Asian market is diverse and made up of five major markets (China, The Indian Subcontinent, ASEAN countries, The Middle East’s Gulf Cooperation Council, and East Asia), each of which has deep cultural, societal, and political traditions, as well as unique customer expectations. 

On the other hand, the region benefits from: 

  • The fastest-growing market for tech-related businesses 
  • Broad policy support from national and local governments
  • Strong infrastructure for emerging industries such as EVs

There’s a lot to consider when planning how to grow in Asian markets. Let’s take a closer look at why Asia is positioned to become the leading economic region in this century.

1. Market size and spending

According to Forrester in 2021, over the last decade Asia has accounted for 52% of global growth in tech-company revenues, 43% of startup funding, 51% of spending on research and development, and 87% of patents filed. 

Growth is expected to continue this year, in particular in countries like the Philippines, Vietnam, and India, where purchases of tech goods and services are expected to grow by 9.1%, 9.0%, and 8.7% respectively, meanwhile China, Malaysia and Indonesia are also expected to see significant long term growth. 

In terms of where growth will happen, it’s expected that the sale of software will rise by 9.2%, with customer relationship management, business intelligence, digital experience, operational excellence, and human capital management projects all seen as significant drivers of software sales. 

2. Government support

Asian governments actively support the development and adoption of technology in domains like renewable energy, advanced manufacturing, and artificial intelligence. 

During the pandemic, public-private partnerships have been essential to South Korea’s track-and-trace strategy, and to national health QR-code programs in China and Singapore. Asian governments are also developing new models for collaboration across digital ecosystems to help enterprises and societies share resources and information more effectively. 

Some governments have been vital catalysts for emerging industries by offering preferential policies or funding for the development of technology in recent years, driving its commercialization and execution. 

In China, for instance, the government’s stated aim is to develop a domestic AI industry worth $150 billion by 2030. India has launched several programs that link technology and social development, such as the digital ID program, as a strategic tool for delivering government services, managing budgets, and increasing financial inclusion. Malaysia has formed digital free trade zones through which $65 billion of goods and services are expected to flow in the period until 2025.

3. Infrastructure

Asian countries have invested heavily in manufacturing, supply chain, and research infrastructure to support both local and multinational companies. You can see the strong development of infrastructure across a range of businesses in Asia, such as: 

5G - Of the five companies that hold the most 5G patents, four are Asian (Huawei, Samsung, ZTE, and LG).

Electric Vehicles batteries - More than half the world’s patents for solid-state batteries were filed in Asia, and 79% of global production capacity is in China.

AI - Asia has a 48% share of AI strong patents and accounts for 42% of global start-up investment in AI technologies.  

Internet of Things (IoT) - Asia has 39% of the world’s strong patents and 56% of startup investment in IoT technologies. China currently has the largest market share at 26%, followed by North America and Europe at 24% and 23%, respectively. 

Manufacturing equipment - Asia accounts for 45% of the world’s strong patents and 40% of startup investment in manufacturing technologies. 

Renewable energy - Renewable energy is expected to account for an estimated 40% of average annual global energy investments through 2025, and Asia is a leading player. The region has the largest share of installed renewable capacity with 45%, compared to 25% in Europe and 16% in North America. Asia is expected to pull further ahead, with the region accounting for 64% of new renewable capacity additions globally between 2019 and 2040, taking its overall share to 56% by 2040, as projected by the International Energy Agency. 

As elsewhere, the outbreak of Covid-19 globally has accelerated digitization in Asia, with companies actively adopting new technology to improve human and capital efficiency.  

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Asian market characteristics

Despite the positive signals about Asia's long-term appetite for technology, it is important to remember that every market presents risks, and growth initiatives in highly competitive Asia markets must be approached with particular care.  

The recent COVID epidemic and the Russian invasion of Ukraine have highlighted the importance of scenario planning. Building a strong business in Asia requires a long-term commitment to the market. There will inevitably be unexpected competitive challenges, internal setbacks, and macroeconomic headwinds over time. Devising a well-researched growth plan that is robust in the face of change will optimize your probability of success. That means studying Asian markets. Asia is not a monolith but is home to unique and dynamic markets with a customer base that may value different product features or follow different procurement or usage processes than in your home market.  

To be successful in Asia, it is of vital importance to understand the competitive, economic, cultural, political, and societal factors at play. 

With this in mind, three of the most common reasons companies fail to achieve their Asian growth targets include: 

Underestimating local competitors – It is imperative to understand the local competitors you are up against. Your technology may very well be superior. But your local competitors will inevitably be better able to understand and adapt to changing market expectations. To compete in Asia you must be FAST. This means localizing a significant amount of decision-making so headquarters does not become a bottleneck when executing your growth strategy. Competitors will often also be less expensive. This does not mean that you must match their price but it does require that you either explore lower-cost options or carefully justify your premium pricing.

Lacking local execution capabilities – It is difficult and expensive to build the full suite of capabilities in every important Asian market that you would have in an idea world. Companies need to establish effective, long-term partnerships with local companies. These local partners can help to bridge the speed and knowhow gap in every stage of the process, from product localization to distribution and aftersales service. Strong business relationships are built on mutual appreciation and trust. There must be a clear incentive structure to motivate your partner in the long-term. And you must invest in building relationships with partner management. Contracts mean somewhat less in many Asian countries than in Europe or the US. Relationships have meaning everywhere. 

Misunderstanding local customer expectations – The days when a management team could sit in Detroit or Munich and define a portfolio strategy for Asian markets are long gone. Even in B2B sectors where cultural differences are less consequential, customer expectations can differ in many ways: UI/UX, feature sets, integrations, sales channels, service levels, procurement processes, pricing model, and of course pricing level. Successful companies localize decision-making and listen intently to their customers and partners. 

Localizing your sales & marketing  

Many tech firms will first focus on building sales and marketing capabilities in Asia. In our experience, localizing requires investing in local capabilities and empowering local teams. A simple translation effort driven by headquarters is never sufficient. 

Go local 

Build teams that work locally, speak the local language, and understand local business practices. Then empower them to make tactical decisions without headquarter input, and give them a strong voice in strategic decisions. Local colleagues are best able to rapidly interpret and respond to customer needs. Headquarters will naturally want to control expansion plans but giving local teams a strong voice will help to ensure that decisions are made based on an accurate understanding of market opportunities and forces within each country.

GM must be a builder and a communicator

The regional or country GM is a complicated role for a tech firm. In the early stages of expansion, this person will largely be a glorified salesperson. And the key success factors will be an existing customer network and sales ability. However, if the expansion is successful, the other competencies such as team management, strategic vision, and cross-cultural communication will quickly become as important.

This then poses the question of whether to hire a young and ambitious sales leader who can grow into a larger role, or to hire someone who is initially overqualified but who has proven ability to manage a complex sales organization. There is no right choice and the decision often hinges on the ambition level of the expansion plan and on budget availability. 

Market approach 

Set expectations with early deals, ensure customers are aware that you are devising a proof of concept, and use these early deals to localize and expand with more staff.

Another route for expansion is the indirect sales model, which would see your company partner with a third-party vendor that supplements or replaces a direct sales team. This works especially well for companies that use software and SaaS models in Asia.

  • The benefits of this model include: 
  • Your partner can take care of cultural nuances
  • You can use your partner’s local reputation
  • Learn from your partner’s market understanding and make changes if necessary
  • Use partner’s existing customers as target market

Localizing marketing for the Asian market can be quite a complex process, but there are some concrete fundamentals that your company can rely on when thinking about your marketing strategy. 

Content marketing 

Content marketing is key, particularly for B2B lead generation. Creating valuable content that your customers can rely on is a long-term investment, but one that builds trust, and will continue to pay dividends for years to come.

Video content marketing

Areas like China and Southeast Asia are mobile-first regions, where local people are interested in the video content put out by brands. Video marketing in general is an incredibly effective way to communicate your product and your brand ethos to customers. 

Use podcasts

Podcasting throughout Asia has skyrocketed. In China, the market for podcasting is second behind only the US and has massive potential for growth. In Southeast Asia, the rising number of smartphones has fueled a bigger appetite for podcasts. Using this format to promote your product can be highly beneficial for your B2B marketing.  

The importance of an agile team 

Regardless of cultural or economic diversity, organizations across Asia have one top business priority in common: fuelling the growth engine. In a survey of seven Asian countries undertaken by Deloitte, it was found that “driving business growth” was ranked by the highest number of organizations as a top business priority. 

Having a lean, agile team ensures that your company is alive to the cycle of change that is happening, with shorter cycles for products, channels, and operating models. How do you make your company agile and independent? Here are some tips: 

  • Give business units independent budgets so they can get going
  • Put emphasis on execution speed and set goals for experimentation
  • Allow job boundaries to blur, and emphasize work, rather than specific jobs
  • Allow fluid organizational boundaries, with a set of partners, suppliers, and joint ventures
  • HR will help steer the way, adapting career pathing, performance management, and learning and developing

Finally, hiring in Asia can be difficult and tedious, whether it’s expatriate or local talent. Once you find your potential candidates, getting all the way to onboarding them as employees can prove complicated. 

  • Labor regulations throughout Asia are not uniform, make sure you understand local labor laws before making hires and remain compliant
  • Understand the difference in employer contributions from region to region
  • Look to local talent as an alternative to expatriate talent, which generally requires work permits and tax equalization, as it can save money and time

To close, expanding to Asia can be a challenging process. The continent is made up of five major markets with a variety of customer expectations and values. Regulations across the continent are by no means harmonized, while cultural, societal, and legal barriers require a good degree of understanding before you begin your expansion, and sales and marketing practices also differ from other parts of the world. 

These barriers may seem insurmountable at first, but the value of a good partner can not be understated. A good locally based partner can guide your expansion in localizing for your new market, it can help you establish valuable connections with in-market businesses and customers, it can guide marketing, hiring and so much more. 

Asia’s continued digitization is unlikely to slow any time soon. As we stated up top, Emerging Asia will contribute 57% of global GDP growth from 2021 to 2025. The time is now to expand into the continent, as markets like Malaysia, Vietnam, and The Phillipines show tremendous growth potential, and current tech behemoths like China continue to stress the importance of foreign investment and digitization. 


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