As part of our research for the latest Notion Insights report ‘The Journey East‘, we interviewed a number of experts in various aspects of doing business in Asia. Each of our contributors shared their stories, advice, learnings and war stories. This week, we share our interview with Mike Laven, CEO Currencycloud.
Currencycloud is a cloud based, cross-border payment engine. In the complicated payments processing ecosystem, its clients are businesses who want to build an international payment component into the transactions that they handle.
With international payments at the heart of the business, it is no surprise that the company has made inroads into Asian economies. Mike says, “For 2017, Currencycloud is on track to generate a modest amount of revenues from Asia-based companies who are buying services that we offer out of the UK and the US. These include Australian, Singaporean, Chinese, and Hong Kong based entities, but we see enormous potential and it’s a major focus for us – and a personal objective for me – to expand our share of revenues to more than 10% from Asia in 2018 and 20% in 2019.”
Our current levels of staffing and investment mean we can’t do as thorough a job as I would like”, says Mike. “We have allocated some resources to the region and have gained 25 customers, but it is nowhere near enough. To do Asia seriously, we need to come up with a comprehensive strategy and finance it accordingly. This especially applies to China as it grows – we will also have a support requirement that we won’t be able to service from Europe. As a first step we established a Singapore subsidiary two years ago that will act as our hub for the region.”
Initial forays have been via partnerships and direct-to-client, but Currencycloud’s ongoing approach is to formalise a market strategy. Mike says, “We have signed a significant partnership with a Chinese firm who specialises in supporting international Chinese students and we have scored a big deal with Hyundai in Korea which is exciting. However, while we have made many trips to China most of our deals have been scattered amongst different clients. We have just recently in February 2018 formed a working group, laid out a detailed plan and started to push.”
“The thing that has changed the most in recent years in Asia is the opportunity of China, which overwhelms everything else. Currencycloud is quite late to address this, but that’s not necessarily a bad thing.”
A REALISTIC APPROACH TO ASIA
Laven’s experience has led him to consider Asia as four distinct regions that must be approached differently. Even within these regions, there are of course many more local nuances and challenges; but for simplicity the overriding territorial segments are:
1. English speaking – Australia, NZ, HK, Singapore.
2. ASEAN – Thailand, Vietnam, Indonesia, Malaysia, and the Philippines
3. North Asia – South Korea, Taiwan, and Japan
1. ENGLISH SPEAKING
The Asian region is enormous and incredibly diverse. However, as a European company, one of the main starting points is to think about the markets represented by English as the first or dominant
language. “Australia and New Zealand are two obvious starting points and the entry point for many European and US companies. Talent is good, and there is a strong similarity in terms of culture. But as individual economies, they are small by Asian standards and quite distant from the other Asian hubs.”
“Hong Kong and Singapore are both interesting, with English as the business language. Both have quite distinct advantages and disadvantages – Hong Kong as a possible entry point to China and Singapore as a route into South-East Asia. Singapore in particular is very accessible, indeed welcoming, to international companies and both are actively building vibrant start-up ecosystems.”
2. ASEAN – THE ASSOCIATION OF SOUTHEAST ASIAN NATIONS
Since its formation on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand, the ASEAN organisation’s membership has expanded to include Brunei, Cambodia, Laos, Myanmar and Vietnam.
“The stated purpose of this group is to accelerate the economic growth, social progress and cultural development in the region through joint endeavours. And while that is the case, these countries are still very different and best served through Singapore.
3. NORTH ASIA – KOREA, TAIWAN, JAPAN
”Japan is of course one of the world’s largest economies. But it is a very difficult market to address with linguistic, technical and regulatory obstacles. As I have a lot of experience opening in Japan, early on we sought a Japanese investor who could help us to open the market when I felt we were ready. We will be able to focus on Japan this year and our investor – Rakuten – is helping us.
Along the same lines, we sought a partnership in South Korea and now have a developing relationship with Hyundai. Both of these markets are large and rewarding, but difficult; and for
us best approached with a partner.
“There are major cash flows from Asia to the West and vice versa – and most revolve around suppliers in the east fueling consumption in the West. In China alone, there are over 10,000 companies reselling their goods on Amazon!”
“Though consumer finance in China is quite automated and supports rich suites of online services through giants like Tencent and Alibaba, B2B banking is still fairly backward. Also, the regulatory environment is very obscure. Though the opportunity for moving funds to/from China dwarfs all other Asian markets and even the US or Europe, we need to enter carefully for regulatory and compliance reasons. For the past year, learning about China has been a major focus: with multiple trips, participation in events and working with key customers. We’re now working on our market plan.”
“The one thing I truly believe is that for any company like ours to succeed in China – in fact in any of the Asian countries – is to source local investment. We were fortunate to have Rakuten come in on our C-Round and they are proving invaluable to us as we navigate the opportunity, but at the next round we will ideally need a Chinese investor.”
ACCORDING TO MIKE…
- Secure local investment partners.
- Create a local strategy and finance accordingly
- Strategy starts with ‘who’s the customer’ – for example we only do business with companies doing global trade east / west which narrows it down.
- Establish a presence in Singapore to service the region 5. Enter, learn and only then expand.