Southeast Asia taps into Shenzhen verve
Companies in region look to deepen links with China’s tech powerhouse
Plans to further open up fastpaced Shenzhen are expected to bring more opportunities to Southeast Asia — a region that has long attracted some of China’s top technology companies.
The world’s youngest major metropolis, which in October marked its 40th anniversary as China’s first special economic zone, is being further developed into a pilot zone for socialism with Chinese characteristics.
Alfonso de los Reyes, head of insights at Momentum Works, a Singapore-based technology venture capital company, said that Southeast Asia “can learn and benefit from close interactions with the ecosystem in China”, against the backdrop of an increasing presence by Chinese technology and telecommunications firms in the region.
Chinese authorities have laid out policies that aim to further open up Shenzhen’s economy. These include easing restrictions in sectors covering energy, telecommunications, public services, transport and education, while loosening limits on foreign investment in cutting-edge technologies and strengthening the protection of intellectual property rights.
As a special economic zone, Shenzhen was developed into a hub for manufacturing and international trade and has offered tax incentives to foreign investors. The southern city has also encouraged entrepreneurship and innovation, and in the process created some of the world’s most renowned companies, including Tencent, Huawei, ZTE and drone manufacturer DJI.
President Xi Jinping praised Shenzhen’s success, noting its historic leap from a backward border town to an international metropolis with global influence. In a speech delivered at Shenzhen’s anniversary celebrations, Xi said the city needs to become a demonstration area of socialism with Chinese characteristics within the next five years.
He also said that it is important for Shenzhen, now home to more than 13 million people, to have an innovation-driven strategy, foster new growth engines and become a leading hub in scientific, technological and industrial innovation with global influence.
Larger market
Analysts said this bodes well for Shenzhen’s homegrown companies. These technology giants can further expand and bring innovation to Southeast Asia. Companies in the region can tap Shenzhen as a base to explore the larger Chinese market.
De los Reyes notes that Shenzhen is a hub for hardware, deep technology and e-commerce. He said plans to further open up Shenzhen will improve the flow of information, resources, human capital and potential business opportunities between the coastal Guangdong city and Southeast Asia.
Zeng Xiaofeng, vice-president of consultancy firm Niko Partners, said Shenzhen and Southeast Asia have an “economic connection”. He said Shenzhen-based companies have been making inroads into Southeast Asia for years, attracted by the region’s large population, growing affluence and young, techsavvy customer base.
He said the Chinese companies’ expansion in the region will have a huge impact as they will contribute to technology and telecommunications development.
One such company is Tencent, which is one of the main shareholders of Sea Ltd — a Singapore-based internet platform provider behind games publisher Garena and e-commerce site Shopee. It also has a stake in Voyager Innovations, the fintech subsidiary of Philippine telecommunications firm PLDT, and Indonesian ride-hailing firm GoJek. Tencent is setting up its regional hub in Singapore to further expand in Southeast Asia.
Huawei has partnered with local telecommunications companies to develop 5G mobile networks in Cambodia, Malaysia, the Philippines and Thailand. ZTE has teamed up with Qatar-based telecommunications company Ooredoo to develop Myanmar’s 5G network.
In Malaysia, the Selangor state government has allocated 2 million ringgit ($480,800) for DJI high-technology drones to monitor rivers in the western Malaysian state.
Maggie Lee, head of capital markets development at KPMG China, said that world-class technology firms have emerged in Shenzhen. She said the reform plans for Shenzhen reaffirmed China’s commitment to innovation and technology — benefiting the city as well as other international companies that invest in it.