Southeast Asia and Europe have become the new battlegrounds for tech firms trying to expand their market reach and evolve to meet the needs of a global marketplace. However, the future is not evenly distributed. Countries vary in their growth rates, acceptance of foreign firms and investors, and their existing infrastructure and talent pools. Here are the hottest emerging markets for tech firms to expand into in 2020.
It made the news when China’s economy surpassed the United States. However, it has significant room to grow, because as one of the significant emerging markets, it could easily double or triple over the next twenty years.
For example, China’s economy is growing at roughly three times the rate of the United States. China started as the factory to the world, making cheap apparel and manufactured goods. It is moving up the value-stream, moving in the pharmaceuticals and higher technology products.
China is also expanding its trade network so that it isn’t as reliant on exports to the United States. For example, its One-Belt-One-Road initiative creates an over-land route to deliver products to central Asia, the Middle East, and Europe. This is much faster than sea routes, and it helps to meet their desire for even more exports.
China has been opening up its economy to both imports and outside investors. Many firms are moving here due to the sheer size of China’s market. It contains roughly 1.4 billion people with a rapidly increasing income. However, the market is difficult for outsiders to crack. Doing business here instead of just manufacturing goods for export requires significant time and resources.
If you want to get more information on how to get in, you can check out this guide about doing business in China at nhglobalpartners.com. It provides an overview of how to recruit and hire Chinese staff through an employer of record. It also discusses options for protecting your intellectual property and banking in China.
One economic development report found that 80% of the world’s top one hundred tech firms have an office in Singapore. But why do so many tech firms choose to do business in Singapore?
One is the country’s many free trade agreements. Singapore has signed more than 20 of them. This allows Singapore-based companies to have preferential access to key market sectors, lower tariffs on their imports and exports, and faster access to surrounding countries, which includes fast-growing emerging markets.
Singapore is a 6-hour flight from any other Southeast Asian country, making it perfect for manufacturing and distribution facilities. This also makes Singapore a good choice for firms that aren’t ready to expand directly into fast-growing economies like Malaysia or Vietnam. Others choose Singapore because it already has world-class infrastructure.
Singapore has far better intellectual property protection than other Asian countries, addressing a concern for tech companies considering moving abroad. This makes Singapore an ideal location for research and development facilities.
Another point in favour of Singapore is its workforce. It has a highly educated workforce. You can use companies like Sky Executive to quickly recruit from Singapore’s deep high-tech talent pool. They can serve as an employer of record so that you don’t have to navigate a foreign country’s labour laws. If you need to relocate key talent here, the country has a relatively open work visa and work pass system.
The United Kingdom
Brexit hasn’t prevented the United Kingdom from being one of the top markets for growing tech firms in 2020. One of its biggest advantages is its robust financial markets. This is why London’s venture capital funding for tech startups rivals Silicon Valley.
The United Kingdom beats the United States in foreign investor-backed investment per capita, and its venture startups accepted more than eleven billion dollars in 2019. This is because the UK is friendlier to foreigners who want to save and invest in the UK rather than the United States. The United Kingdom also benefits from its proximity to the European Union.
Germany is well-known for its advanced manufacturing capacity. It is also one of the world’s top technology destinations. Note that half of these startups are in Berlin, so it is more concentrated than average.
Yet Berlin’s startups are surprisingly diverse. More than half of its startup teams come from other countries. English is typically the language of business here, making it possible for American, Australian, British and Indians to work here.
A side benefit of relocating to Germany is that you’re close to France’s massive business incubators for artificial intelligence without having to deal with their regulatory environment. France’s startup ecosystem growth is too highly dependent on government programs, though it is seeing some outside investment. Berlin’s startups received more than 2.5 billion Euros in 2018, while French tech startups raised much less than this.
The hottest emerging markets for tech firms share a robust tech ecosystem, friendly business environment, and large talent pool. The only question is where you want your firm to expand based on its long-term plans.