Overseas presence is a key part of value creation
Friday, June 1, 2007
WITH the growing awareness of and exposure to the dynamics of business internationalisation, the new wave of Asian entrepreneurs plan their overseas expansion very early on, sometimes starting practically at the company's inception.
Less than half of the respondents in our survey indicated that profitability was a pre-condition to meet before they intended to go ahead with international expansion.
This suggests that for many Asian start-ups, international presence is indeed part and parcel of their broader business operation and value creation model.
For instance, one Singaporean technology start-up commented that "as a company involved in technology licencing, it would be insane for us not to be present in China".
It is the realisation of the importance of business presence across multiple locations in Asia and/or the rest of the world, rather than the pursued benefits of internationalisation, that seems to differentiate the agile players from the latecomers.
This trend is evidenced by the responses of those survey participants who, when setting up their business, didn't actively anticipate the need to internationalise, but changed their plans as their companies got onto a path of attracting clients and generating revenue.
The motivations behind the decision to internationalise were manifold but principally came down to a few common patterns.
The majority of entrepreneurs, including those who showed interest in expanding their business overseas relatively late, decided to pursue new markets and/or to move closer to existing foreign clients. Many start-ups reported going even further, with the idea of international presence cutting across their product development, executive succession planning, and fund-raising strategy.
Ironically, it was mostly companies who took the easy way out and pursued an internationalisation path that "made sense" at the time (such as Chinese-Singaporean entrepreneurs venturing into China) who in retrospect rated their decision to go overseas as premature or ill-thought-out. One participant remarked that his company was "seeking an opportunity, but probably set up in China too early".
The name of the game is spotting opportunities that go beyond market access. This is clearly manifested in some of the start-up companies' tendency to outsource selected functions, such as product design, to other locations, and/or target partnerships and alliances with multinational vendors. There is also the perception of going international as a confidence-booster, or simply "the right thing to do". A company in India shared the observation that "having an office in Singapore also gives us the 'foreign business' spin that helps attract local clients as well".
Less than half of the respondents in our survey indicated that profitability was a pre-condition to meet before they intended to go ahead with international expansion.
This suggests that for many Asian start-ups, international presence is indeed part and parcel of their broader business operation and value creation model.
For instance, one Singaporean technology start-up commented that "as a company involved in technology licencing, it would be insane for us not to be present in China".
It is the realisation of the importance of business presence across multiple locations in Asia and/or the rest of the world, rather than the pursued benefits of internationalisation, that seems to differentiate the agile players from the latecomers.
This trend is evidenced by the responses of those survey participants who, when setting up their business, didn't actively anticipate the need to internationalise, but changed their plans as their companies got onto a path of attracting clients and generating revenue.
The motivations behind the decision to internationalise were manifold but principally came down to a few common patterns.
The majority of entrepreneurs, including those who showed interest in expanding their business overseas relatively late, decided to pursue new markets and/or to move closer to existing foreign clients. Many start-ups reported going even further, with the idea of international presence cutting across their product development, executive succession planning, and fund-raising strategy.
Ironically, it was mostly companies who took the easy way out and pursued an internationalisation path that "made sense" at the time (such as Chinese-Singaporean entrepreneurs venturing into China) who in retrospect rated their decision to go overseas as premature or ill-thought-out. One participant remarked that his company was "seeking an opportunity, but probably set up in China too early".
The name of the game is spotting opportunities that go beyond market access. This is clearly manifested in some of the start-up companies' tendency to outsource selected functions, such as product design, to other locations, and/or target partnerships and alliances with multinational vendors. There is also the perception of going international as a confidence-booster, or simply "the right thing to do". A company in India shared the observation that "having an office in Singapore also gives us the 'foreign business' spin that helps attract local clients as well".
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