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Southeast Asia, with a huge population of more than 600 million and also a sizable mandarin-speaking population, may serve as the next proxy Chinese tech battlefield.

It has been an interesting few months in the Fintech/E-commerce space. Just recently, Alibaba announced another US$1 billion investment into Lazada, slightly over a year after it invested its first US$1 billion into the company. The investment into Lazada presents a beachhead for the Chinese internet juggernaut to extend its influence over the Southeast Asian tech scene.

Also read: China on its 3rd Phase – Stewards of culture, or sleight of hand?

Over the last few years, the Chinese investment wave has begun descending upon Southeast Asia. The Chinese government had recently unveiled the “One Belt One Road” initiative, which would facilitate huge amounts of investment into the Southeast Asia eco-sphere. Besides the government, Chinese tech companies are finding their own local markets too competitive to compete in, and have begun shifting their attention to Southeast Asia  —  where the markets are presumably more fragmented. Southeast Asia, with a huge population of more than 600 million and also a sizable mandarin-speaking population, may serve as the next proxy Chinese tech battlefield.

Starting from scratch

Earlier on, some Chinese tech firms have begun experimenting with entering the Southeast Asian market by building up operations from scratch. Take for example early in 2015, JD started its expansion into Indonesia by means of setting up its own JD.id. That came during a time amidst intense competition with a number of incumbents like Tokopedia, Bukalapak etc. While the jury is still out on success of that venture, one can conclude that such a path is fraught with tremendous difficulties, especially since Southeast Asian market is so much more fragmented than the Chinese market.

Although building up an overseas presence organically can help preserve the culture of the company, it takes too long a period of time. In the tech industry, the markets can be quite unforgiving over a lost opportunity to grab market share from the beginning. Competitors can emerge very quickly and snatch market share ruthlessly.

Therefore rather than starting up their overseas businesses from scratch, it made a lot of sense of these tech giants to acqui-hire or invest directly into Southeast-Asian tech firms that have already been growing rapidly and had also ironed out a lot of the operational/regulatory issues that would have plagued these Chinese firms, should they start from zero. By M&A, they would also have access to a wealth of talent, which likely would have taken a long time to train and build.

Romance of the Three Kingdoms  —  BAT

Chinese influence on the Southeast Asian tech market is growing exponentially. It was earlier reported that Alibaba is mulling an investment into Grab. If that happens, it would likely be the biggest fundraise ever in Southeast Asia. Besides Lazada and potentially Grab, Alibaba has made a whole host of investment/acquisitions in Ascend Money, a Thailand payment provider; Mynt, a Filipino digital payment provider; M-DAQ, a Singapore-based multi-currency trading startup.

Earlier in April, Alibaba announced a partnership with Emtek to co-launch a new mobile payment product as well as other financial services; this partnership may subsequently result in an investment in Bukalapak, another e-commerce behemoth in Indonesia. In 2015, Alibaba signed an agreement with Indonesia’s largest online payment provider, Doku, to fast track and simplify payments made for Indonesian customers.

The investment into Lazada also enabled Alibaba to take control of HelloPay and in 2017, HelloPay merges with Alipay, hence setting up the expansion of Alipay into Southeast Asia.

Besides Alibaba, Tencent has also made forays into the Southeast Asian market. It has backed Sea, a Singapore-based platform provider that is preparing for its IPO that could fetch up to US$1bn. With fresh funding from Tencent, Sea also accelerated Shopee’s expansion plans across Southeast Asia.

Bloomberg, citing figures from Sea, reported that Shopee’s annualized gross merchandise value (GMV) now tops US$3 billion. Tencent has also recently led an investment round of US$1.2 billion into Go-jek. Besides that, Tencent has also formed a joint venture with Ookbee, a digital entertainment platform based in Thailand with more than 8 million users in Thailand, Malaysia, Indonesia, the Philippines, and Vietnam. It has a monthly active user count of 4 million.

Also read: Tencent, Ookbee launch joint venture to grow digital content in Thai

Besides BAT, JD.com (China’s second largest e-commerce company after Alibaba) was in talks to make a major investment into Tokopedia. Incidentally, Tencent is JD’s biggest shareholder with 21.25 per cent, even higher than that of its founder. It was rumoured that this investment could be worth up to several hundreds of millions, far lesser than Alibaba’s investment but still significant in the context of Southeast Asia. Credit China Fintech, a Hong Kong-listed Fintech company, has also announced that it would establish a Southeast Asia headquarter in 2017 to speed up the expansion of overseas fintech businesses. Some sources have also revealed that they would likely be looking to acquire incumbents to expand their footprint here (PDF).


The Southeast Asian ecosystem is experiencing what China was experiencing a decade ago  —  rising internet and mobile penetration rates. As such, Southeast Asian companies can expect to leverage upon Chinese expertise and know-how in different areas ranging from cloud computing, big data analytics, credit risk assessment, mobile payment and logistics. I still remembered that as I was coming back to Singapore after working in China for several years, I still recalled finding the payments system being significantly more backward as compared to what I experienced in China.

While the Chinese expertise can help accelerate the learning curve for many startups, Chinese tech firms should not take a cookie-cutter approach by plagiarizing its usual playbook. While Southeast Asia has a less scale than Alibaba, it is definitely much more fragmented and it does make sense to first partner with locally-based Venture Capital firms to size up promising companies and then make an offer to partner or even to invest.

The recent slew of investments from Chinese tech firms represents just the beginning. I have recently spoken with several Chinese funds (outside of the BAT); They have visited Singapore and are looking to opportunities to collaborate with successful incumbents. This will eventually be the new normal.

Southeast Asia’s tech scene is still a blue ocean, with abundant opportunities yet with a lot of uncertainties. As Deng Xiaoping once said “cross the river by feeling the stones”, Chinese tech firms should continue to move forward, but at the same time, feel their way forward amidst uncertainty.

E27 | Independent


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