“Things can get quite rocky”: Six tips for surviving an expansion into Asia

We often hear of Australian startups with grand plans to expand into the US, or dreaming of taking on the European market, while overlooking a huge and vastly populated continent right under their nose.

Asia is a patchwork of different cultures, languages and economies, and the very notion of trying to set up business there can understandably feel overwhelming. But it’s possible. And, according to these founders who have done it, it doesn’t even have to be all that hard.

From mindset to relationships, to nitty-gritty practical stuff, here are our six tips for a successful expansion into Asia.

Understand the market, and the culture

Anthony Johnston is the founder of CoVentured, a platform connecting corporates with startups for events, partnerships and other collaborations. Last month, CoVentured announced it has launched in Singapore and Hong Kong, as well as in the UK.

Speaking to StartupSmart, Johnston said it’s important to make sure the product-market fit you have in your own market is also applicable in another.

Your product’s success on home turf “doesn’t mean it’s necessarily relevant in other markets”, he says.

This could be because of other competitors, but it also comes down to cultural differences — and this is perhaps an even bigger consideration.

In certain Asian cultures, there’s a strong focus on local networks, Johnston explains.

“The more people you know, and the better you know them, the more likely you are to be able to sell,” he says.

Your brand also needs to be ready to go, and aligned to the target market, and you may have to rework your logo, and the language used in your materials, he advises.

“You can bang away at that market for some time and not succeed,” he adds.

“And it’s not necessarily a product fit, it’s how you sell, and it might not fit culturally.”

Speaking to StartupSmart, Sarah Liu, founder of The Dream Collective, also notes it’s important to be mindful of cultural differences that may not be obvious.

Liu has expanded Sydney-based The Dream Collective, a corporate leadership training platform for women, to Singapore, Tokyo and Shanghai, and notes in some Asian cultures, people have a slightly different concept of time.

“In Australia, if you’re efficient, meet someone and don’t take up too much time, get straight to the point, they will respect you for that,” Liu observes.

“In Asia, if you’re too to the point, they will think you’re not investing time in the relationship,” she adds.

“It’s not that you shouldn’t be efficient, but it’s not about getting things done the quickest way.”

But, don’t be intimidated by it

Expanding into Asia is challenging, “but don’t think it’s harder than it is”, Liu advises.

When The Dream Collective launched in Japan, it didn’t have anyone on the team who spoke fluent Japanese.

“We didn’t want to invest too much into a full local team before we really understood the market,” she explains.

But the platform still managed to take off in the city.

It’s okay to take a minimum-viable-product approach and to pivot and change the model along the way so it fits into the new country and culture.

“Don’t feel like you need to have a local team and a local everything to begin with, and invest so much upfront,” Liu says.

“It’s okay to take a step-by-step approach.”

Startup founders can sometimes put expansion in the ‘too-hard’ basket, assuming the cultural differences will be an insurmountable barrier. And they should be mindful of those differences, Liu says.

“But, beyond all cultural differences, we are all human, and humans connect in a similar way.”

If you’re authentic, genuine, willing to learn and customer-centric, “that surpasses the so-called cultural differences”.

Be flexible

Both Johnston and Liu recommend founders remain flexible, and willing to divert from their original plan, as they embark on their international expansion.

If it doesn’t work, pivot, Johnston says.

“If you’re going to do it, you’re not going to test it just to pull out, you’re going to test it to make it work. There’s a big difference.”

The key is in “learning as you go”, he adds.

Asia is a very big market, and a very big opportunity for Australian startups, Liu notes.

“You don’t really have to have the right solution right there and then,” she explains.

“Be ready to learn, and don’t assume what will work in Australia will work in Asia.”

For Australian founders, “it’s all about being a little bit vulnerable”, Liu adds, and not going in with the exact same tactics as they have used so far.

It’s about entering the market in order to learn about it, while knowing you may or may not succeed.

For The Dream Collective, this approach “actually took the pressure off a lot”, Liu says.

“You let your market tell you whether it’s going to fly or not.”

Get the practicalities down

Johnston warns startup founders not to overlook some of the practicalities of entering the Asian market, and some of the structure of running a business.

For example, “make sure you get good local legal and accounting advice”, he advises.

There may be differences in things such as IP, privacy and HR laws, he warns, which could trip you up if you don’t fully understand them.

Equally, he says it’s important to make sure your investors are on board with your expansion plans, and that their vision is still aligned.

Wherever your funding is coming from, make sure the people involved know what’s going on and are prepared to be patient, he says.

“Because things can get quite rocky.”

Invest your time

Liu stresses the importance of the founder themselves investing time into understanding the market they’re entering personally, and into building trust in the ecosystem there.

“Ultimately, the buck stops with the business owner, and if you don’t understand the market and you rely on your team to understand the market, you’re not necessarily making the right decisions,” she says.

While she admits “I know it’s not always feasible”, Liu stresses the importance of spending time to build trust and familiarity within the market, suggesting founders spend between six months and a year on the ground in the Asian city they’re launching in.

Of course, Australian customers have to trust the business too, “but how they go about that trusting process is slightly different”.

Focus on you

Similarly, Johnston says it’s important to be patient. At CoVentured, the team started talking about entering the Asian markets about one year in. It was six months later that they felt confident enough to make the leap.

However, the timeline will be different for every business, and “it’s really hard to define”, Johnston says.

“You need evidence before you expand,” he explains.

“That takes many shapes depending on your business.”

First, you must understand where your product fits in your own market. That will help you extrapolate that to other regions.

“If you don’t have that data, then you’re making a lot of assumptions, and assumptions come with risk,” he says.

Startups should make sure they’re ready before they do anything — marching to the beat of their own drum rather than reacting to what competitors are doing, Johnston says.

“It’s easy to say, but it’s hard to do,” he adds.

If you already have the capability to respond to competitors’ moves, then you should.

But if that’s your only motivation, “because you’ll veer away from what your own plan is, and that kind of gap can expose you”.

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