In 2015, Asean launched its ambitious Asean Economic Community to catalyse a golden age of free trade, freedom of movement of goods and people and integrated Asean opportunities.
Boston Consulting Group’s (BCG) 2012 and 2014 reports, The Companies Piloting a Soaring Region and Winning in Asean, highlighted the buoyant excitement of that period. Our cross-sector regional survey indicated that 80% of companies viewed Asean integration as an opportunity for their businesses to accelerate economic growth in their industries. They envisioned growing to become regional champions — showcasing success in one or more regions on the way to achieving the scale of MNCs.
The last decade of regional economic growth has provided an encouraging backdrop. Asean GDP reached US$3.6 trillion in 2022 — a 50% increase from US$2.4 trillion in 2013. Singapore’s economy followed this trend, with GDP growing from US$307.6 billion in 2013 to US$466.8 billion by 2022, and other Southeast Asian countries witnessing even more rapid growth.
In recent years, however, transformational shifts have created complex challenges for regional companies. Major geopolitical and economic transitions have occurred due to conflict, the pandemic, and cost-of-living challenges.
The quest for regional dominance has been gradually impacted by the twin forces of globalisation — which has recalibrated supply chains — and the digital revolution, which has transformed brand promotion and sales channels. Lack of clarity presents another major challenge, particularly in fast-moving carbon regulation and pricing changes.
A decade after a bullish first assessment, we must ask if the concept of regional champions still resonates. And what are the prospects for ambitious companies to become the regional champions of the future? Examining current examples of regional champions provides useful insights.
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Singapore is home to a vibrant business landscape, with numerous strong cases for regional champions. Regional unicorn Grab is a noteworthy example, growing from ambitious ride-hailing roots to a super-app operating across Southeast Asia. Grab is now a US$12 billion-plus ($16 billion-plus) company, which achieved Southeast Asia’s biggest Nasdaq IPO in 2021.
Sea offers another compelling example. In over a decade, it transformed from a local gaming startup to a diversified digital company valued at US$32 billion, with a strong regional presence in gaming, fintech, and e-commerce through its subsidiary Shopee.
Digital startups are not alone in carving a path to becoming modern regional champions. Traditional companies United Overseas Bank U11 and Singapore Telecommunications Z74 demonstrate the success of building on trusted brand foundations, evolving to succeed across the region.
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Airport services company Sats offers another compelling case study, riding out pandemic headwinds and purchasing European cargo firm Worldwide Flight Services in late 2022 to deepen its offerings. Sats now has over 45,000 employees in over 27 countries.
The reality is that in the past, regional champions were household names — billion-dollar companies with extensive legacies. However, a modern business landscape offers even the smallest enterprise the ability to scale and build an effective regional footprint.
A bright future for regional champions
The future still appears bright for the region and its companies.
With the global trade map being redrawn as companies look to diversify away from a reliance on single-source supply chains, cumulative Asean trade along major corridors is expected to grow by US$1.2 trillion in the next ten years.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is due to unlock new economic opportunities. At the same time, Southeast Asia’s domestic consumption is forecast to double to US$4 trillion by 2031.
Local labour pools are deep, with large and increasingly educated workforces. Significant investments in technology and climate tech have also fostered a vibrant innovation ecosystem. Moreover, while complex, the local political landscape provides continuity, offering valuable reassurance for businesses.
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This creates fertile ground to grow the next regional champions, yet companies must navigate a complex landscape with an agile mindset to deliver.
Employing a multi-local strategy is critical. This means delivering a regional footprint which can be customised to the unique local context of this culturally and economically diverse region. BCG suggests exploring fractal companies — local companies that address the differentiated needs of customers in a local arena with speed, responsiveness, and innovation.
Understanding and navigating local regulation and government policy is also an important element. Companies need to work to align with local regulators while maintaining the flexibility to adapt to changing requirements, as well as visionary skills to help guide these evolutions.
At the same time, governments should work to create a conducive and business-friendly ecosystem that recognises the needs and challenges of the modern landscape. The Singapore government’s vision to develop Enterprise Singapore, evolving beyond segregated and differentiated trade bodies for SMEs and other players, demonstrates what we all know in today’s business landscape — size is no barrier to reach. Even the smallest company, whether it is a gaming startup or an ambitious noodle retailer, can go on to deliver regional success.
Leveraging new technologies, including deepening digitalisation and evolving AI solutions, will also be vital and offer a key platform for rapidly scaled growth. This complements the wider need for agility, as technology tools provide a platform to pivot and adapt to various challenges. Progress on Asean’s Digital Economic Framework Agreement will offer an important catalyst for this journey.
There are also new paradigms informing success. Social and ethical business ways are increasingly scrutinised in a connected digital world. How you care for your workforce, gender balance, and inclusivity mandates form a complex picture in a culturally diverse region.
This also impacts potential key markets, with the EU recently aligning a provisional agreement on new rules banning products from sources suspected of using forced labour.
Sustainability is another key issue that companies need to meet, as well as meet changing consumer expectations and comply with evolving regulations, to succeed in expanding across markets. The EU’s Carbon Border Adjustment Mechanism (CBAM) is already in place to align the carbon prices of imports with those produced in the EU. The scope of goods covered by CBAM is only likely to grow.
Last but not least, despite recent high-profile layoffs, talent that can develop and execute against sound business strategy in an ever-changing landscape remains in high demand and low supply worldwide. Companies should not underestimate the importance of cultivating a dynamic, adaptable workforce.
Looking ahead
The next regional champions will go beyond simple compliance and excel in these areas to capture a genuine market-leading opportunity.
Are you prepared to deliver differentiated strategies in local markets across the region?
Do you understand how to navigate key local regulation(s)?
Is your company positioned to leverage innovative technologies?
Do you comply with rigorous ethical and sustainability standards, and can you demonstrate doing so?
Are you cultivating a dynamic workforce?
As the sun sets on the past decade for ambitious companies in Asean, the stage is set for a new era of champions to define success in a landscape transformed by geopolitical shifts and digital revolutions. As Asean stands on the brink of a transformative decade, the call for regional champions echoes louder than ever, where resilience, adaptability and innovation create winners in this vibrant market.
Vincent Chin is managing director and senior partner and global vice chair of public sector practice at the Boston Consulting Group, and Evelyn Tan is global knowledge business director, global advantage at the Boston Consulting Group
