What are the 3 Common Issues Startups Face When Expanding In SEA – Have a Look

Southeast Asia is on the radar of many global investors and venture capital firms as one of the regions with great opportunities and untapped potential for raising the next startup unicorn. As well, many startups and companies from outside the region are eyeing expansion into the market due to its huge population base and good mobile and internet penetration.

The total population of Southeast Asia surpasses 600 million, and it constitutes about 8.5% of the world’s population. It’s the world’s third most populous geographical region after South Asia and East Asia. It is also one of the most culturally and ethnically diverse regions in the world, with nearly over 800 native languages spoken in the region, and is home to a huge number of followers of the world’s religions such as Islam, Buddhism, Hinduism, Confucianism and Christianity, as well as practitioners of traditional shamanistic and animistic beliefs and practices.

Being such a culturally and linguistically diverse region, it can be quite daunting for any startup looking to enter or expand into different markets or countries in Southeast Asia. Indeed, here are three challenges that startups face when expanding from one Southeast Asian market to another.

Assuming Things Will Work the Same

A common mistake that startups make when expanding their business operations from one market to another in Southeast Asia is assuming that things will work or function the same way. The truth is, every market in the region has its own specific cultural nuances and way of doing things even if they do share a number of similarities, like Malaysia and Indonesia which have mutually intelligible national languages and are both Muslim-majority countries. Geographically-wise each country is also quite different and varied as well, so factors like each country’s transportation and logistics must also be taken into account.

Companies and startups should enter each new market with a clearly defined vision and scope of what their products or services can offer to the local market, but they should be flexible and adaptable in their approach, and not be afraid to make changes to suit local needs and wants. If the company were to stick rigidly to their original plan without making the appropriate adjustments or adaptations, there is a high chance that their venture will not meet expectations, or fail. In short, if the market reacts differently than expected, the startups should listen to the market earnestly and be flexible in making any suitable adjustments instead of just running things as they were.

Communication Barriers

Another challenge that startups face when expanding into different markets in Southeast Asia is the many different languages spoken and diverse societal norms and behavior practised by the people there. This presents a challenge for startups that want to build teams that can effectively communicate and work together across different Southeast Asian countries.

Indeed, it is not just the language barrier that presents a challenge for startups. There are also cultural and custom differences which can affect the way the organization is run, besides influencing the company’s own internal culture. Operating in an entirely new environment can also bring stress to the startup’s members as well.

As always, doing one’s due diligence before entering a new market will pay off handsomely. Study and understand the local culture and customs, and interact positively with the locals to get a general feel of the market. Hiring locally also goes a long way towards establishing a solid foothold in the market, especially if the position is one of power or influence.

Understanding Each Market’s Laws and Customs

Sometimes startups make the mistake of not fully understanding the unique laws and system of regulations of the market they are entering. Either that or they assume that the customs and laws of one place in Southeast Asia are the same as another, or are very similar. These erroneous assumptions can lead a startup to waste their precious resources to little avail. Again, fully understanding the market regulations, conditions and laws of the country before expanding into it will bring much benefit and save on costs in the long run. Reaching out through the local network or communicating with the local bodies or regulatory associations is a good way for a startup to gain a better understanding of the laws and regulations of the market they are expanding into.

Southeast Asia offers many opportunities for a well-prepared startup to launch and thrive. By understanding each market and country’s cultural nuances, societal norms, laws, regulations and treating them with courtesy and respect while remaining nimble and flexible in the face of changing circumstances, startups can do very well and prosper.