Confident mid-sized Asian companies plan to internationalize

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Mid-sized companies in Asia are growing in confidence and are looking for opportunities to diversify and expand into new markets. The Standard Chartered report Asia’s Mid-Sized Companies: Confident, Dynamic and Growing, is the result of surveys conducted with business leaders in 300 businesses across the bank’s key markets in China, India, Indonesia and Malaysia. Mid-sized companies are those with an annual turnover of between US$30 –US$100 million.

Business confidence amongst CEOs and CFOs of mid-sized Asian companies is high with 86% expecting to increase their turnover and 75% planning to take on more workers in the next five years. The average anticipated rise in turnover is 39% and the average increase in employees is expected to be 32%.

Opportunities The strong growth of the Asian middle class means a stronger demand for products and services, which presents a key opportunity for businesses in Asia. Hand-in-hand with more demand for products is the opportunity for product diversification, which is seen as a primary objective of CEOs and CFOs of mid-sized companies. Domestic and international expansion is also seen as important for the next five years.

Many of the companies surveyed already operate beyond their domestic market, most (56%) in ASEAN markets. The other 54% sell their products and services to markets in Europe, mainly in Germany and the UK. Expanding into international markets is a priority for two-thirds of the CEOs and CFOs. Growth for the most part does not include mergers and acquisitions, except for India where 47% of companies are planning for mergers in the next five years.

Only a small number of companies in each country choose not to operate outside their domestic market: China (27%), India (15%0, Indonesia (12%) and Malaysia (10%).

The most common business activity across the region is selling products and services, except for China where sourcing raw materials is the most frequent business activity.

Challenges The CEOs and CFOs appreciate that their businesses face more competition and rising costs. In Malaysia the lack of skilled workers is a major challenge as is political instability in the Philippines. Despite these challenges many CEOs and CFOs aspire to run the leading business in their industry.