By Cate Hull
We read with interest a recent story in the South China Morning Post about Chinese technology companies and their efforts to gain a foothold in the Southeast Asia market.
They write, “Typically defined as the region east of India, west of New Guinea, north of Australia and south of China, Southeast Asia is home to some 655 million people in 11 countries that range from a city-state like Singapore to archipelagic nations like Indonesia and the Philippines, to landlocked Laos, speaking different languages and practising different religions.”
China’s largest hi-tech companies have made forays into the region, with Alibaba Group Holding buying the Southeast Asian e-commerce firm Lazada Group and signing cooperation deals with Malaysia and Thailand. Tencent Holdings, the gaming-and-social media giant, has invested in Singapore-based Sea, which operates the Shopee e-commerce site and Garena gaming and esports platform. JD.com led an investment round into Thai online fashion brand Pomelo last year, while the region’s two biggest internet platform start-ups, Singapore’s Grab and Indonesia’s Go-Jek, count Chinese tech unicorns Didi Chuxing and Meituan Dianping as investors, respectively.
It is no surprise that China, with its well-defined One Belt, One Road Initiative to reshape global trade, wants to see Chinese companies expand to Southeast Asia.
Our firm, FreightExchange, a logistics and freight management company based in Sydney, has similar plans to expand to Southeast Asia, which we see as a natural expansion of our market in Australia.
Hian Goh, an investor with a strong track record in Southeast Asia, told the South China Morning Post that “Southeast Asia is becoming a proxy war for large Chinese internet companies like Tencent, Alibaba and we think going forward this will increase,” he said.
We believe the growing trade disputes between the United States and China could provide an opening for Australia. The EU and others are re-evaluating traditional trading partners and are exploring new trading strategies.
Australia is presently meeting with EU officials and we find it interesting that they see Australia as a possible entry point to Southeast Asia.
Tan Yinglan, founding managing partner of Insignia Venture Partners, believes Southeast Asia has just started the second half of a metaphorical football match.
“In the first half, the platform companies in e-commerce, ride-hailing and game publishing have been established,” said Tan, who has invested in start-ups such as used-car marketplace Carro and co-working space EVHive. “In the second half, where the models involve local operations and are transactional, it would be challenging for these players to build their own operations in Southeast Asia, and we believe that they are more likely to make strategic investments or acquisitions,” he told the South China Morning Post.
Start-ups in China accounted for 47 per cent of the world’s VC funding in the three months ended June, compared with a combined 35 per cent for the U.S. and Canada, according to a report by Crunchbase, which tracks and compiles fundraising data.
Cate Hull is the CEO of FreightExchange, a Sydney-based logistics and freight management company.