The opportunity-friction paradox: why ‘where to go’ isn’t the same as ‘how to execute’

The Vistra Friction Index is built on data from primary research including in-depth interviews with senior executives across Asia Pacific, spanning industries including high-tech manufacturing, semiconductors, biopharma, clean energy and consumer goods. Respondents rated both the market attractiveness and operational complexity of 12 key APAC markets.

We assessed friction across three dimensions:

• Entity Management & Regulatory (weighted 40%)
• Accounting & Tax Compliance (weighted 30%)
• HR & Payroll Operations (weighted 30%)

The result is a composite friction score for each market, which we then plotted against our composite opportunity score — derived from economic development indicators, FX stability, political stability, trade and investment environment, and demographic fundamentals including population structure and purchasing power.

The output is what we call the Opportunity-Friction Quadrant: a framework that makes explicit something senior leaders have long felt intuitively but rarely quantified.

‘Most market research tells you where to expand. The Vistra Friction Index tells companies how to expand, with strategic guidance calibrated to each market’s unique opportunity-friction profile. This is both a risk assessment and an operational playbook so you can evaluate risks intelligently and execute with confidence.’ — Hailiang Zhang, Business Head, Executive Vice President, Vistra North Asia

The Opportunity-Friction Quadrant plots each market across two axes: market opportunity (vertical) and operational friction (horizontal). Markets fall into one of four zones.

Source: Vistra Friction Index: Where to Grow, Where to Execute (APAC Edition 2026)

The quadrant isn’t designed to tell you where to expand. Your commercial strategy does that. What it does is surface a question that too many organisations answer too late: does your operating model match the market you’re entering?

The headline data confirmed much of what experienced APAC practitioners expected. But the detail revealed five findings that gave even seasoned executives pause.

1. Friction scores were consistently underestimated before entry

Executives who had entered a high-friction market in the previous three years reported that operational complexity was greater than anticipated at the planning stage. The most commonly underestimated areas: tax and statutory reporting requirements, local employment law nuances and the time required to establish a compliant corporate entity.

The pattern held across market types. Even executives entering Singapore, a market widely regarded as APAC’s most business-friendly, reported underestimating the pace of regulatory evolution and the need for ongoing compliance monitoring.

2. Speed of entity establishment is the no. 1 execution constraint

When asked to rank the single greatest barrier to market entry execution, respondents cited entity establishment timelines. In markets such as Vietnam and Indonesia, the process of incorporating a foreign-invested enterprise, obtaining business licences and completing regulatory registrations can extend to six months or more.

This creates a meaningful competitive disadvantage for organisations that treat entity establishment as an afterthought rather than a strategic priority. By the time the legal structure is in place, market windows can narrow or close.

3. HR and payroll complexity is the hidden friction driver

Regulatory and tax complexity typically dominate friction conversations. But our data identified HR and payroll as the most consistently underestimated source of operational burden, particularly for organisations expanding from Western markets into Southeast Asia.

Social contribution structures, mandatory benefits, termination protocols and the management of expatriate versus local employment packages all create compliance exposure that is difficult to manage without in-market expertise.

4. The ‘regional hub’ model is under pressure

Many multinationals have long used Singapore or Hong Kong as regional hubs, running APAC operations from a single base. Our data suggests this model is being tested. As markets such as Indonesia, Vietnam and Chinese Mainland demand deeper local presence, through local entity requirements, data localisation rules and ‘substance’ tests for tax purposes, the hub model increasingly requires supplementation with genuine in-country infrastructure.

5. Executives who use specialist partners execute faster — and stay compliant longer

Organisations that engaged specialist corporate services providers for entity management, tax and HR functions reported meaningfully shorter time-to-operation in new markets.

In high-friction markets, the cost of getting it wrong — in fines, operational disruption and reputational risk — dwarfs the cost of getting expert help from the outset.

The table below summarises composite scores for each market assessed in the index. Scores are indexed 1–100; higher opportunity scores reflect greater market attractiveness; higher friction scores reflect greater operational complexity. A score of 0 does not imply the complete absence of operational friction.

Source: Vistra Friction Index: Where to Grow, Where to Execute (APAC Edition 2026)

Alongside the quantitative analysis, the research includes in-depth interviews with senior executives and industry practitioners across APAC markets. Their perspectives add texture to the numbers.

‘When choosing a location in Vietnam, there are three things I always advise companies to consider: First, industry alignment is critical — companies need to ensure there is already a cluster effect, meaning upstream and downstream suppliers are present and active. Second, labour availability requires careful consideration. Third, companies must assess tariff structures for their specific products.’ — High-tech manufacturing company

‘Japan’s business system and market segmentation must be well understood before market entry. The biopharmaceutical market offers a relatively low cost-benefit ratio: marketing costs are high, tolerance for error is limited, the population is comparatively small and geographically dispersed, and success is highly dependent on the experience and resources of local partners — making the selection of a strong local partner critical.’ — Biopharmaceutical company

A recurring theme across the interviews: the organisations that navigated high-friction markets most effectively were those that treated operational infrastructure — entity management, tax, HR — as a strategic investment rather than an administrative overhead.

The Opportunity-Friction Quadrant is a diagnostic, not a destination. Once you’ve mapped your target markets, the work begins. Based on our research, we’ve distilled the conversation that matters most into three questions.

01    Is your entity structure fit for where you’re going?

Many organisations enter new markets with an entity structure designed for their current footprint, not their future one. High-friction markets often require specific local entity types, minimum capital requirements, or local director provisions. Entity set-up timelines vary from 15 minutes in Australia to more than three months in Vietnam, Indonesia and Thailand. Get this wrong at the start and restructuring mid-operation is costly.

02    Can your compliance function scale with your expansion plans?

Compliance obligations don’t scale linearly — they multiply. A team that manages compliance for three APAC entities is rarely equipped to manage ten, particularly when high-friction markets are in the mix. The question isn’t whether you’re compliant today; it’s whether your compliance infrastructure can absorb tomorrow’s complexity.

03    Do you have the right partners in place before you enter?

The organisations that execute best in high-friction markets are rarely doing it alone. Companies that invest in robust governance infrastructure early don’t just survive the friction — they use it as a competitive moat. They have advisers — in-country, specialist, deeply experienced — who can navigate the regulatory terrain, flag changes before they become problems and keep the operation running while the commercial team focuses on growth. This isn’t outsourcing the problem. It’s building for it.

Vistra Friction Index: Where to Grow, Where to Execute (APAC Edition 2026) provides a complete market-by-market analysis, the full Opportunity-Friction Quadrant dataset and practical guidance on entity management, tax & accounting and HR & payroll across 12 APAC markets. 

Download now: https://www.vistra.com/vistra-friction-index-your-strategic-playbook-cross-border-growth 

Read the article: Fast-track markets: Hong Kong, the strategic governance hub of Asia-Pacific | Vistra