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Top 4 things you need to know before starting a business in Asia
December 3, 2019

How to expand your business into Asia-Pacific, what difficulties and opportunities await entrepreneurs when entering this market, and how consumer behaviour differs in China, Singapore, Indonesia, etc. – this and more was addressed in the speech of Audrey Ottevanger, Director and Head of APAC at international payment service provider and direct card acquirer ECOMMPAY.

PaySpace Magazine has summarised the key points from her presentation at ECOMMTALKS 2019 , a conference held earlier this month in Riga, Latvia.

1. Why the Asia-Pacific market is so profitable for business

Asia is one of the fastest growing and rapidly developing regions in the world, with 49 countries and a total population of 4.5 billion people. In the Asia-Pacific region, China is responsible for half of all eCommerce sales. For instance, during this year’s Singles’ Day, Chinese consumers spent $39.6 billion.

The region is first in the world with regards to number of millionaires, while the middle class is also growing. Over the next five years, 88% of new middle class consumers will be Asian citizens (particularly from Indonesia and Vietnam) with an average age of 30 years old.

The rapid growth of eCommerce is due largely to emerging industries, such as online retail, travel, and media, as well as specific factors affecting the regional economy:

High smartphone usage. Consumers in Asia-Pacific skipped desktop computers and went straight to mobile. In China, 8 out of 10 transactions are made through mobile devices. If you’re targeting this market, it’s imperative that you provide either a mobile application or adapt your site for mobile browsing.

Healthy funding. In Ottevanger’s talk, she mentioned that the volume of investment into the region amounted to $35 billion in recent years.

Ecosystem challenges are being resolved. One of the impediments to widespread eCommerce has been the logistics of delivery, but this issue has now been largely solved by the numerous startups, as well as established players.

Digital financial services, including online and offline payments, have reached an inflexion point due, in part, to the numerous startups providing access to financial services for customers without a bank account. Nevertheless, Ottevanger noted that, despite the high level of digital and bank account penetration, cash is still popular as a payment method throughout the region.

4 fastest growing online segments by user adoption:

  1. Travel
  2. E-commerce
  3. Online gaming
  4. Ride-hailing

Top eCommerce merchant segments:

  1. Travel
  2. Consumer electronics
  3. Clothes & apparel
  4. Household goods
  5. Groceries
  6. Health & beauty

To successfully establish a foothold in Asia-Pacific, Ottevanger recommends careful research and separate business strategies for each country.

2. What business should keep in mind before entering Asia-Pacific

The more established a market is, the greater the competition. Ottevanger advises companies looking to expand into Asia-Pacific to identify 1-3 key markets, grouping them by a common attribute (language, for example), rather than attempting to introduce a product or service to all countries within the region at once. She mentioned a company that opened a business in the Philippines, Thailand, and Indonesia, i.e. countries with the most rapidly expanding middle class, as an example of a success story.

It is also important to adopt a business strategy that takes into account the cultural features of each country. In particular, Ottevanger noted the importance of establishing good relations before starting operations, as well as helping the business maintain a good image.

Ottevanger also emphasised the importance of localisation for most markets in the region. English can be used in Singapore, Malaysia, the Philippines, and Hong Kong, but local languages are necessary when targeting other countries in Asia-Pacific.

Last but not least, it’s necessary to familiarise yourself with local laws and regulations, especially concerning taxes and legal repatriation of funds. As an example of countries with strict financial regulation, Ottevanger cited Malaysia and Indonesia, whose national currency (Malaysian Ringgit and Indonesian Rupiah) can’t be traded outside the country. Vietnam, meanwhile, has a 10% withholding tax on all transactions.

In Ottevanger’s opinion, Singapore is the best starting point for expansion due to its open international market. English is one of the official languages and the one most commonly used in business communications. Also, the large number of expatriates residing in the country have boosted eCommerce, with cross-border transactions making up 55% of all eCommerce activity.

3. Features of consumer behaviour in Asia-Pacific**

Omnichannel is more than a buzzword for local consumers in Asia-Pacific. It’s standard practice for shoppers to begin their customer journey on a mobile phone, check out on a laptop, and pick up the product in-store (or any combination of the three).

Consumers typically shop in the following way:

  1. Check prices
  2. Read reviews about products and services they are about to buy
  3. Look for special offers or promotions

In Asia-Pacific, social media plays an influential role when it comes to eCommerce. Thai buyers using the Line messenger are able to directly communicate with merchants or customer service, asking any questions before buying a product. Chinese shoppers use social media to leave both positive and negative reviews for purchased goods and services. Indonesian customers are the most numerous and active users of Twitter in the world. Businesses preparing to enter this market must have a presence on social media in order to appeal to local consumers.

4. Accepting payments – relevant solutions for each target market

When it comes to eCommerce, it’s important to know how each consumer segment in each Asia-Pacific country prefers to pay. For instance:

1. Bank transfer. This payment method is most popular in Malaysia, Thailand, Vietnam, Indonesia, and the Philippines. Consumers are used to payment pages redirecting them to their local banks or generating a 16-digit code, which the customer then needs to use for payment by bank or via ATM.

2. Credit/debit cards. Card payments are most often used in Singapore, Malaysia, and Hong Kong. In other countries across Asia-Pacific, credit card penetration is “pretty low” – about 10% or less. Citizens also use local cards, which aren’t Visa or Mastercard. These cards are valid only in that particular country, since their acquirers are domestic banks.

3. Digital wallets. E-wallets are the fastest growing payment method in Asia-Pacific. Among the most popular solutions are Alipay, WeChat Pay, as well as alternatives GoPay and GrabPay. Some countries also use their own e-wallets for domestic transactions, for example, Boost in Malaysia.

4. Cash-based payments. This option is most popular in Indonesia, the Philippines, and Thailand. The consumer can pay for goods and services with cash in the bank or pay for products in 7-Eleven or supermarkets.

5. Other. Cash on delivery is also a common payment method.

Before expanding a business into any country in Asia-Pacific, it is necessary to study the most popular payment methods for the target audience and provide them on your checkout page. For example, young people in Indonesia prefer to use e-wallets for payment, while the older generation prefers to pay in cash. In this case, the cash payment method implies the ability to pay for the product or service in local currency.

In addition to using a mobile application and/or a mobile version of the website, the entire customer journey should be streamlined and the payment page should be simplified. Filling out numerous forms when placing an order can lead to significant shopping cart abandonment among Asia-Pacific consumers. One of the best technologies available to address these preferences is the one-click payment option.

Payment methods in different countries of Asia-Pacific

CountryPayment methodsInsights
ChinaE-wallets (Alipay, WeChat Pay, UnionPay) – 54%
Cards – 21%
Bank transfer – 11%
Cash – 10%
Other – 4%
  • Mobile sites are key for e-commerce business
  • No local entity required or local bank account needed for cross border payments
  • High per transaction value for goods and services
IndonesiaCards – 34%
Bank transfer – 26%
E-wallets – 20%
Cash – 14%
Other – 6%
  • Indonesia is a highly regulated market and the Indonesian rupiah (IDR) can’t be repatriated
  • Low credit card usage, bank transfer is preferable
  • High mobile phone usage
  • Rise of E-wallets
SingaporeCards – 59%
Bank transfer – 10%
E-wallets – 14%
Cash – 14%
Other – 3%
  • SGD can be accepted from outside Singapore
  • USD is acceptable for online purchases
  • High penetration of credit cards
  • 3DS enabled transactions
ThailandCards – 30%
Bank transfer– 23%
E-wallets – 23%
Cash – 15%
Other – 9%
  • Online bank transfers and cash-based payment methods are predominant
  • Payment fraud is prevalent so merchant security credentials are important
  • THB has to be offered
Philippines Cash, e-wallets, OTC payments – 65%
Bank transfer – 30%
Cards – 5%
  • Cash type payments are preferred
  • Authorisation rates tend to be lower in the Philippines than in other markets
  • Lower average spending compared to the rest of SEA 
VietnamBank transfer – 34%
Cards – 22%
E-wallets – 19%
Cash – 19%
Other – 6%
  • Card payment here is greater with debit cards than credit cards using local banks
  • Digital wallets are on the rise
  • Cash is still popular but will be decreasing
  • Withholding tax on all transactions of 10%
MalaysiaBank transfer – 46%
Cards – 29%
Other – 11%
E-wallets – 7%
Cash – 7%
  • Online banking is the most popular
  • FPX is not available for cross border payments with no local incorporation
  • Strong financial regulation control, and the Malaysian Ringgit is a non-tradable currency that can’t be settled outside the country
  • 3DS is mandatory
JapanCards – 65%
Bank transfer – 14%
Cash – 13%
Other – 6%
E-wallets – 2%
  • Cards are the primary way to pay – JCB
  • Cash via Konbini is popular amongst teens
  • Low fraud rate
  • Localisation is a must in every aspect


Gate2Asia – a simple solution for a complex market

One solution ECOMMPAY has engineered is Gate2Asia, which combines all relevant payment methods within one integration. Click here to find out more.

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