Opportunities in Southeast Asian Markets

Joe Mimran (00:02): Hi, I'm Joe Mimran and welcome back to the Export Impact Podcast. We've heard from a bunch of Canadian companies and entrepreneurs about the challenges and opportunities they face. We know that it takes a lot to grow an international business, a lot of hard work, a lot of research, and a lot of support from the right partners; partners that can hopefully assist in reducing the risks of exporting.

That's why we’d like to introduce you to other successful exporters, to not just learn from, but perhaps inspire you to take the challenge of growing your business internationally. And that's also why we want to bring you in touch with trade experts who can give you the latest scoop on market trends, economic outlooks, and the financial solutions to help you succeed because when your homegrown business goes global, that's the export impact.

Today, we're going to be talking to Olivia Lee, chief representative of Southeast Asia at EDC. Olivia is based in Singapore, where she connects Canadian exporters with on-the-ground resources in Southeast Asia. She's going to tell us about doing business in Southeast Asia and what makes it such an attractive market for Canadian business. 

I'd like to begin today's episode by acknowledging that we're recording from my office in Toronto, which is on the traditional unceded territory of many nations, including the Mississaugas of the Credit, the Anishnabeg, the Chippewa, the Haudenosaunee, and the Wendat peoples, and is now home to many diverse First Nations, Inuit and Metis people. We value taking this moment to deepen the appreciation of our Indigenous communities wherever we are, and to remind ourselves of our shared debt to Canada's First Peoples.  

Welcome to the show, Olivia, great to have you here. You're the chief representative in Singapore for EDC? 

Olivia Lee (01:59): I am, yes.

Joe Mimran (02:00): Perhaps you can tell us a little bit about what the chief representative does.

Olivia Lee (02:05): Happy to. I would like to mention that there are actually a few chief representatives plastered across the world. In Asia, we’re currently four and we'll be expanding two more and we're going to see more chief reps coming in. I cover all of Southeast Asia. Southeast Asia comprises of 11 countries, but Indonesia is one of the countries where we’ll be opening up in September 2023 and Korea, as well. Once Indonesia goes, I’ll be covering all of Southeast Asia, except a part from Indonesia.

The way I describe my role is in two very large brackets. I mean, apart from being EDC's face in market, there are two things that I do in a very general sense. First of all, is servicing the Canadian clients. Customers who are looking to come into market or are currently in market, we try to see how can we support them further as a financial institution, how do we work with them and the account managers back in Canada just to cater to their needs as they're expanding into other markets. That's the first bracket. 

The other bracket where what I do is EDC provides financing solutions for not just Canadian companies, but also we provide lending solutions to large conglomerates. The purpose of these programs is because as we get to know the local companies, then we get to learn what is the market knowledge, what are the latest trends? We're looking at the really large companies that have a footprint in the market, are the leaders and basically, what we try to do is get to know them so, that then, we can feed in some Canadian capabilities into their supply chain.

Joe Mimran (03:51): Interesting. And you’re stationed in Singapore. It's a compelling market, the whole Southeast Asia. How about Singapore? What makes that a compelling market for Canadians?

Olivia Lee (04:04): Singapore is the landing hub for all of Southeast Asia, and to some extent, arguably maybe even the rest of Asia. Singapore is strategically placed in all of Asia and Southeast Asia, and with that comes the responsibility of being the hub for all companies. If you see the number of multinational companies present in Singapore, it's a very extremely high amount. And then from there, you can service all the rest of Southeast Asia where Singapore is going to be basically the place where you start off and then you travel to all of the other countries with so much ease when you're based out of Singapore.

In addition to that, I think the Singapore government has done an excellent job over the past few decades at trying to be a leader, not just in the financial industry, but being innovative overall. How do they look at society? How do they look at advancement overall? How do they become a leader considering that they have zero resources? The government has poured a lot of resources into trying to figure that piece out, and they've been pretty successful. So, all companies, when they look at Southeast Asia, the first landing spot should be Singapore. It often is, unless they have a specific opportunity in a specific market.

Joe Mimran (05:21): That's interesting. Exporting to Southeast Asia can feel pretty daunting. But there's many ways that business owners can connect with customers on the ground. And that starts with understanding the culture.

Olivia Lee (05:33): Yes.

Joe Mimran (05:33): But also having an understanding of many different aspects such as the free trade agreement, which Canada has with Southeast Asia under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. I mean, that's a mouthful. What does that mean for Canadian business?

Olivia Lee (05:52): The CPTPP, which is that free trade agreement, isn’t actually all of the Southeast Asian countries. It has some of the countries in it, and it incorporates other countries, like Japan and New Zealand. It's one of the most comprehensive, I believe, free trade agreements there is. But Canada is working with the ASEAN (Association of Southeast Asian Nations) community. ASEAN are the 11 countries that comprise Southeast Asia and they're working on a free trade agreement. What it does is allows Canadian companies to do trade with more ease. When we remove the tariffs, it's lowering the barriers to entry into the country. This is something that I believe the Government of Canada is pushing, and we do hope to see free trade agreements signed and ratified sooner rather than later.

Joe Mimran (06:43): And when considering Southeast Asia, and when I say Southeast Asia, obviously, you know, it encompasses so many countries and each one is so different, I would think within that market and very dynamic markets, particularly the way Korea has grown in the last 20 years, 30 years and obviously Japan, a much more mature market. And now you're mentioning Indonesia, which has a huge population and has its own complexities, I'm sure. What sectors in Southeast Asia are particularly ripe for Canadian businesses to explore?

Olivia Lee (07:21): Great question. There really are so many opportunities in Southeast Asia. At EDC, we narrowed it down because we can't do everything, we can't be everywhere. And we're looking specifically into infrastructure, which would include cleantech. Generally, when we speak of infrastructure, if you look at countries, like Indonesia and the Philippines, they're looking a lot at revamping their airports, building new roads to connect, having bridges, all of those pieces that would allow these countries to go from where they are to the next middle-class stage—where they want to be. And all of the countries, most of them have some kind of commitment to net zero.

With that, Canada is very well-positioned to be providing these cleantech solutions to these companies because it might not be as much of a priority as it is for some of the developed markets, but it will get there. I think what's important is you want to be present before there's already an uptake on all of these. We want to make sure that Canada's branding is there from the get-go, so that then, they get familiar with what Canada has to offer. Infrastructure and cleantech are areas that we're looking at. 

Another one has to do with agri-food. And the reason being, I mean this has been the topic I believe for almost every country, food security, right? Southeast Asia does have some concerns, you know, pronounced concerns with the geopolitical situations on food security. Canada does have a lot to offer on that front and this is where we talk about free trade agreements, it would be very helpful for some of the countries where Canada doesn't have a free trade agreement with.

Lastly, another area that we're looking into is advanced manufacturing. That's because solutions and advanced manufacturing spans across all verticals almost, so you can have an advanced manufacturing solution in cleantech or in agri-food, and Canada is very well-positioned when it comes to innovation and AI (artificial intelligence) technologies. But this is still an area that we're trying to figure out how can we position Canada better because Southeast Asia isn’t anywhere as developed as Canada and they're trying to get that edge, definitely. How do we get Canada into that picture is something that we're working on and we're trying to figure out.

Joe Mimran (09:44): And how do other countries know when they're ready to expand to somewhere? Singapore, you're saying, isn’t necessarily the first place to expand to. I guess, you land and expand from Singapore.

Olivia Lee (09:56): Yes.

Joe Mimran (09:57): But how does a company determine when it's ready to make that move?

Olivia Lee (10:02): Unfortunately, Asia being so far away from Canada, you need the resources and the commitment to be there. Asia is a strongly relationship-based, business environment. You can't just hop in and hop out every order. You have to be there consistently and show and demonstrate your commitment to the market.

Companies have to have that carved-out portion of their business just for Asia and I understand that a lot of the Canadian companies might not be at that level. But I think it's important, as well, to think a bit more long term. If we look short term, you're probably looking at your current clients or clients who are in the U.S., or maybe even Latin America or Europe, because they're closer and it's more familiar. But if you look at what the growth opportunities are in Southeast Asia, it's just boundless.

That's the next wave that's coming out. Just the numbers if we look at it, Southeast Asia, there's soon to be 700 million people. The median age is 30, so the growth in the mid-class is just going to be rising at an astounding rate. And if you're not there at the early start, then you're going to be missing out on that wave, you know? And that’s why Canada's focusing a lot on the Indo-Pacific region, but also at the core of it, I believe, it's Southeast Asia.

Joe Mimran (11:26): And what's the first step a company should take then? If they've made the decision to plunge into Southeast Asia, what's the first thing they should do and who should they speak to?

Olivia Lee (11:37): Canada, we're very lucky to have a number of resources available. EDC will bring you there when you're ready to export. But before that, a lot of times you might need to explore the market, and I believe the Trade Commissioner Services (TCS) are the go-to people you should be thinking about, because it's a free service that allows Canadian companies to get market intel of where you're planning to go.

In every country, there are trade commissioners who are there to help and service these Canadian companies for free. That should give you a good idea of, OK, is this market for me? Should I be looking at a different market? What should I do? Provincial representations are all over Asia, as well. Just in Singapore, we have Quebec, British Columbia, Saskatchewan, and Alberta I believe. They are great resources for you when you're starting to look at the market. They can also help you find relationships, or suppliers to get your first step. And then that's when EDC would come in to help. When you have your first sale, internationally, we can provide different financial tools that you need to manage your risk internationally. After that, EDC can also step in and help a bit more as you grow larger. If you need to acquire a company or have some kind of plan for opening or anything, we can provide additional services there as you grow.

Joe Mimran (13:01): That's quite a menu of services to help mitigate the risk for companies taking the plunge and certainly to take advantage of the trade commissioners is a very good idea. That's something people should really look at as they're contemplating whether or not they should take the risk. But again, it's about de-risking, which is what EDC does so well for so many companies and provides such a fulsome service like you do now.

I think a lot of people still think of EDC as just insurance for receivables as they think of expanding, but you do so much more with respect to M&A (merger and acquisition) work, plant openings as you were saying, and just assisting in general. If I was to open up the market for myself, would I hire a local agent? Do I try and spend as much time as possible in a particular market, like Singapore, to start? Why don't you just walk me through, if I had to go there tomorrow and I was ready to take on the market, what would I do first?

Olivia Lee (14:05): I think having local partners is absolutely crucial for success in Southeast Asia. You alluded earlier to the fact that Southeast Asia has such a large variety of culture, religion, race, so every market you go to will be different. What's important is finding a trusted local partner. The partner can help definitely and I think that's the first step. But at some point, as you grow, you might want to be physically there to see the growth. If you're based out of Singapore, it still works out because everyone in Southeast Asia knows that Singapore is the main hub. But a lot of times, it's actually easier to just be in the market itself directly. 

If we look at the whole chain of what should be done, first, you identify the markets that you want to go to and you can do that through the Trade Commissioner Service (TCS). You get to the market, try to find deals. As you find deals, you can also interact with EDC to see how can we get more support, especially, on the financial side. And then you find your local market, you get a deal done and then how do we grow? Is there anything that EDC can do to help if we increase the insurance amount or the receivables amount, looking at how long the days are. Those are different ways that we can support you. And then the people in markets such as myself, if we can, we’ll also be connecting you with some partners we believe might be beneficial to your company and to their company as well.

Joe Mimran (15:35): I would've loved to have had EDC help me in the early ‘90s when we opened up Korea with Club Monaco and then Japan, also with Club Monaco. We had 40 stores in Korea and 30 stores in Japan. It would've been fantastic to have EDC's help back then. But we did have good local partners and that was really important and they made a big difference. They really helped in growing the business much quicker and understanding the local markets and also the cultural differences were huge between Korea and Japan at that time—very big differences.

How would you advise companies on how to manage that? How do they learn that? I mean, do you have to just immerse yourself or is there an EDC hotline or crash course that you give on the difference in cultures between Korea, Japan, Indonesia. Singapore is fairly, I would think, an easy one because it's so westernized, but some of these other cultures are quite different.

Olivia Lee (16:43): I know that EDC has a number of articles and resources available online, but I'm not sure if there's anything that pertains specifically to cultural differences between different Asian countries. I guess, generally, that's why you can always connect with us, the chief representatives in market, or again to Trade Commissioner Service and ask about it. For example, in Singapore, when you give out a card, you should be giving it out with both hands holding it. You don't just give it with one hand. It's a sign of respect and that's something that all Singaporeans mostly do.

Another thing that people really appreciate knowing when they're coming to Singapore is that it's never expected for men to wear a tie and suit. That's just an overkill because we all know how hot it is outside. Whenever we see people like that, we’re “Oh, it must be their first time in Singapore.” Usually just the shirt is OK, maybe a suit on top of it. If it's  extremely formal, that's when you'd wear a tie. But it's not expected. Somewhere, like Indonesia, they wear their own Batik shirts, so their traditional attire for the men. There are a few differences like that.

Joe Mimran (17:54): Certainly, the air conditioning in those countries, they keep it very cold inside and then when you get blasted with the warm air, my glasses fog up very quickly. It's super interesting having worked in those countries myself and seeing the differences. You do have to be very aware of the cultural differences and how they negotiate and the importance of the local customs and all of that. I think that's terrific. Are there any examples that you can give of companies that have really performed well in the short time that you've been in that position? Is there an example of a winning business that you've seen in the short period of time? Is there somebody that you can call out as being a shining example of doing it right?

Olivia Lee (18:44): I don't have a particular example. I think there are a number of companies that have done it right, but also, I think it's important to stumble, too. You learn a lot. And the thing is, yes, there are some cultural differences that make it difficult to succeed at the rate that you would want to succeed. For example, the pace that things are done in a country, like Indonesia, is very different from Singapore. In Indonesia, a lot of times they might not say no, but they're not going to say yes as well. They just don't commit. That's the whole thing about relationship building and that's the whole thing coming back to you need to be in the market because the more you immerse yourself there, the more you build that relationship and eventually, it'll become a yes.

I think the companies, what they do is they'll use the services that Crown corporations provide, and at the end of the day, it still falls back on them and where do they want to  focus on. What do they want to do? But one of the things I think that's very important for companies and you know, they're like, “I want to go to Asia,” that's not a very good strategy. You need to specifically choose where exactly and why. And you can't pick, like five countries. Maybe you can do that in your discovery trip, but at some point, you have to be, “Well, this country has more potential than the other one. I'm going to really do a deep dive in that.” I think that’s very important.

Joe Mimran (20:11): And how important are trade shows, do you think?

Olivia Lee (20:14): I think it depends first on the size of the company. If you're an almost large company, medium to large, you don't necessarily need these trade shows. You do them more for maintenance purposes. For smaller companies, I do believe that it has been extremely helpful. Like anything else in business, it can be a hit or miss. There are a lot of amazing opportunities that come out of it. So, generally speaking, if you have the resources—financial and the people-human resources—to do it, you should absolutely do it because you'll get your feet wet, get to meet the people.

Usually these trade shows, if it's tied to one that Global Affairs Canada organizes, they'll be doing additional services, like B2B match-making events or networking cocktails, or even just these presentations of what the landscape looks like. Those are very useful, especially if it's your first time in market. After that, at the second or third time, there’s a very large component of the company having to do the business development themselves.

Joe Mimran (21:16): I have a final question, and I ask this every time. We've got a lot of Canadians who are listening and who want to grow their business through exports. Is there one piece of advice that you would give to them that would help them on their way? And if there is, what would that be?

Olivia Lee (21:34): So many pieces of advice, Joe <laugh>.

Joe Mimran (21:37): Well, you could give more than one then. I'll take more than one piece of advice.

Olivia Lee (21:42): First of all, take the risk. There are tools that are made available to Canadian companies and being in market, you see the support that other countries provide. I don't think it's as comprehensive as what Canada provides because we have Crown corporations, like EDC, TCS, the provinces, and then that doesn't include the chambers of commerce and the other associations out there such as for my region, there's the Canada ASEAN and Business Council, as well as the Asia Pacific Foundation. Taking a calculated risk is the right thing to do. Calculated meaning be strategic in which markets to get into. You can't conquer it all. You can't be chasing every deal. So, seeing which one is aligned to you. I think when it comes to Southeast Asia, how do you select a market if it makes sense and there’s an opportunity there, maybe also pick a market that you like travelling to.

Joe Mimran (22:40): For sure. I know that in my early days in Japan, I used to love Japan. I'd love to go there and spend time there. And obviously, early days in Hong Kong were exciting. It's certainly one of the most exciting things a business can do, which is to try and conquer new markets and to try and export outside of Canada is something that is very fulfilling and rewarding from a business perspective. Not just monetarily, but how it expands your own thinking and how it can sometimes help you in thinking about your own business in a different way because you'll see things in a market differently and you'll approach it perhaps with a different point of view from the learnings that you get in these different markets. I think it's all very fascinating. I think EDC provides an amazing service. I think Canadians need to know about it as much as possible because it's something they should definitely be taking advantage of.

And if you're an entrepreneur, a true entrepreneur, and you said it, that was the first thing you said was take the risk. And when people ask me about entrepreneurship, I say that you have to be willing to take risks if you want to call yourself a true entrepreneur. I'm with you on all of those and I want to thank you so much for your time today and for your insights. I'm sure our audiences found it very informative and helpful. Thanks for joining us today. 

Olivia Lee: Thanks so much, Joe. 

Joe Mimran: Thanks for joining us today on the Export Impact Podcast. If you enjoyed today's episode, we'd love for you to subscribe, rate, and leave us a review on your favourite streaming platform. See you back here in two weeks.