Market access is the new moat: Why international expansion is no longer a size game

The landscape of global expansion has shifted dramatically in recent years. As highlighted in a recent survey by Avalara, 80% of business leaders report that cross-border operations are more challenging than they were just a year ago. This change is not merely anecdotal; it stems from a surge in trade and investment restrictions, with the number of such barriers tripling globally since 2018. Projections suggest that this trend will continue, creating a new political variable that affects business operations.

This shift in the global business environment has far-reaching implications. It affects everything from where companies decide to incorporate, hire, and sell to how they approach financial modeling. The traditional playbook, which relied on finding the largest market, building something unique, and dominating it, is no longer applicable.

Instead, the focus is now on securing market access, which itself is influenced by political decisions. Governments can grant, restrict, or even revoke access, making this a crucial factor in business strategy.

The focus on market access is particularly pronounced in sectors like AI and data. Many countries, including Vietnam, Malaysia, and Thailand, are investing heavily in AI development and implementing stringent regulations to ensure data sovereignty. These policies not only dictate where businesses can operate but also require significant adjustments to data architecture and compliance setups.

Southeast Asia, in particular, offers a varied landscape, with each country having different regulatory requirements. For instance, rules around data localization and cloud infrastructure are becoming increasingly critical.

Moreover, capital is increasingly favoring certain regions over others. Singapore has seen a significant increase in startup funding, while Indonesia has faced substantial declines. Similarly, Southeast Asian startups are increasingly targeting the US market due to perceived stability and investor interest. This shift indicates that geography is now a part of the investment equation, influencing decisions about where to raise capital and grow.

For founders, the new playbook emphasizes deliberate scaling rather than opportunistic growth. It requires a careful assessment of political risk in every market entry. Access to a market should be viewed as an asset with inherent risks. A volatile market with unpredictable policy changes could be worth less than a more stable market with a proven model.

Therefore, the emphasis is on proving the business model in durable markets where the doors remain open, focusing on unit economics and a proven strategy before expanding further.

One of the key recommendations is to price political risk into every market entry. It is essential to recognize that market access is a valuable asset that carries risk. A politically unstable environment can lead to significant financial repercussions, potentially wiping out a business overnight. Founders should therefore prioritize markets with stable political environments and adapt their operations to ensure portability.

This involves setting up data systems, banking, and partnerships in a way that can withstand shifts in regulatory environments.

Building for portability is another critical aspect. Companies should structure their operations to survive changes in political landscapes. This means designing systems that can adapt quickly if policies change, preventing the need for costly and time-consuming overhauls. Continuous monitoring of geopolitical developments is essential, akin to how businesses manage financial planning. By treating policy monitoring as an ongoing process, businesses can make informed decisions before committing to new ventures.

The ultimate goal is to focus on predictability rather than size. Southeast Asia, with its stable and business-friendly jurisdictions, offers a unique advantage. Founders in the region should seek markets where the regulatory environment aligns with their business models. Proving success in such markets can then serve as a foundation for scaling outward.

By focusing on regions where the rules are favorable to their operations, founders can build businesses that are more resilient and capable of withstanding the uncertainties of the global marketplace.

In summary, the new reality of international expansion is not about chasing the biggest market but about securing long-term access and stability. This shift requires a strategic, deliberate approach that prioritizes political risk management, market access reliability, and sustainable scaling. For founders in Southeast Asia, this presents a rare opportunity to leverage stable and supportive environments, potentially outpacing competitors who remain focused solely on size.