Navigating the Complexities of Cross-Border Marketing

Businesses can be confident in handling this complexity and pursuing development prospects if they conduct rigorous research and seek help from the appropriate partners. Here are some practical concerns based on our experience as ASEAN's top international bank.

Starting a new firm in the ASEAN economies can be challenging

According to the World Bank's Doing Business database, starting a business in the Philippines takes an average of 33 days and 13 separate steps. This contrasts to 1.5 days and two processes in Singapore.2

As they move from one ASEAN market to the next, company executives must ensure that they can comply with new and possibly quite different sets of local requirements, such as product licenses, employment laws, and environmental regulations.

The process of obtaining a license can be complicated and time-consuming, typically necessitating several approvals from various government organizations. Depending on the country, a food and beverage company may be required to obtain health and safety certificates, import licenses, and halal accreditation.

Businesses may also need to take extra precautions to protect their intellectual property as they enter new markets. This is to ensure that they get the most out of their marketing and distribution efforts, and that their expansion runs smoothly.

In terms of finance, establishing a regional treasury center may assist businesses in reducing the complexities of operating across multiple markets by centralizing banking relationships, managing multiple currencies, and streamlining cash management, subject to local market regulations. Choosing the correct site for a treasury centre can be difficult, thus it is critical to engage with a financial institution with experience in different ASEAN countries.

Compliance with local rules is, of course, necessary. Businesses must be well-versed in local laws and customs to avoid legal pitfalls. The assistance of domestic legal and tax specialists, as well as industry advisors, might be an excellent investment.

Select partners wisely

While the cross-border possibility may be appealing, the penalty of incorrect international expansion can be severe, both financially and in terms of a company's reputation.

Local partners can assist limit risks by giving insights into the legal framework and local business practices, such as consumer trends and access to appropriate e-commerce platforms. Partners can also be quite helpful in navigating local government offices and making introductions to key stakeholders. Partnerships can also reduce time to market in specialised industries by offering access to a trained workforce without the need for intensive training or a lengthy and expensive recruitment procedure.

Businesses, on the other hand, must exercise prudence when entering into partnerships in order to protect their investments. Proper and diligent due diligence is required, and any expansion plans including joint ventures or acquisitions require skilled legal counsel.

Businesses can rely on the networks of tried and trusted law firms, accountants, and trade associations in their home markets, or turn to chambers of commerce and government trade promotion agencies, including consular officers, in target countries.

While several local banks have a presence in one or two ASEAN nations, HSBC has operations in six of the region's largest markets with a history in Southeast Asia dating back over 135 years. All of this puts the bank in a unique position to serve businesses as they expand throughout the region.

Be alert to policy opportunities

The regulatory environment is more than merely compliance. Changes in policies might present opportunities for businesses seeking a competitive advantage.

ASEAN economies continue to develop their network of free trade agreements, providing firms with additional market prospects. The Regional Comprehensive Economic Partnership (RCEP), for example, has increased ASEAN exports of durian, a spicy fruit popular throughout Asia, since its implementation in 2022. The RCEP has also cut tariffs among the 15 signatories, which include the ten ASEAN states, Australia, New Zealand, Japan, South Korea, and China.3

In addition to RCEP, ASEAN enterprises may profit from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and a network of bilateral accords, such as the EU-Vietnam Free Trade Agreement. The US-led Indo-Pacific Economic Framework, as well as bilateral EU treaties with Indonesia and the Philippines, are still being negotiated. Keeping track of regional and bilateral free trade agreements can help firms identify new ways to save costs in their supply chains or collaborate with new international partners.

Vietnam, for example, has pledged to eliminating tariffs on European auto parts by 2027 and most automobiles by 2030.4

ASEAN authorities continue to aim toward greater economic and financial integration. At the ASEAN Summit in Jakarta in September 2023, ministers began negotiations for a digital economy framework that will govern how the region's countries collaborate on digital trade, cross-border e-commerce, and digital payments.5

Policymakers have also committed to encourage the use of local currencies for cross-border transactions, utilizing the region's superior digital payments infrastructure to lessen reliance on external variables.

ASEAN's digital connectedness is also influencing trade regulations and assisting firms in reducing friction during import and export procedures. On January 1, the ten ASEAN countries formally adopted an electronic certificate of origin, which reduced processing times and documentation costs6. With digital transformation at the top of ASEAN's agenda, firms may be able to use new technologies to improve international processes, such as automating trade financing documents.

Sustainability regulations can also provide opportunities for firms involved in ASEAN's green transition as regional governments work to reach their emission-reduction targets.

For example, ASEAN nations approved a Blue Economy Framework in September 2023 with the purpose of promoting the region's economic development through the sustainable use of ocean resources7. Many markets provide preferential policies for the battery storage and electric car industries. Several regulatory actions have also improved access to finance for the energy transition, including the release of the updated ASEAN Taxonomy for Sustainable Finance in March 2023.8