According to the 2020 State of Global Expansion™ Report: Technology Industry, nearly a quarter (23%) of U.S. and UK tech executives identified Asia as their target region for global expansion in 2020.
Of the top 10 most promising global markets on the report’s Global Expansion Tech Index™, Singapore tops all others, with Hong Kong coming in fifth. This post includes an additional three Asian markets found on the index’s top 20 list and explores how each market earned its ranking, the determining criteria, and challenges businesses must anticipate in some of these top markets.
Why Asia Remains a Top Global Expansion Region
Asia is the second-most desired region for growing U.S. and UK tech firms, placing behind Europe. The following criteria determined each market’s ranking:
- GDP growth and inward investment (30%)
- Availability of skills (25%)
- Complexity of regulatory landscape (20%)
- Connectivity (15%)
- Quality of infrastructure (10%)
In 2020, nearly a quarter of U.S. and UK tech firms see Asian markets as their top choice for growing revenue. 33% of tech executives believe Asian markets top others in terms of tech skills availability—a four percentage point increase from 2019’s report. China, Japan, India, Hong Kong, and Singapore were the most commonly-targeted markets for top talent access.
While China is the twentieth-most desired market, 56% of executives rank it higher than other Asian markets when it comes to driving revenue growth.
#1 Asian Market for Global Expansion: Singapore
Singapore is no longer just a leading market for revenue growth. In 2020, U.S. and UK tech executives named it their top market for global expansion.
Singapore rose four spots from last year’s Global Expansion Tech Index to claim the #1 spot on this year’s report. 21% of U.S. and UK tech executives cite Singapore as their first choice for accessing top tech talent in the region.
But it’s not just talent drawing tech firms. Singapore scored well across the board; the country topped all other markets in terms of ease of doing business and outperformed all other Asian markets on the index in regards to skills availability and innovation capability.
#2 Asian Market for Global Expansion: Hong Kong
Despite social and political unrest, Hong Kong remains a top-five choice for tech executives in 2020. Hong Kong is the fifth-most desired global market for expanding U.S. and UK tech firms.
26% of tech executives see Hong Kong as the top destination in the region for accessing premier talent, ahead of the index’s top market, Singapore.
While Hong Kong’s GDP did not fare as well as other Asian markets in 2019, some analysts viewed the country’s unrest as a “hyper stress test,” with the country passing that test. Hong Kong’s dollar sits at near three-year high and, as of December 2019, traded at a six-month high on the Hang Seng index, Hong Kong’s stock market.
Hong Kong places closely behind index-topper Singapore in terms of regulation and ease of doing business. But perhaps more impressive is Hong Kong’s foreign direct investment, topping even Singapore, at 23.8% of its GDP.
#3 Asian Market for Global Expansion: South Korea
South Korea is among the top Asian markets for the second year in a row, thanks to strong performances in multiple categories. It remains one of the easiest markets in which to do business, both in- and outside of Asia. The World Bank listed it as the fifth-most business-friendly country in the world, and the third-easiest market in Asia, behind only Singapore and Hong Kong, respectively.
Of the Asian markets, South Korea places third in terms of knowledge availability, making it one of the most promising markets for firms’ tech talent searches. Businesses reliant on exports and imports find South Korea an easy market in which to do business. It places third behind Singapore and Hong Kong, with South Korea’s infrastructure streamlining regional and global trade on the Global Expansion Tech Index.
#4 Asian Market for Global Expansion: Malaysia
Bordering Singapore, Malaysia may come as a surprise to firms just exploring global expansion—but it has much to offer. Much like its neighbor, Singapore, and other top Asian nations, Malaysia offers one of the most business-friendly markets anywhere.
Though Malaysia sits fourth among Asian markets overall, it takes third place (behind Singapore and Hong Kong, respectively) for its GDP growth. Similarly, Malaysia’s foreign direct investment outpaces all other markets in the region except for Singapore and Hong Kong.
#5 Asian Market for Global Expansion: China
China remains an attractive market for companies across the globe, with U.S. and UK tech firms citing it as a top market for its strong GDP. China’s GDP (surpassed only by the United States’ GDP) is the primary driver of growth opportunities.
Despite China’s low scores in most categories, 56% of tech executives see China as the top Asian market for revenue growth. For the U.S., 59% cite China as a key market for global growth.
China scored poorly for secure internet connectivity, rates of internet use among its population, inward investment, and, in stark contrast to other top Asian markets, skills availability.
However, businesses must weigh whether or not other Asian markets on the index offer more favorable environments. And with the recent coronavirus (COVID-19) pandemic, businesses must heavily consider a flexible expansion method and plans into China.
Elevate Your Asian Expansion with an Experienced Partner
Asia offers growing tech firms fertile ground for growing their brand abroad. But companies must perform their due diligence before selecting a market for global expansion. The 2020 State of Global Expansion™ Report: Technology Industry is an excellent place for firms’ initial research into Asia.
If you’d like to learn more information about why the markets outpaced others and how they compare to the rest of the world’s top markets for tech businesses, download your free copy of the report here.
Want to learn more about how Velocity Global’s International PEO solution enables firms just like yours to establish their global presence without the costs, time commitment, and stress of setting up an entity? Reach out to us today.