Chinese tech giants looking to S-E Asia for growth

Motorcycle-hailing startup Go-Jek is riding its way to success in Indonesia. As part of a series on e-commerce in the region, we explore one of their latest services Go-Glam, where beauticians go to clients' homes to do makeup a style their hair.

HONG KONG • Chinese tech titans are shifting their gaze towards the rest of the planet, as growth in their home market slows and saturates. Their first stop: South-east Asia - a region with twice the population of the United States and the largest Chinese diaspora in the world.

Chinese investments in technology abroad more than doubled to US$37.8 billion (S$52.4 billion) last year, PricewaterhouseCoopers estimates. Among those, Alibaba paid US$1 billion last year for control of Singapore-based e-commerce player Lazada Group - now its beachhead for the region.

WeChat-operator Tencent - already a backer of Sea Ltd, South-east Asia's most valuable start-up - is said to be close to investing in Indonesian ride-sharing giant Go-Jek. Even Didi, Asia's most valuable start-up, backs car-hailing peer Grab and has declared its intentions to go global.

"What you are seeing is a change in mindset," said Mr Thomas Tsao, founding partner of early stage investor Gobi Partners. "They're starting to aspire, not just to be the biggest Chinese company, but they are thinking globally."

China has laid the groundwork to take the helm of the regional economy for decades. Its ever-wealthier investors have poured billions into everything from transport to real estate, transforming the region.

China almost doubled foreign direct investment into the six biggest South-east Asian nations last year alone, says Credit Suisse Group. Little of that largesse went to a tech sector in its infancy. But with deepening mobile penetration and an emergent middle class, China's tech giants are beginning to take note.


The region hosts the largest ethnic Chinese population on the planet - a comfort to would-be financiers craving cultural similarities. Growth in the Asean-5 of Indonesia, Malaysia, the Philippines, Thailand and Vietnam is projected to exceed 5 per cent annually through 2022, the International Monetary Fund says, outstripping North Asia's 3 per cent on average.

Israeli tech pioneer Yossi Vardi says Alibaba's moves to aggressively capture market share outside China reminds him of the US in the 60s and 70s, when American firms began looking outward for growth and ended up as multinationals. "This is very, very substantial and it's just a beginning," he told a conference in Singapore last month.

"The opportunity in Asia is just unparalleled," Ms Grace Xia, Tencent's senior director of corporate strategy and investment, said in an interview last month.

Meanwhile, China has overtaken the US as the "gamer capital of the world" in terms of market size, said a report published by London-based venture capital firm Atomico.

The 600 million gamers in China generated US$24.6 billion of the industry's US$101.1 billion global market value last year, just ahead of the US$24.1 billion in the US.


A version of this article appeared in the print edition of The Straits Times on June 02, 2017, with the headline 'Chinese tech giants looking to S-E Asia for growth'. Subscribe