Having been established as market leaders in their home market, it is only natural that China tech companies will want to grow their business overseas. Hence, China’s internet giants Alibaba and Tencent have chosen the neighboring region of Southeast Asia (SEA) for their first overseas business ventures, targeting the region with huge investments and acquisitions over the last few years.
Known as a diverse region of 600 million people, Southeast Asia is the world’s fastest growing internet region and is expected to grow in value to more than US$200 billion by 2025.
Here is a look at the expansion strategies of some companies backed by China’s hottest tech companies in the coming months:
Acquired by Alibaba last year for US$1 billion, Lazada has also recently acquired Singapore e-retailer RedMart and are now gearing up their operations to prepare for Amazon’s entry into Singapore in the first quarter of 2017. This is possibly the first time that Alibaba will compete with its American competitors for dominance in any market, and it will definitely be one of the toughest challenges that Alibaba will have to face, as two established e-retailers battle it out in unfamiliar ground.
Lazada has businesses in six countries across Southeast Asia: Indonesia, Malaysia, Thailand, Vietnam, the Philippines, and Singapore. In a recent Bloomberg report, Alibaba hopes to take advantage of Lazada’s distribution network across Southeast Asia, and will be working with other distribution partners in China and South Korea to beef up its transportation and payments infrastructure, which is still lacking in the region.
Though Garena is still privately owned, Tencent may have been investing in its Southeast Asian equivalent from as early as 2013. Garena is successful in the gaming industry, and has expanded to e-payment and e-commerce with its well-received AirPay and Shopee businesses. The company is now valued at close to US$4 billion, and will be on track for an initial public offering (IPO) in the next two years.
In an interview with Bloomberg this past Wednesday regarding its pick of Goldman Sachs to lead its initial public offering (IPO), Garena Group President Nick Nash said that Tencent is an important shareholder and Chinese partner. Nash likened Tencent to an ‘elder brother’ offering them good advice on the technology industry. Nash also aims to have its businesses linked to a single platform, just like Alibaba and Tencent’s.
Despite its small market size, Singapore is chosen yet again as the first expansion footprint by popular China bike sharing app Mobike. Mobike’s Singapore general manager Florian Bohnert said in a Mashable interview that it could be a success in Singapore though daily commutes by bicycles only amounts to 1.5 percent of total commutes. Mobike’s foray into the Singapore market comes at a time when the city state is exploring bicycling as a viable mode of transport, with the government recently approving new regulations on bicycling.
Though Mobike was launched less than a year ago, the bike sharing app has already completed a US$215 million Series D financing led by Tencent and American private equity firm Warburg Pincus last week.
Tencent has been interested in Thailand’s internet market for quite a while. Its initial investment of Sanook, Thailand’s number one online portal, has since turned into a wholly owned subsidiary of Tencent in December 2016. Now known as Tencent (Thailand), it also operates Thailand’s top music-streaming app Joox with more than 20 million registered users.
In the beginning of this year, Tencent decided to partner with digital content startup Ookbee in an undisclosed joint venture of at least US$19 million to produce Ookbee U, an app that will hopefully find and market the latest internet music talent in Thailand and the rest of Southeast Asia. Ookbee U will be closely aligned with Joox, together with other Tencent initiatives to encourage budding Internet artists to upload their music onto the platform, and eventually establish them as music professionals. Ookbee is currently established in five Southeast Asian countries, with most of its 8 million registered users in Thailand.
(Top photo from Pixabay.com)