My name is Peter Park and I am the founder of Floridge Exports, your one-stop gateway to Asia. As a Korean-born Aussie who lived in Taiwan, connecting with Asia via business has been one of the most rewarding things I’ve done. Over the last few years, I have taken two health food brands to China and the rest of Asia.

What appeared clear to me is that the golden era of uninterrupted crazy growth for foreign brands is well and truly over in China. Chinese consumers are more sophisticated, more nationalistic and more demanding. The cost of doing business in China is rising, competition is fierce, and it is ever more complex to navigate a large country with different demographics.

A quote that I have been hearing lately is that "Southeast Asia is like China 5-10 years ago during its golden era". It got me thinking, is it?

So far:

• An exodus of low-cost, high-volume manufacturers are moving from China to Vietnam. This started off for Nike and Levi’s.
• Thailand, a regional food manufacturing hub, is seeing its incumbent players in canned food moving more into high-value products such as pet food.
• Apple recently launched their online store in Vietnam. Thailand saw its offline physical store only in late 2018.
• Apple has a mere 1% market share in Indonesia, the world’s sixth-largest smartphone market and the world’s fourth most populous country (227m).
• COVID accelerated the adoption of E-Commerce in the region and encouraged the move away from a cash-based society.

But there are also other factors that make you question if the market is mature enough for Western consumer brands - political uncertainty, relatively small premium market, corruption etc.

We believe that Southeast Asia is a market of opportunities. The right knowledge, understanding and positioning will allow any Western brands to ride the growth wave in the region and improve the quality of life for consumers.

This is the first edition of the Southeast Asia Bi-Weekly where I will share the latest and most relevant news on all things economy, politics and F&B trends in the region.

Statistics of the Week

• Overall: Lazada with GMV of $20.1B remains the second-largest player in all countries except Indonesia. Shopee’s GMV is $47.9B. Source
• Thailand, Vietnam and the Philippines are the countries where TikTok Shop was launched in 2022, and it has become a meaningful player, clocking $4.4 billion GMV, compared with $600 million in 2021. Source
• Indonesia: Tokopedia’s 35% GMV share of the total E-Commerce market ($18B) remains very close to Shopee’s $19B (36%). Source
• Indonesia: The middle class to grow to 141 million people by 2023. Source
• Indonesia: 46% of consumers have been spending more on groceries over the last five years. Source
• The Philippines: The e-commerce market to reach $12 billion by 2025, driven by increasing internet penetration and digital payment adoption. Source
• Singapore: Two influential groups are Expats and the middle-aged PMETs aged 40-64, who have a higher disposable income and a sophistication of taste acquired from their travels. Singapore consumers are seeking 'clean and green' products, something Australia can offer due to high food safety standards. Source

Politics & Economy

• The European Union and the Philippines have announced their intention to explore the relaunch of negotiations for a free trade agreement. The Philippines is the EU’s 7th most important trading partner in the ASEAN region, and the EU is one of the largest investors in the Philippines. Source
• The Thai political establishment has prevented the Move Forward party, which won a majority in the 14 May elections, from forming a government. This move risks pushing Thailand towards turmoil. Source
• The ASEAN countries now account for almost 8% of global exports, which is on par with the United States. South-East Asia’s share of global exports has doubled in the last 30 years, largely due to the trade integration process between China and the countries of South-East Asia. The region’s trade integration will benefit from the new Asia-Pacific Free Trade Agreement. Source
• The Vietnamese government has yet to release official guidelines for the implementation of its new visa policy, which will allow foreign tourists to extend their stay in the country by 30 days. This move is seen as an effort to boost tourism in the country, which has been hit hard by the COVID-19 pandemic. The government is also considering similar policies for other Southeast Asian countries. Source

E-Commerce

• TikTok is quickly becoming a major e-commerce platform in Southeast Asia, with sales growing sevenfold in one year. The platform's shopping and entertainment features are attracting a young, tech-savvy user base, and its rise could disrupt the region's dominant online shopping players, including Shopee, Lazada, and Tokopedia. Source
• Southeast Asia's e-commerce gross merchandise value (GMV) reached $99.5 billion in 2022, with Shopee accounting for 48% of the region's GMV. TikTok Shop is also becoming a significant player, with $4.4 billion GMV in 2022 compared to $600 million in 2021. Source

Food

• The ASEAN region offers potential for Australian companies, with trends including health and nutrition, sustainability, and home cooking. Notable food trends include Indonesia's push for local ingredients and Cambodia's growing market for imported packaged foods. Source
• Vietnam ranks ninth globally in beer consumption, higher than any other Southeast Asian nation. Vietnamese craft beers, known for their fruity and spicy flavours, are gaining popularity abroad, with Pasteur Street Brewing leading the way. Other Vietnamese craft beer makers, such as Heart of Darkness Brewery, are also expanding abroad. As Vietnamese breweries expand their lineup to include low- and non-alcoholic beers, they aim to cater to changing consumer preferences and mitigate the impact of declining beer consumption in the country. source 

Diagram of the Week