Chinese companies are setting their sights on a new market for growth: Southeast Asia and its 620 million people.
According to a report by The Wall Street Journal, China’s top internet companies, including Alibaba, Tencent, Didi Chuxing and JD.com, are expanding in Southeast Asia, moving beyond the slowing economy in China. WSJ noted Alibaba and Tencent have led deals with a value of $1 billion combined to expand their businesses in Southeast Asia, which is the third-largest region for technology mergers and acquisitions by Chinese technology companies in 2016. The deal values combined were $1.9 billion compared to $193 million in the year earlier, WSJ reported, citing data from Dealogic. What’s more, industry watchers said in the report they think that investments on the part of Chinese tech companies will accelerate next year.
“What we have learned in China, we can apply the fastest in Southeast Asia,” Poshu Yeung, Tencent’s vice president of its international business, said in the report. “Everything in Southeast Asia, particularly in Indonesia, you will experience a pretty good growth rate.”
EMarketer, the research firm, is projecting that the number of smartphone users will surpass 257 million by 2020, presenting a big opportunity for companies. What’s more, the incomes in the region are growing at the same time smartphone ownership is, noted the report.
Some of the acquisitions Chinese technology companies made in Southeast Asia this year include Alibaba’s $1 billion acquisition of Lazada Group, which gave it access to Indonesia, Thailand, Singapore, Malaysia, the Philippines and Vietnam. It also gave the eCommerce giant access to a wide logistics network to deliver packages to Southeast Asian customers who order on its Chinese platforms. Meanwhile, Tencent invested in Garena Interactive, a Singapore-based startup that launched a peer-to-peer marketplace app called Shopee. JD.com, for its part, got into the Indonesia online sales market last year and plans to use it to expand into the rest of the region, reported WSJ.