Dear All,

The last few days have been interesting.

One of my LinkedIn posts on the Taiwanese market went viral (30,000+ impressions, 200+ new connections, 3 Asian cities among top views) which led to many new connections in Taiwan, India, Thailand, Singapore and Indonesia. It was a small progress towards more awareness of small and profitable export markets.

What was interesting was the level of interest from food factory owners in Thailand and Indonesia. They see Taiwan as one of the major mature consumer markets in Asia that are willing to import from them. The intra-Asia trade appears strong. I will be sure to visit them next year on my maiden Southeast Asian trip!

On the home soil front, I continued to look for premium Aussie F&B brands with export potential to Asia by attending the Good Food & Wine Show (27 Oct-29 Oct). I was blown away by the goodness, dedication and resilience of these businesses. I will share my thoughts on LinkedIn soon.

This week, I feature Vietnam in a Special Edition. I will discuss how the country pivoted from a backwater Soviet-supported state economy into a growth engine of Southeast Asia over the last decade, and where the opportunities and challenges are.

Living up to the spirit of this newsletter - understanding Southeast Asia through commercial and analytical lenses, I compiled more content about the food industry, business regulations and social changes. Let’s see how this change goes.

Have a fantastic week ahead,
Yours Truly Spiderman 🕷️🕸️

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FROM OUR PARTNERS

Whilst hawkish on Southeast Asia, there are clear, concrete export opportunities available in Northeast Asia.

In fact, these markets are not your $100M+ markets. Most successful Aussie brands have done $5M-$10M historically.

However, with the right channel partnership and market messaging, each of the markets could be a profitable $2m-5m opportunity. In the current market where cash is king and brand equity is priceless, this is welcome news.

Think of them as part of your brand's broader Asian portfolio that could well add up to $10m-$20m with more profitability than markets like China or the US over the medium term but with relatively less upfront investment.

At Floridge Exports, we are your one-stop gateway and an extended export arm in Asia. We will design and implement strategies for Australian Health and Wellness brands to (1) review export regulations, (2) establish pricing and ideal channels, (3) find local partners, and (4) support you post-launch.

For more information, please email [email protected] or book a complimentary 30-minute call to do export diagnostics.

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Special Edition: Vietnam - Past, Present and Future

In the mid-1980s, the Vietnamese government implemented a radical economic reform called ‘Doi Moi (đổi mới)’ which means “innovate” or “renovate” in Vietnamese. (Source: Global Asia) The leaders aimed to rid the country of the self-imposed barriers based on the Soviet-inspired development model. Early measures included:

• De-regulating the Domestic market deregulation

• Encouraging Foreign Director Investment

• Encouraging private ownership

• Reducing subsidies to state-owned enterprises (SOEs)

The odds were truly stacked against Vietnam. It had no security alliance with major powers. Communist China was conducting border skirmishes, the Soviet Union had increasingly less relevance and the USA placed strict sanctions following the Vietnam War. Self-reliance was the only way out.

But this was simultaneously Vietnam’s advantage as they were able to become friends with everyone - demonstrated by the normalisation of the diplomatic relations with China (1991) and the USA (1995).

By 2008, Vietnam reached a GDP of $1,000 per capita. It became the world’s second-largest rice exporter after Thailand, grew at 6.5% CAGR (short of China’s 8%) and de-listed itself from the world’s least developed countries.

Between 2008 and 2023, Vietnam’s GDP grew at an unprecedented rate of 9% YoY, reaching the per capita amount of $3,800.

Looking at the Top 50 ports and their trading volume between 2017 and 2021, Vietnam stands out (6.8% CAGR), though its ranking (#26) is still low. China dominates the list with 9 ports in the Top 20 but it is also noteworthy that 4 ports are Southeast Asian. Three European ports made it to the list followed by one each in the USA, Korea, Taiwan and the UAE.

As seen in the table below, whilst Vietnam’s manufacturing sector is burgeoning and is laying a solid foundation for the next phase of growth, I am cautious about its services sector becoming sophisticated any time soon. Vietnam currently ranks 70th in Ease of Doing Business mainly due to regulatory drivers such as cross-border trade, taxes, starting a business and insolvency.

According to the government’s 2021-2030 National Master Plan, three growth pillars are the Digital Economy, Green Economy and Hi-tech economy. The Gold Gate Ventures x BCG Report features the following growth sectors worth investigating for foreign investors. For more information, please visit the free online report.

The government is also tasked to navigate the country through its unique challenges coming from (1) maintaining domestic stability and security, (2) transitioning from high growth to sustainable growth and (3) improving international status. We shall glean into each of the current challenges in the rest of the newsletter.

Quote of the Week

Vietnam's transition from decades of conflict during the Cold War to one of Asia's fastest-growing and diplomatically active countries in the twenty-first century is arguably one of the most notable recent national transformations in Southeast Asia. 
_{Source: Global Asia}

Statistics of the Week

• Vietnam is reigning on its workforce’s early pension withdrawal by proposing to reduce the minimum contribution period for pension eligibility from 20 years to 15 years and limiting the withdrawal amount to 50% of total contributions, reflecting an effort to make pensions more attainable despite the financial challenges workers face. The proposed law will come into effect from 2025 (Source: East Asia Forum)

• Thailand is planning THB 10,000 (approximately USD 275) free handouts (US$15B in total) to all Thai citizens aged 16 or older through digital wallets, with the aim of boosting consumer spending. This subsidy would reach approximately 56 million people in Thailand and could cost up to THB 560 billion baht (Source: Bangkok Post)

• Ready-built factors (RBFs) in Vietnam offer a swift and efficient infrastructure solution. Rental costs per square meter vary across regions ranging between US$2.5 to US$6/sqm/month (Source: Vietnam Briefing)

• The Philippines’ proposed sovereign wealth fund has been suspended to further scrutinise its governance. It is valued at PHP 500 billion (USD 8.8 billion) in shares for governmental bodies and banks (Source: SCMP)

Economy

• Factory workers, especially in export sectors like garments and footwear, face precarious living and working conditions, leading many to financial hardship when they lose jobs. This situation drives the trend of early social insurance withdrawals (Source: East Asia Forum)

• Where to build or buy factories in Vietnam? For instance, the Northern region is favourable for electronics, automotive, and renewable energy manufacturing projects, the Central region is more suited for food processors, heavy industries, and oil and gas, while the Southern region is common for plastics and rubber, garments, and textiles sectors (Source: Vietnam Briefing)

• The article delves into the intricacies of setting up a family office in Singapore. It distinguishes between Single-Family Offices (SFO) and Multi-Family Offices (MFO). The piece elaborates on different entity formations including private limited companies, trusts, and Variable Capital Companies (VCC), highlighting the legal and tax implications of each. Particularly, it underscores the benefits of Singapore's robust regulatory framework and attractive tax regime for establishing trusts or VCCs that came into effect in July 2023, which offer flexibility, cost-efficiency, and ease in meeting financial obligations (Source: ASEAN Briefing)

E-Commerce & Food

• In order to tap into available business support packages for ASEAN, the following reference points may be helpful in any grant/support applications: (Source: Asia Society)

  • Indonesia: 273 million people

  • Malaysia: Launch of the National E-Commerce Strategic Roadmap to promote the digital economy

  • Thailand: 57% of the population engaged in online shopping (41 million)

  • Vietnam: Young and tech-savvy population, with over 70% of its citizen under 35

  • Philippines: E-Commerce sector is projected to grow at 20% YoY

• Other reports such as “How Asia Buys and Pays 2023: Tapping into Asia’s Regional Commerce Opportunities” highlighted insights as below: (Source: Marketing-Interactive)

  • Digital payments growth is expected to result in a 100% expansion in the Southeast Asian e-commerce market

  • Southeast Asia is projected to lead in digital economy growth at 15.8% for the next five years, outpacing the United States and the European Union, with South Korea and Japan following at 12.7% and 10.2% respectively.

  • The digital economy of the Southeast Asia, South Korea, and Japan (SEAKJ) regions is anticipated to grow to US$914.9 billion in 2027E, marking an 82% increase from US$501.7 billion in 2022. However, this is still 50% of China’s projected US$2 trillion.

  • Challenges such as combating fraud, low card penetration, generally low pricing in emerging SEA markets still pose barriers to entry for many foreign brands.

• The Malaysian government is considering banning TikTok following the actions taken by the Indonesian government. this is due to concerns about consumer protection, fraud, counterfeit products, data privacy, security, and misinformation. While Indonesia's ban aims to protect local merchants and prevent data misuse, questions arise about why it targets one social platform. (Source: Marketing-Interactive)

• Kellog has appointed Ogilvy Singapore as its Southeast Asian agency to redefine breakfast consumption habits in a region where cereal consumption has plateaued, partly due to consumers “skipping and skimping” breakfast. The resulting campaign tagline, "Your day is waiting, but first Kellogg's," encourages individuals to press pause before they embark on their daily routines, positioning Kellogg's as the ideal breakfast companion. (Source: Marketing-Interactive)

Diagram of the Week

Southeast Asia is diverse. This diagram informs where your target audience is positioned relative to each other.

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Can I help your brand explore export pathways? Are you a distributor or a marketing agency based in Taiwan or Korea with digital execution capabilities?

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