SEA Anchor – Helping Korean Startups Enter the Southeast Asian Market

SEA Anchor is a premium Southeast Asia Anchoring program, strategic venture builder, and early-stage investor. They work closely with startups that are aligned with their investment thesis. They focus on key growth strategy development, opportunity maximization, business advisory, and connections facilitation for Southeast Asia. There are thousands of Korean startups that are looking to enter the Southeast Asian region because it offers high-potential business opportunities that are still untapped. Korean investors also see the potential of the SEA market because it increases their potential for higher returns on their investments. By joining the SEA Anchor portfolio program, Korean startups will develop the right strategies thanks to SEA Anchor’s expert panel of consultants, venture accelerators, and investors.

An Overview of the Southeast Asian Market

ASEAN SEA Anchor is very experienced in the Southeast Asian market. The Southeast Asian market has two groups. One being Maritime Southeast Asia and the other is Mainland Southeast Asia. Maritime Southeast Asia is Singapore, East Malaysia, Indonesia, the Phillippines, Brunei, and East Timor. Mainland Southeast Asia is Vietnam, Peninsular Malaysia, Laos, Myanmar, Burma, Thailand, and Cambodia.

Since Peninsular and East Malaysia are seen as just Malaysia, and East Timor is not a member of the Association of Southeast Asian Nations (ASEAN), there are 10 countries when talking about the Southeast Asian market. Therefore for startups looking to break into the Southeast Asian market, they will need to deal with 10 different governments, legal systems, religious beliefs, currency, languages, and different kinds of infrastructure. Therefore when looking to enter the Southeast Asian market, many businesses and startups narrow the list down to the top 6 biggest economies in ASEAN. This list includes Indonesia, Thailand, Phillippines, Singapore, Malaysia, and Vietnam.

These 6 countries each have distinct and unique markets. They all have their own challenges and advantages.

SEA Anchor Understands the Potential of the SEA Market

There is a reason why Korean startups are eager to enter Southeast Asia. This is why SEA Anchor has developed the right program specialized for Korean startups. However to fully understand the potential of the SEA market we need to see ASEAN as a whole. The GDP of ASEAN sits at $2.95 trillion and is growing at an annual rate of 5%. Therefore Korean investors and VC firms are looking for projects that focus on the Southeast Market. The population of Southeast Asia is around 655 million. Compare this to South Korea which has a population of 51 million. The fact that there is 13x the potential consumer base shows the vast business opportunities in the SEA region. Furthermore, Southeast Asian internet users are the most engaged in all the world.

For example, in Thailand, a typical consumer spends 5 hours a day on their mobile internet, ranking Thailand #1 in the world in this category. The Philippines and Malaysia are not far behind averaging 4 hours a day on mobile internet. Compare this usage to the U.S. or U.K. where the average consumer spends around 2 hours a day on mobile internet.

SEA Digital MarketSource: WeAre Social, Hootsuite Jan 2018

The Rise of eCommerce in SEA?

SEA consumers are constantly using social media platforms like Facebook and Instagram. In fact, the growth of smartphone users is twice as high as the US. However, this high smartphone use has not led to a sharp rise in eCommerce. Many SEA consumers will shop offline. This is very noticeable when you visit SEA countries which have shops ranging from luxury shopping malls to local bargain outdoor markets. For example, you can find a street vendor selling various goods at almost every corner in Thailand. SEA makes up 3% of the $3.5 trillion global eCommerce industry. Compare this to China which accounts for more than half of all eCommerce sales worldwide.

So the question is, why are SEA consumers who are very active on their mobile phones, not shopping online? The main reason seems to be the payment aspect. Most SEA consumers are more comfortable with cash than online payments. The two main reasons are trust factors and the fact that there are many SEA consumers that are unbanked.

Therefore the eCommerce industry is primed to explode. Many experts predict that eCommerce in SEA will grow to $88 billion by 2025. South Korea is already in the top 5 for eCommerce sales bringing in over $100 billion in sales in 2019. Therefore many Korean eCommerce companies are looking to break into Southeast Asia to expand their reach.

ASEAN has been very active in looking for a collaboration to become a single market and production base. Much like what has been done in Europe with the EU. This will take time as there are many differences that exist between the member nations. However once this is done, there could be a new player in the eCommerce scene in SEA within 5 years.

SEA eCommerce Sites
Source: App Annie Intelligence

The Challenges of Entering the SEA Market

This is why there is a lot of pressure for Korean startups to enter the SEA market. However many Korean startups are hesitant because they know they are not equipped to handle such a difficult task. Korean culture, regulations, geography, and infrastructure are different compared to each country within ASEAN. This is because Southeast Asia is a highly fragmented market. Even tho ASEAN is doing their best to fix this issue, it will take many years before they are successful. Therefore any Korean startup that is successful in one country in SEA, might not find the same success as they look to expand into other SEA markets.

This means they will have to start at square one every time they enter a new region. However, this is the only way to expand into the SEA market. For this reason, SEA Anchor is headquartered in Singapore. They realize the best way for Korean startups to break into the SEA market is through Singapore.

Singapore is the First Step into SEA

Singapore MarketKorean startups make the mistake of trying to launch into multiple countries at once. That is not the right strategy. Korean startups need to enter one market at a time. Each market is unique and it is crucial to start with the market which resonates well with its products or services. This is why many Korean startups look to enter Singapore first. Singapore ranks #1 in Asia for IP protection and sustainability. Singapore is the easiest country to do business while at the same time having a competitive economy. However, a Korean startup will still need help entering the Singapore market. Doing business in Singapore is about building a personal relationship first. Therefore it will take time for a Korean startup to build these relationships unless they have a partner who already has cultivated these relationships over the years.

Why Korean Startups Should Join SEA Anchor

Entering the SEA market is not going to be easy. There are different regional and local laws from brand protection to intellectual property registration. For example, Vietnam, Cambodia, and the Phillippines have restrictions on FDI (Foreign Direct Investment). This means that they require international firms to have local partners as well as local shareholders. Therefore before even entering the market, there will be months of screening to just get the approval to enter.

This is why Singapore is what SEA Anchor focuses on first as they do not have these restrictions when it comes to FDI. There are other issues to deal with when entering the Singapore market. Starting a business will require construction permits, registering the property, getting credit, and even getting electricity to your on-premise office. This is before having to worry about paying taxes, making and enforcing contracts, and finding investors.

SEA Anchor understands the business environment, the role of government, and the culture of not just Singapore but the whole SEA Market. They know which countries make it easier for startups to establish their businesses in their country while others still have bureaucratic practices that prolong the process of starting a business. Remember, each country is different, just because your startup is successful in one country, doesn’t mean the same strategy can be applied in another country. This is why it is important to have a partner that understands each region and can develop the right strategies for that particular region.

The SEA Anchor Venture Acceleration Program

SEA AnchorThis program is specially designed by a team of experienced venture enablers, accelerators, mentors and key influencers with deep knowledge of the Singapore market. Korean startups looking to enter Singapore or looking to raise funds, joining the SEA Anchor program is a must. The program will help co-develop the right strategies and build the right network to accelerate their growth. They can help early-stage Korean startups raise seed funding or help more established Korean startups break into the Singaporean Market. However, participation is only available via invitation or introduction which Seoulz can help with.