Online giants need 5-10 more years in ASEAN

It should be another five to 10 years before Chinese companies that have been keeping their noses to the grindstone in the Association of Southeast Asian Nations (ASEAN), particularly domestic online giants like Alibaba and Tencent, can get a good profit, an analyst told the Global Times on Tuesday.

According to data released by Japanese securities firm Nomura Securities Co, major Chinese online giants’ investment in ASEAN markets is centered in fintech, logistics and e-commerce, but Tencent has also expanded into other areas like travel and gaming.

For some of those industries, such as gaming, ASAEN markets have a lower entry threshold and flexible government management, according to Andrew Orchard, Nomura analyst of internet and media research for the ASEAN and China markets.

Tencent has already invested in two ASEAN-based gaming companies. One of them, Singapore-based Sea, got listed in the US in 2017.

But Orchard pointed out that for certain areas, it still takes time for market demand to develop.

“Like mobile payments... ASEAN is still not quite ready to accept it,” he said. So far Alibaba, Tencent and Didi Chuxing have all invested in several mobile payment companies in ASEAN markets, such as HelloPay and GrabPay.

According to Orchard, political instability is a lurking risk for Chinese companies that are exploring the ASEAN markets.

For example, China’s investments in Malaysia might face “rocky times” ahead as the Malaysian prime minister has expressed doubts over Chinese investments recently, according to a report of the Straits Times on Monday.

“Of course I don’t think ASEAN countries will completely shut their investment doors to Chinese online giants, as it's not easy for those countries to develop the internet business all by themselves. But the risk still exists,” he told the Global Times Tuesday.

Li Yi, a senior research fellow at the Internet Research Center under the Shanghai Academy of Social Sciences, said that ASEAN is still a region worth Chinese investment.

“Vitality is rising in many ASEAN countries, with people more capable and more willing to learn and spend,” he told the Global Times on Tuesday.

He also said that with big companies’ move to grab the ASEAN markets, smaller players can also get outsourcing business from bigger participants in those countries.