If your firm is eyeing global expansion, then chances are you’ve heard a lot about APAC, the Asia-Pacific region. Since the 1980s, the term has become commonplace in discussions of global business, finance, and geopolitics — and with good reason. The region encompasses much of the planet. Generally, the term refers to most of East Asia, Southeast Asia, the Pacific Islands, and Oceania. And, as if that weren’t big enough, countries as far-flung as Russia, Pakistan, Chile, and Canada fall under its banner in various contexts.
Why They’re Grouped Together
As the name suggests, the Asia Pacific designation was originally motivated by geography. If you want to divide the world’s territory into a few big chunks, you can start with the Americas, Europe, the Middle East and North Africa, and sub-Saharan Africa. APAC is, more or less, what’s left over.
But APAC has also become a common business term. In the context of business, a good rule of thumb is to associate APAC most closely with the high-growth, emerging Asian economies that form its core. This encompasses countries like China, Vietnam, and Indonesia, as well as Hong Kong, South Korea, Taiwan, and Singapore, all of which are further along in their development.
Why You Shouldn’t Lean Too Heavily on the Term
But just as APAC’s size contributes to the widespread use of the designation, it also limits the term’s utility. Australia and New Zealand are usually included under the APAC designation, but have much to separate them historically, culturally, and economically from most of the rest of the region.
Australia ranks second on the United Nations’ Human Development Index, right ahead of the U.S. Expansion efforts in Australia will benefit from a shared language, democratic institutions and a free market economy, but the country has less potential for explosive growth. That’s a very different picture from, say, China.
But even within the region’s high-growth, Asian economies, you’ll find as much difference as similarity: Singapore is a free trade mecca, while the Chinese government wields a heavy hand in that country’s economy and reserves extra scrutiny for foreign firms operating on its soil.
You’ll also find a patchwork of regulatory regimes standing between you and the high-growth markets at APAC’s core rather than any unified system. Employment regulations, for example, change with alarming frequency in the region.
APAC remains a useful concept, and the region has potential for tremendous expansion. At the same time, be sensitive to context and be sure to have everyone on the same page when you’re talking APAC. You’ll want to examine your goals and begin determining exactly which APAC economies suit them.
If you’re look at the region for expansion, you’re looking the right direction. Now it’s time to look a little closer.
This post was written by Dafydd Williams, Director of Advisory Services, APAC.