As August drew to a close, one of the things I had to cross out from my task list was to provide some reflections on entrepreneurship in Asia. The reflections included questions about the environment of entrepreneurship in Asia and factors or situations in Asia that either enable or pose challenges for entrepreneurial ventures. Those who posed the questions also asked whether entrepreneurial enterprises tend to aim for domestic, regional or global markets and whether there were any success stories that provided some insight into Asian enterprises.
Here are those reflections.
Growth, Status, Support
Asia, while decelerating, is still the world’s growth engine. Even the dampened growth rates in most countries in Asia are far better than the growth rates expected in the rest of the world, especially in the Western developed economies.
Rapid growth is probably the greatest positive factor driving the growth of entrepreneurship in the region. However, in the developing countries, the compliance burden and weak infrastructure continue to be a challenge for entrepreneurs. A quick check of the Doing Business index will provide insight into what the weak links are in terms of creating a conducive environment for business in Asian countries. The reality, of course, is that entrepreneurs essentially balance these increased costs of doing business versus the returns available as a result of growing economies.
On the positive side, virtually everywhere in the region, the social status of entrepreneurs has increased rapidly in recent years and so have the institutions and organizations supporting them. These include media programs and companies devoted to supporting entrepreneurs as well as organizations supporting entrepreneurs, including those that feature entrepreneur-mentoring programs. Especially, in the developing countries of Asia, the large populations of millenials, who seek more control over their time and are better versed in the tools of e-commerce, are driving entrepreneurial activity.
Context and Paths
The Asian region includes two of the most highly populated countries in the world, China and India. These two, with Japan make up half of the world’s six largest economies. Representative of the larger Asian community of nations, these large economies exemplify the truest business fact about Asia – its diversity. The Asian economies include some of the cheapest and most expensive countries to live in—reflective of the great diversity of its domestic markets and labor force. Asian countries run the gamut from innovation-driven, highly industrialized economies such as Japan and South Korea to efficiency-driven economies such as China and Indonesia to factor-driven India.
Taking advantage of government programs, when they exist, is important for entrepreneurs. In many countries, priority industries are supported by explicit government programs, such as temporary tax relief, government-financed infrastructure or subsidized training. These programs tend to focus on industries with export potential or those designed to create a key competitive edge for the country. Historically, focusing on the export market is how early stage developing economies, such as China and Thailand, have fuelled growth. In recent years, Singapore has very explicitly created a strategy for turning Singapore into a center for technology innovation as well as a hub for culture and entertainment. The 10-member group of the Association of SouthEast Asian Nations (ASEAN) also works on programs to encourage entrepreneurship in the region, including a common curriculum for teaching entrepreneurship in the ASEAN.
While necessity-motivated Asian entrepreneurs tend to focus on local markets, many Asian enterprises, especially those looking to scale, tend to focus on export markets. Intra-Asia trade has become increasingly important, especially in the wake of decelerated demand from the West and accelerated Asian demand arising from increasing Asian wealth. In recent years, the availability of online platforms and global logistics solutions have allowed even smaller enterprises to create viable business models addressing micro-niches. As many economies in Asia leapt directly onto mobile platforms, many Asian business models leverage the typically high utilization of mobile technology in Asian economies.
A key concern for Asian entrepreneurs is to find the right mix of local versus international customers and to leverage the domestic factors available in the countries in which they operate.
Stories
There are many Asian success stories. Here is a quick of some of the Asian success stories that represent some of the more interesting trajectories for Asian enteprises.
Alibaba and Wechat, both from China, represent a massive change in the way entrepreneurs do and will do business in Asia and from Asia. While it is easy to dismiss Alibaba as simply the Amazon of China, it is important to remember that Alibaba has just recently bought Lazada, which gives it a strong foothold in SouthEast Asia, one of the fastest growing regions in Asia. The most exciting parts of the Wechat model (e.g. the e-commerce solutions) are, thus far, primarily confined to China. Once the company finds a way to export this model to other countries, it will create a vastly different operating platform for many entrepreneurs. These two companies with Amazon and the social networking sites which have been widely adopted not only throughout Asia but globally represent entirely new terrain for entrepreneurs – one which enables even those with limited capital to reach to and serve a global market profitably.
In the area of design, two companies are worth mentioning. Uniqlo is presenting a take on fashion that is predicated on textile technology, something that leverages Japan’s technological strengths. CJ E&M, the Korean entertainment group, on the other hand, is leveraging Korea’s unique take on popular culture, South Korea’s technological edge, and partnering with companies across the globe creating what could be an Asian entertainment powerhouse.
CJ E&M is an example of a uniquely Asian approach to business, focusing on something distinctly Asian. By contrast, Philippine-based Potato Corner, a fast food chain specializing in flavored french fries, represents a diametrically opposite take on internationalization. Potato corner typically moves into a new market with a first mover advantage and focuses on rapid growth to dominate the market. It’s micro-franchise approach and positioning as mainstream, rather than a Philippine or regional brand, allows it to rapidly penetrate a market.
These Asian companies represent the many different ways Asian enterprises are growing their business, representing the diversity that is the Asian reality.
Readers can email Maya at [email protected]. Or visit her site at http://integrations.tumblr.com. For academic publications, Maya uses her full name, Maria Elena Baltazar Herrera.