E-commerce segment in SEA is estimated to double by 2025 — by rising demand from Indonesia, Thailand, the Philippines, and Vietnam.
From Australia to Hong Kong, the Asia Pacific or APAC is quickly making a name for itself as a place to conduct business.
But what is it about this region that makes it so attractive to businesses? Is it the region's wealth of natural resources and large population? Or is it something else entirely?
And that's why we're going to break down the factors that make the Asia Pacific an exciting business destination.
1. A Vast Talent Pool
Businesses looking to access skilled talent were primarily limited by geographical considerations in the past.
Fortunately, technological advances and the advent of remote work have changed all of that. And this, coupled with Asia Pacific's large population and diverse talent pool, is an excellent opportunity for businesses looking for a new advantage.
Singapore and Hong Kong, in particular, are two attractive destinations with their highly skilled workforces and impressive levels of tech literacy.
Additionally, both countries feature a unique blend of Asian and Western influences. All of which makes corporate cultural assimilation easier while still allowing companies to get a local's perspective of current market conditions.
Hence, it should come as no surprise that many international organizations choose to locate their regional HQs in either Singapore or Hong Kong.
2. The E-Commerce Market
Growing on the back of the COVID pandemic, Southeast Asia's e-commerce market has become a dominant force on the global scene.
Research shows that Southeast Asia's e-commerce segment is estimated to nearly double by 2025 — all driven by rising demand from countries like Indonesia, Thailand, the Philippines, and Vietnam.
From fashion and beauty products to electronic devices, it's clear to see that consumers in Southeast Asia are more than willing to participate in the e-commerce market.
3. The Popularity of E-Wallets
Despite making up a significant portion of the e-commerce market in APAC, Vietnam, the Philippines, and Indonesia are among one of the most unbanked countries globally.
The term unbanked refers to segments of the population who have limited or no access to financial services like bank accounts. So, how can citizens in such countries gain access to the global e-commerce market?
The answer is simple — digital wallets.
Also known as e-wallets, digital wallets function as a store of value and allow users to transfer/receive funds without using a bank account.
From GoPay in Indonesia to GCash and PayMaya in the Philippines, e-wallets have opened up a whole new world of possibilities for unbanked populations.
Whether it's accepting remittances from overseas to shopping online for products, e-wallets allow businesses to reach previously inaccessible populations. And with payment schemes such as BNPL, even unbanked individuals now have access to basic financial services such as microfinancing.
All of which serves as a catalyst for strong and vibrant economic growth in the years to come while at the same time cementing the Asia Pacific region as a top business destination.
4. Smartphone Penetration and mCommerce
But, of course, all of the above would not have been possible without smartphones and other mobile devices.
Smartphone penetration throughout the Asia Pacific region has grown steadily over the years. And the main contributing factors were a rising middle class and more affordable smartphones.
And in turn, this, coupled with the COVID pandemic, has encouraged the widespread adoption of e-wallets. But that's not all the smartphone revolution has brought about.
It has also encouraged individuals to begin shopping on their smartphones, giving rise to the term — mCommerce, i.e., the process of purchasing goods and services with your mobile device.
This is exciting because mCommerce presents businesses with another channel to better engage with the Asia Pacific market. By pivoting their offerings to tap into this niche, companies can get an edge over their competitors.
5. Ease of Doing Business
Besides its diversified economy, large, tech-literate population, and robust e-commerce growth, Asia Pacific is a favored business destination because of its pro-business policies.
DB Score's 2022 report, New Zealand, Singapore, Hong Kong, Malaysia, and Australia were all listed as great places for business. Stable governments manage all 5 countries with foreign investor-friendly policies.
For example, both Singapore and Hong Kong are tax havens and financial centers. Meanwhile, Australia and Malaysia have abundant natural resources and a large population to tap into.
While New Zealand has neither a large population nor financial center status, it stands out because the country allows new businesses to be started up within just half a day. Compared to other countries, registering a new enterprise can take up to a year.
One Platform to Rule Them All
Although the Asia Pacific region is one of the most exciting business destinations, cross-border transactions can quickly complicate things.
For one, a foreign business operating in a local market has to register a new organization in its host country while subject to local laws and regulations.
But, with XanPay, this doesn't have to be the case. XanPay is a payment platform that allows businesses to accept payments from countries all over Asia Pacific — without any tedious legacy processes associated with cross-border transactions.
For more information on XanPay and our range of offerings, check us out here.