Why do those Chinese merchants expanding overseas choose Southeast Asia as their first stop? | Overseas Expansion Insights

Author | Qi Xiao     Editor | Jia Xin

Source | Market Value List

A cooking video changed the fate of a cookware OEM factory.

In 2022, a short video of a Southeast Asian housewife unexpectedly went viral: In the video, a Chinese-made frying pan demonstrated amazing thermal conductivity during the cooking of nasi lemak. Tens of thousands of comments saying "Where to buy" piqued Irene's interest. She stayed up all night researching and found that open-fire cooking accounts for about 70% in Southeast Asia.

Two strategic transformation decisions, "launching self-owned brands" and "expanding into Southeast Asia", enabled Irene's brand Ecowin to find its blue ocean - in the Southeast Asian market, the monthly GMV exceeded 8 million yuan, and the sales ratio between the domestic and Southeast Asian markets was close to 1:1. Undoubtedly, whether it's the growth rate or future potential, the Southeast Asian market outperforms.

"From 29.9 yuan for 2 pieces to 9.9 yuan for 3 pieces", "Selling 20,000 units of a certain product results in a loss of 14,000 yuan". Taizhou Sansanxing's domestic e-commerce business was in a cut - throat competition, so it had to turn its attention overseas. After expanding into Southeast Asia, focusing on beauty products, general merchandise, and children's toys, both profit and order volume recovered, reaching a daily sales volume of 10,000 units in half a year.

Different from Ecowin and Sansanxing, Balabala's expansion overseas is an inevitable part of its "globalization" strategy. Balabala found that there was a lack of professional brands focusing on children's design in Southeast Asia, and a children's clothing brand with a certain brand influence like Balabala could shine.

Coincidentally, the veteran outdoor sports brand Camel also saw its performance soar and its team's capabilities and business understanding make great leaps after entering the Southeast Asian market.

Even young brands have opportunities. Yoole, a high - speed hair dryer brand established for just over a year, experienced a boom after its first wave of content release in Southeast Asia. Its monthly sales reached 1,000 - 2,000 units, with sales of about 100,000 US dollars.

Why do these merchants with different backgrounds, product categories, and levels of experience all set their sights on Southeast Asia? In fact, there are many similar merchants. A survey shows that 50% of medium - sized cross - border sellers list it as their primary core market. So, for domestic merchants, is it really the right time to enter the market?

Timing:

Capture certain growth with the "time machine"

01

Famous investor Masayoshi Son verified the effectiveness of the "time machine theory" through a series of successful investments. That is, by leveraging the development stage differences between different markets, the business models of mature markets can be replicated in emerging markets, just like traveling through time to get the answers in advance.

Tech giants also agree that the future is already here, just unevenly distributed. And this uneven distribution is the greatest arbitrage opportunity.

The above merchant cases are exactly engaging in "time difference" arbitrage. Their success in time arbitrage is mainly because Southeast Asia is replicating the golden age of China's rapid e - commerce growth.

(Payoneer's "White Paper on the Entry Strategy for the Southeast Asian Cross - border E - commerce Market")

As shown in the figure above, Southeast Asia has gone through stages such as the popularization of smartphones, the decline in mobile data costs, the improvement of logistics infrastructure, and the cultivation of mobile shopping and electronic payment habits, and has entered a period of great e - commerce prosperity.

Referring to the development process of China's e - commerce, there is still a long upward period for live - streaming e - commerce and content e - commerce in Southeast Asia, which is a definite trend.

Data from Momentum Works shows that from 2022 to 2024, the GMV of TikTok Shop in Southeast Asia soared from 4.4 billion US dollars to 22.6 billion US dollars, leading the growth rate. Right now, it is the best time to enter the market.

This judgment is not only based on theory but also on the following facts.

First, on the demand side, a content consumption ecosystem with both increasing volume and price is taking shape.

The total population of the six Southeast Asian countries exceeds 600 million, and those under 35 years old account for more than 60%. The scale of these users is not only expanding, but their consumption propensity is also at a high level - Euromonitor data shows that in major Southeast Asian countries except Singapore, the proportion of per capita consumption expenditure to disposable income in 2024 is at least 87%.

Young people in Southeast Asia prefer shopping methods with strong interaction and high fun. They spend more than 3 hours a day on social media and have a significantly higher acceptance of short - video and live - streaming e - commerce than traditional shelf e - commerce.

That is to say, there is no shortage of traffic here, let alone the demand for purchases.

Second, there is not enough supply to meet the strong and diverse consumption demands.

In 2024, the scale of the standardized product e - commerce (including 3C digital products and household appliances) in major Southeast Asian countries was 14.3 billion US dollars, with a penetration rate of 24%. The scale of the non - standardized product e - commerce (such as clothing and shoes, beauty and personal care, and household care) was 21.8 billion US dollars, with a penetration rate of 19%.

In China, the e - commerce penetration rates of standardized and non - standardized products are 54% and 33% respectively, a difference of 30 and 14 percentage points. Especially in categories such as beauty and personal care and household appliances, there is still a lot of room for the improvement of e - commerce penetration.

Take beauty products as an example. In 2024, the e - commerce penetration rate of the beauty track in major Southeast Asian countries was only 16%. In China, the number of licensed cosmetics production enterprises reached more than 5,400, the number of various cosmetics registration and filing entities was more than 87,000, and the number of valid registered and filed products was nearly 1.6 million.

Excessive production capacity competing in a limited market will inevitably lead to fierce competition. From another perspective, the diversity and flexibility of China's supply chain can just fill the demand in the Southeast Asian market. For example, during the 66 promotion this year, the cross - border e - commerce GMV of TikTok Shop in Southeast Asia increased by 123% year - on - year, and the order volume soared by more than 104%.

At present, the cross - border e - commerce market in Southeast Asia has sufficient consumer willingness, the platforms are advancing, and the competition is far from saturated.

Compared with the "cut - throat competition" in the domestic market, there are more opportunities for category segmentation here, users respond enthusiastically to high - quality content, and there are still plenty of opportunities to occupy a market position. For domestic merchants to enter the market is not a risk, but a chance to "reap the time difference".

Geographical advantage:

Have a home - court advantage for going global with "zero cultural discount"

02

In media economics, "cultural discount" refers to the value depreciation of goods or services in foreign markets due to cultural differences. More simply put, something that is highly sought - after in one place may be worthless in another.

However, for Chinese merchants, Southeast Asia is a rare market with "zero cultural discount" - there is almost no depreciation, and instead, "cultural premium" can be seen everywhere.

The cultural affinity reduces the threshold for consumption decisions. In Southeast Asia, Chinese product designs, aesthetic concepts, and lifestyles are more easily accepted and respected, and even become the "social currency" in local society.

Labubu trendy toys are pursued as "royal - style" in Thailand; Michelle Ice City is still the "Snow King" in Southeast Asia, and the Chinese songs played in the stores are considered cool; in the Asia Mall, the largest shopping mall in Manila, the capital of the Philippines, there is a long queue in front of the store of the Chinese lifestyle collection store KKV. These Chinese brands not only don't have problems adapting to the local environment but have become trendy symbols pursued by local young people.

The "geographical advantage" of Southeast Asia is not only reflected in cultural similarities but also in the fact that the Southeast Asian region is in a critical period of consumption upgrade transformation.

With the expansion of the middle - class consumer group in countries such as Thailand, Malaysia, and Vietnam, the consumption logic will shift from "meeting basic needs" to "pursuing a better life". The proportion of basic consumption will decrease, and the proportion of self - indulgent consumption will increase. The consumption upgrade logic during the economic upswing is being established, and the average customer price will naturally rise.

According to a survey by the Hong Kong Trade Development Council of consumers in major Southeast Asian countries in 2024, quality is the most important consideration when purchasing most products online, followed by brand reputation; for new brands or products, consumers are most concerned about brand image, word - of - mouth, and reputation, followed by cost - effectiveness and product functions; if it is cosmetics, personal care products, etc., consumers value efficacy the most.

It can be seen that simply equating the Southeast Asian market with "low - quality and low - price" is a serious misjudgment. A profound change in consumption concepts is taking place in the real Southeast Asia - they are willing to pay for healthier raw materials, better quality, and better word - of - mouth.

In this wave of consumption upgrade, users' price perception has not been solidified, which provides a time window for Chinese brands to "define value" rather than "compete on price".

Content e - commerce provides an efficient path for brand value transmission. Content e - commerce represented by TikTok Shop has revolutionary advantages over the traditional shelf model: it can not only more accurately convey product value and brand concepts but also establish a deep emotional connection with consumers. This model naturally has the characteristics of strong explosiveness, high conversion efficiency, and high average customer price.

"This way of using content as marketing exactly fits the characteristics of our children's clothing products - emphasizing visual presentation and affinity," said Chen Shu, the overseas digital business and marketing director of Semir.

Balabala adheres to winning with the dual values of product quality and design rather than low prices. Camel also adheres to not engaging in price wars in Southeast Asia and has won over consumers who pursue "high - quality and high - professionalism".

Yoole's hair dryer adheres to using "only the best" raw materials to improve product performance and service life. Through marketing methods such as inviting a Thai beauty pageant champion as a spokesperson, it quickly became well - known. The hot sales of the products confirm the founder Kisure's idea - consumers in Southeast Asia need higher - quality and more innovative products.

The eye makeup brand WOSADO's magnetic false eyelashes are priced much higher than ordinary popular false eyelashes but still frequently rank among the top in the beauty category on TikTok Shop in markets such as Vietnam and the Philippines. This is because short - videos intuitively show the differentiated values of "easy to wear" and "immediate results".

They jointly prove that in Southeast Asia, it's better to sell value than products, and it's better to compete on trust than on price.

As the digital economy in Southeast Asia continues to develop, this "zero cultural discount" advantage will continue to expand. For Chinese domestic merchants, it is just the right time to enter the market - they can not only enjoy the cultural home - court advantage but also seize the dividends of consumption upgrade.

People factor:

Smoothly transfer capabilities and achieve "dimensionality reduction strike"

03

If the e - commerce operation capabilities of domestic merchants are compared to a mature "operating system", then content e - commerce represented by TikTok Shop provides a highly compatible "operating environment", allowing the operation capabilities accumulated by domestic merchants to be seamlessly transferred, and there is experience to follow in team configuration and cooperation between positions.

This transfer of capabilities greatly reduces the threshold for entering the market and the difficulty of operation, making cross - border business as simple as "domestic business".

First, the products can be reused.

In addition to the cultural and aesthetic similarities mentioned above, the Internet is also narrowing the information gap. This means that products that are popular in China can also be popular in Southeast Asia, and the product portfolio of cross - border e - commerce can be highly reused. In the Southeast Asian market, cross - border merchants do not need to start from scratch, and the scale advantage of the supply chain can be maximized.

Zhu Yaoji, the boss of the household cleaning brand logeski, said that whether it is the domestic market or the Southeast Asian market, the logic of product development is the same. Take logeski's best - selling toilet cleaner as an example, the goal is to achieve the best cleaning effect; the high - speed hair dryer that has been iterated many times in China also sells well in the Southeast Asian market where traditional hair dryers are dominant, even a dimensionality reduction strike. For "new" products, they just lack awareness and haven't had contact yet, not that there is no demand; Ecowin's thick - bottomed pots are suitable for open - fire cooking in both Chinese and Southeast Asian kitchens...

Second, the mature content experience can be "transferred", and there is no need to go all out.

As a big seller on domestic content e - commerce platforms, Wosado has rich content operation experience. After entering TikTok Shop's cross - border e - commerce in Southeast Asia, relying on high - quality grass - planting videos and professional live - streaming demonstrations, in just a few months, it sold more than 40,000 pieces of magnetic false eyelashes per month with related video views exceeding 100 million times through its innovative magnetic false eyelashes, successfully bringing the niche category into the public view and achieving "high exposure for a small category".

The beauty brand "Jianmei Chuangyan" achieved a leap from 0 to 1 in just over a year on TikTok Shop's cross - border e - commerce platform in Southeast Asia, and its monthly GMV can even exceed 10 million yuan.

In the Philippines, the first market it entered, "Jianmei Chuangyan" found that the richness of short - video content was far behind that in China, and basic content such as oral promotion of product features and product reviews could attract users and achieve extremely impressive views and sales data. A video of a mom with her lip glaze color still intact after shopping and dining out in summer received 14 million views.

Third, the influencer strategy can be "copied".

Feilu'er, a beauty brand that "achieved a single - day sales volume of more than 60,000 US dollars" during the 66 promotion this year, adopted an influencer matrix strategy. By precisely matching high - influence influencers and cooperating with more than 200 top and mid - tier influencers, it brought a lot of exposure to the brand.

Ecowin copied its domestic strategy of "extensive product testing + focusing on category influencers" to Southeast Asia, and the cycle of incubating a hit product, which originally took 6 months, was greatly shortened.

The industrial belt brand Tomorrow Shop in the 3C industry has enjoyed the dividend of the influencer ecosystem of "leading with top influencers and followed by mid - tier influencers" - the influencer commission in Thailand is only 15%, far lower than the 40% in China.

These are all common and proven strategies in domestic content e - commerce. The same set of strategies has achieved better results in Southeast Asia.

In addition, the live - streaming strategies during major promotions can also be used. For example, Feilu'er designed its product portfolio with a combination of "traffic - driving products + profit - making products", extended the live - streaming time to seize the peak exposure period, distributed high - frequency welfare to activate the atmosphere in the live - streaming room, and actively participated in official activities. These are all familiar strategies for domestic content e - commerce merchants.

Conclusion

04

A new global e - commerce growth pole is taking shape. This is not only an opportunity for consumption upgrade in Southeast Asia but also a great era for Chinese domestic merchants to go global.

A report jointly released by Singapore's DBS Group and market insights company Cube Nextwave shows that e - commerce in Southeast Asia is growing rapidly. It is estimated that by 2030, the e - commerce sales in this region will rise to 410 billion US dollars, more than doubling compared with 184 billion US dollars in 2024.

This shows that the Southeast Asian e - commerce market has both scale and growth flexibility. A large scale means that every cross - border merchant can get a share of the pie, and sufficient growth flexibility means that as long as one can gain a foothold, both the current market share and long - term returns are within reach. This is unimaginable development potential.

Of course, the train of the era doesn't stop just because you wave. Now that the dividend window is still wide open, domestic merchants, especially those operating on content e - commerce platforms, will gain more initiative by entering the market earlier. If they enter the market later, they may miss the first - mover opportunity.

This article is from the WeChat official account "Hangzhou Qiantang Enterprise Going Global Service Base", author: Market Value List team, published with authorization from Qiantang.