Southeast Asia is an attractive region for companies looking for expansion opportunities. This is especially so for businesses focused on the Chinese, Japanese and South Korean markets where growth is expected to be slow or stagnant. However, swift action is necessary in Southeast Asia, a dynamic growth region with unique local attributes and an increasingly globalising economy.
Whilst Japanese and Korean brands set the bar for perceived quality in Asia, Chinese brands play more into the indulgence positioning which bodes well with snacks and dairy products.
Localised strategies position foreign brands more competitively
The key to localisation in Southeast Asia goes beyond flavour and product positioning – a strong push into the region includes having to understand distribution channels and consumer preferences.
A prime example is Inner Mongolia Yili, a dominant player in Asia’s food market due to its leading position in China. Its success in Indonesia’s ice cream market with its Joyday brand has been driven by strategic localisation. Recognising the market’s 13% CAGR prior to its 2018 entry, Yili capitalised on this momentum, capturing a 5% market share by 2024 – a notable achievement given the fragmented landscape and strong incumbents.
Yili achieved this by localising its distribution strategy to suit Indonesia’s grocery-dominated market, partnering with retailers to install freezers, while also launching value-added dairy products to overcome lingering consumer scepticism towards Chinese-made pure milk.
M&A strategies quickly consolidate presence in the region
Yili's growth strategy has extended beyond localisation with its acquisition of Cremo, Thailand's established dairy brand. This strategic move has proved transformative – under Yili's stewardship, Cremo surpassed three multinational competitors in the Thai ice cream market between 2017 and 2024. Yili achieved this by enhancing product quality, implementing aggressive digital transformation, and smartly leveraging Cremo's strong local brand equity.
The importance of strategic acquisitions is further exemplified by Mengniu's purchase of Aice. Recognising Aice's remarkable growth trajectory between 2017 and 2019, Mengniu acquired Aice in 2021. Despite economic headwinds, Aice has maintained its strong performance through its unique dual channel approach, combining retail distribution with foodservice kiosks offering frozen desserts and beverages.
Southeast Asia’s packaged food market requires a strategic blend of localisation and agility. Chinese brands like Mengniu and Yili have gained ground by adapting products – from probiotic beverages to value-positioned ice cream – while leveraging local distribution. Yet incumbents like Nestlé and Indofood retain dominance through continuous innovation and strategic partnerships.
Chinese brands have yet to achieve a strong positive reputation and indisputable trust amongst consumers in the food industry, making local partnerships necessary. Hence, the long-term goal is to improve consumer perception of Chinese-produced food brands; illustrating their expertise in research and development is key to this. Product innovations that have proved successful among Chinese consumers could be brought into Southeast Asian markets at competitive pricing.
Future success hinges on identifying high-potential categories like cheese, forecast to grow at over a 14% CAGR, and remaining agile to dynamic market environments with some help through strategic alliances in bringing localised innovations to markets
Source: Euromonitor International
Chinese juggernauts, with their experience innovating to diverse regions and consumers within China, are well positioned to capitalise on Southeast Asia’s growth and hold their own against rising competition.
Read our blog, The Rise of Chinese Brands is Reshaping Southeast Asia’s Consumer Landscape, and the white paper, The Rise of Chinese Brands in Southeast Asia, for more analysis on how Chinese brands are expanding into Southeast Asian markets in food and other industries.
