On Nov 26, TechNode kicked off its 4th edition of ORIGIN in Indonesia, on the main stage of Wild Digital Indonesia. A great lineup of tech leaders and industry elites from ASEAN and China gathered to discuss the latest developments in ASEAN-China’s tech and startup scene. Topics covered included food & agriculture innovation, chuhai phenomenon, digital advertising, e-commerce landscape, and China’s tech ecosystem.
Understanding why Chinese entrepreneurs are going abroad (Chuhai)
“Southeast Asia is drawing comparisons with China a decade ago, at a time when there is an exponential growth of mobile-based businesses. These entrepreneurs are bringing along their industry knowledge and experience to seize this region’s untapped opportunities where it is less competitive compared to home”, Dimitra Taslim, Investor at GGV Capital, told the audience at TechNode’s ORIGIN Indonesia conference, held in collaboration with Wild Digital Indonesia on November 26.
“ Chuhai also means building a local business for the locals,” said Andy Li, CEO of Singapore-based fintech company Silot. Startups should evaluate their own strengths and analyze the product-market fit when identifying the right Southeast Asian country to land in, added Li. “Localization is not about incorporating a company and clinching a few business deals. Understanding the local cultures and nuances goes a long way in forging meaningful and long-term partnerships,” said Johnny Li, co-founder of Indonesia-based fintech startup SuperAtom.
While there is a Chinese playbook that entrepreneurs can follow, Taslim highlighted the importance of building the right product for the right market. As Southeast Asia is experiencing burgeoning activities in the digital, social media and mobile activities, entertainment apps such as TikTok are taking off well in Vietnam, he added. Short video app Douyin and its overseas version TikTok with 12 million users in Vietnam alone have been downloaded more than 1.5 billion times on Apple’s App Store and Google Play since release.
“Phase 1 of the chuhai endeavor started way back in 2008,” said Devin He, investment director at a cross-border fund VC Grand View Capital. Companies back then focused on developing utility applications to acquire a large group of market users in the shortest time, said He, citing the success of iHandy Group who was the only third-party app available for iPhone manuals in 2009, as a pioneer successful Chuhai example.
Why China’s food and agricultural trends are hard to replicate in SEA
Edward Tirtanata, the CEO and co-founder at Kopi Kenangan, an Indonesian grab-and-go coffee chain, said, “The rise of online food order and delivery reflects the changing consumer’s behavior where speed and convenience are the key factors.” Indonesia’s online food delivery industry generated a revenue of US$1,443m in 2019 and it is expected to grow 15.1% annually, hitting a market volume of US$2,536m by 2023.
“Making a brand resonate with consumers through stories that they can connect with encourages organic word of mouth discussion,” said Tirtanata. “Kopi Kenangan Mantan,” an Indonesian phrase which is loosely translated as memories of your ex-girlfriend/boyfriend, cited by Tirtanata is an example of an emotionally-resonating drink on his menu. The coffee chain startup rose to fame with organic social media posts despite minimal to zero marketing dollars spent.
“The upside of being compared to a China equivalent is that investors are interested in companies that have a validated business model,” said Wineka. While it may seem both Meicai and TaniHub are connecting farmers to the b2b buyers, he noted that Indonesia’s digital payment ecosystem is largely different from the one in China.
Wineka lauded the highly efficient and integrated digital payment system in China, which he believes is a key factor in Meicai’s rapid growth. “Indonesian farmers generally prefer receiving cash to reduce the time spent on traveling and waiting to collect payments from the banks,” he added. However, Wineka believes that this situation will change as the ecosystem matures, with the introduction of e-wallets in rural areas.
Driving e-commerce growth in Southeast Asia with digital advertising
“The majority of the advertising dollars are going to areas such as FMCG, retail, online platform and travel,” said Sherly Luo, the Vice-President of OPPO Advertising Indonesia, a subsidiary of OPPO Indonesia. According to an analysis by emarketer, total Indonesia media ads spend in 2019 is expected to be around $3 billion, digital ads occupied 20.4%, its growth ratio is 18% in 2019. “Based on the statistics and our experiences in working with local SMEs, we are seeing more digital ad dollars spent by the B2C marketers,” she added.
“The Chinese love story-telling branding,” said Luo, noting that the Chinese consumers are drawn to products with appealing narratives as China is going through a consumption upgrade and they are looking for something unique which sets a brand apart from competitors. “We are still seeing many outdoor billboard advertising in Indonesia, but you won’t find this in China,” he added.
Here in Indonesia, the KOLs make lifestyle and beauty videos on Instagram, YouTube, and other popular video apps, said Luo, adding that Indonesian consumers refer to such videos for product recommendations and reviews.
China's tech ecosystem
At ORIGIN Indonesia, Dr. Lu Gang, CEO & Founder of TechNode, gave an overview of China’s tech ecosystem. Here are three points shared by Lu.
A massive market
China has a massive population with a high penetration rate of 61.2%. “This means that about 40% of the population is offline and this shows that there are still opportunities in the market,” said Lu. In China, the majority of internet users access the internet through their mobile phones. With such ubiquitous presence of mobile phones, Lu encourages business “to start with mobile when doing anything in China”.
Evolving technology in companies
With attitudes to data privacy relatively lax in China, AI companies are seizing the opportunities to monetize the data collected from users. The number 1 most downloaded app, TikTok is owned by China-based ByteDance, said Lu. Alongside TikTok, Lu shared success stories of companies and startups such as XiaoMi, OPPO, VIVO, Royole, XAG, Pinduoduo, and Luckin Coffee.
Globalization is key
“We have seen many examples of Chinese companies globalizing despite China having a massive market,” said Lu. "Think of globalization regardless of the size of your market," he emphasized.
TechNode Global , in partnership with North Ridge Partners , has released the 2019 Southeast Asia Internet Trends Report which aims to provide a concise view of the regional technology market. This report is for VCs and those who want to have an overview of the Southeast Asia market, as well as corporates and startups who seek updates on the current investment trends in the fragmented regions/markets of Southeast Asia. The 2019 Southeast Asia Internet Trends Report is available to download for FREE. Simply click the "read more" below.
TechNode’s vision is to be the #1 platform that bridges China’s global tech and startup ecosystem to Southeast Asia. Recognizing that the Southeast Asia startup ecosystem is booming, TechNode held its 4th edition of ORIGIN by TechNode at Jakarta, Indonesia.
We are humbled to have such great minds to join us here at ORIGIN by TechNode and we’d like to thank our speakers, volunteers, and partners who have helped in making this conference a success. We are happy to end the year with ORIGIN by TechNode at Jakarta and we are excited for what's to come in 2020!
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