Investing in Tomorrow: The Bright Future of Franchise Business in Southeast Asia
ASEAN countries are home to 655 million people. Their economies are fast rising, and their demand for certain franchise products has already overtaken that of India. In these countries, there is a varied spectrum of people in a huge middle class with disposable income; income that they wish to spend on brand names.
The worldwide franchise market in Southeast Asia is rapidly expanding. Historically, US franchises have looked to English-speaking countries such as Canada and the United Kingdom for growth opportunities. Outside of English-speaking countries, China and India were popular destinations. More franchises are now looking to Thailand, the Philippines, Indonesia, Cambodia, Singapore, and other nations in the Association of Southeast Asian Nations, or ASEAN.
With its expanding GDP per capita and young population, franchise brands recognize this market as one into which they must expand. Because of the area’s interconnectedness, brands face fewer challenges when expanding into more ASEAN countries and are more likely to offer products and services across most of the ASEAN countries, though there are enough differences between individual nations to rule out a ‘one-size-fits-all’ approach.
Southeast Asia’s economic foundations are very robust, and they underpin the region’s promise. It’s impossible to lump 655 million people together, but the region shares many traits. If it isn’t already, Southeast Asia will be an incredibly appealing market for worldwide franchise brands. The region benefits from real GDP per capita increases, a growing middle class, and a relatively young population. It is a region of the world experiencing economic progress for the first time, and with it, new goals and desires.
People now have more spare cash and time as a result of Southeast Asia’s rapid development and shift away from agriculture and toward more well-paying and productive jobs. This is where franchise brands can step in and offer people the products and services, they now desire. This is mirrored in the types of brands that are popular around the country.
Consumer-facing, product-based brands appear to be quite successful. The largest American fast-food businesses arrived in the region some time ago. Their expansion can be seen in the region’s first unicorn, Grab. Grab is a food delivery and payment service app, and its success reflects the region’s rise and opportunities for companies worldwide. While the region shares characteristics and proximity, franchisors should avoid seeing it as a single market. Countries can have huge disparities in culture, law, and commercial practice.
Southeast Asia’s Franchising Future
The economies of Southeast Asia will continue to rise as more people migrate to cities and abandon the agrarian lifestyle. This, together with the region’s young population, will offer an appealing proposition for worldwide businesses.
Increased disposable money and increased refinement in tastes, wants, and requirements will lead to the rise of firms that were not as popular 20-30 years ago. Training, extra-curricular education, fitness, and service franchisees will be in high demand.
The ambition of the emerging middle class is typically mirrored in their spending habits, and educational franchises are well positioned to prosper in Southeast Asia. Aspirations are becoming more practical in real life in the region, therefore parents will enhance their children’s education as best they can, as is happening around the world.
The only constraint to the region’s franchising growth is a lack of cash. While loan availability has improved significantly, it still has room to grow. It is frequently easier for franchisees in markets such as Singapore, Malaysia, and Thailand to borrow funds for their franchise firm, however it is more difficult for franchisees in other nations.
Conclusion
Expansion into Southeast Asia market should be a no-brainer for well-capitalized brands. While it may not be the sexiest destination in the world right now, it is on the right track. It is a region that sees a lot of cooperation and has found a lot of stability thanks to ASEAN. Southeast Asia may be a main growth region even for smaller franchises.
According to economic metrics, it is one of, if not the, fastest-growing region in the world. With its young, aspiring populace, it’s the ideal location for forward-thinking brands to establish themselves.
Hebronstar Strategy Consultants
Rezanda Suteja / Associate Consultant
Sources :
iFranchise Thailand. (n.d.). ASEAN Franchises Showing Promise [Web article]. Retrieved from https://ifranchisethailand.com/articles/asean-franchises-showing-promise/
Detik Finance. (n.d.). RI Punya 1,475 Waralaba Terbanyak di Asia Tenggara [Web article]. Retrieved from https://finance.detik.com/berita-ekonomi-bisnis/d-3289551/ri-punya-1475-waralaba-terbanyak-di-asia-tenggara
ASEAN Briefing. (n.d.). ASEAN Market Watch: Korean Investment, Laos Cambodia Infrastructure, Thailand Retail Sector [Web article]. Retrieved from https://www.aseanbriefing.com/news/asean-market-watch-korean-investment-laos-cambodia-infrastructure-thailand-retail-sector/
