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Hi everyone — south-east Asia is rising, China is cooling. Our Big Story uncovers the dimensions of the VC boom in south-east Asia and explains how China’s big funds are grabbing much of the action. Elsewhere in the region, Japan’s tech spat with South Korea appears to be claiming Samsung as a victim. India’s first IPO for a while showed the appeal of tech. Check out a report by Stratfor, a US think-tank, on how China is catching up with the US in the tech race. Lastly, is the real money in self-parking rather than self-driving?
The Big Story
China’s big venture capital groups have been preparing to embrace south-east Asia’s start-up scene for a while. But now the big hug is really under way, according to this report in the Financial Times. Chinese VC groups poured in $667m in the first half of this year, up from $148m in the same period of 2018 — more than a fourfold increase. Such activity has the potential to turbo-charge tech developments in a region of 650m people.
Key implications: The south-east Asian tech boom is already in play, with about $3.4bn in VC money flowing in during the first half of the year, up more than 300 per cent from the same period in 2018. But the arrival of the Chinese groups en masse is a game-changer. Some have deep pockets and several have helped nurture the rise of China’s tech behemoths including Alibaba, Xiaomi, Meituan-Dianping and others. They bring this experience with them.
Upshot: Two main outcomes are likely. First is a surge in activity across the region as Chinese money floods in, pulling in more international investments and boosting valuations. Warburg Pincus, for instance, announced last month a $4.25bn fund dedicated to China and south-east Asia, while Sequoia is also targeting the region. Second, although south-east Asian “unicorns” are still scarce, they may well proliferate.
Mercedes’ top 10
A round-up of the week’s best tech stories from the FT’s Asia tech reporter Mercedes Ruehl.
The Japan-South Korea tech spat is starting to claim victims. Samsung may have to delay the launch of its most advanced processor chip, according to this scoop by the Nikkei Asian Review.
China’s tech scene is cooling considerably. Here is one of the latest signs — tech companies have slowed their hiring significantly compared with last year.
It was not all bad news on the mainland. DouYu International, the Tencent-backed game-streaming company, upsized its IPO. The company filed to raise up to $944m on the Nasdaq.
Overseas workers from the Philippines send home a ton of money — about $30bn a year. This flow has now become a battleground for fintech players vying to dominate the remittance market.
Failure of the week went to Seven & i Holdings, Japan’s second-largest retail group by sales. Its new mobile payment service, 7pay, was hacked days after launch, with about ¥55m ($505,000) being stolen from roughly 900 users. This is unlikely to help the country’s low rating for cashless transactions.
Nice interview on the rise and rise of the “Amazon of Vietnam”, Tiki. The country’s ecommerce market is estimated to have grown at a compound annual growth rate of 25 per cent between 2015 and 2018 and Tiki founder Tran Ngoc Thai Son says the company’s growth has far outstripped that.
Technology companies, while facing headwinds, appear to be weathering the US-China trade war, according to the Asia300 Power Performers ranking, NAR’s list of leading companies to watch in the region.
IndiaMART, the ecommerce group whose IPO marked the end of the drought for Indian listings, jumped 25 per cent on its debut, showing demand for tech listings.
Forget autonomous driving — is the real money in self-parking cars? China’s Baidu could generate revenue from its self-parking service before fully autonomous cars even hit the road.
Do as I say, not as I do. James Dyson has bought himself the most expensive flat in Singapore. Alert readers will recall that the tech entrepreneur supported Brexit yet made the decision to relocate his company’s headquarters from the UK to the city-state after the 2016 EU referendum.
When sages speak
Matthew Bey, senior global analyst at Stratfor, a US geopolitical think-tank, has this report on the US-China tech war. It says that “hard as it may be for Washington to admit, China is catching up in the tech race”. It then goes further to ask whether US tech companies will be “able to keep up with their Chinese counterparts’ breakthroughs”.
Check out the latest missive from Jeff Ding’s @jjding99 ChinAI newsletter, in which he and Lorand Laskai provide an epic translation called “The Sour Past of China’s Chips”. The piece is by a blogger called “Boss Dai” and provides a full background on China’s often unsuccessful attempts to create a homegrown semiconductor industry.
A little left of field, but both entertaining and thought-provoking, is this piece by Lt Col Dave Calder, who uses China’s sci-fi cannon to yield insights into the country’s tech and strategic ambitions.
Heard by Henny
Two decades ago Richard Li, son of Hong Kong’s richest man, Li Ka-shing, was a tech entrepreneur who sartorially rocked the vibe. He used to wear a T-shirt and backpack as he snapped up tech assets.
Now he is shaking up a different world: insurance. As the founder of FWD, an insurance company backed by Swiss Re that spans Asia, Mr Li made two acquisitions this month in Thailand and Hong Kong worth a combined $3.3bn.
But tech still features in the background. He is concentrating on building a digital insurance operation out of Singapore that will run separately from FWD. And in Hong Kong, which has already started to award virtual insurance licences, Mr Li will have to adapt.
Read the story by Henny Sender, the FT’s chief correspondent, international finance.
In the spotlight
Indian billionaire — and prolific tweeter — Anand Mahindra is never one to shy away from a debate. The latest volley from the head of the $20bn Mahindra Group, one of the country’s largest automobile manufacturers, is on electric vehicles.
In an interview with the FT, Mr Mahindra called for an urgent shift towards electric vehicles in India, even though this will cause a “huge amount of economic disruption in the value chain”.
Mahindra Group has developed a range of electric vehicles, including electric rickshaws, and last year forged an agreement with Ford to develop more electric models.
His exhortation came as a government think-tank proposed bringing forward to 2023 the deadline by which all three-wheeled vehicles sold — including India’s rickshaw taxis — are electric. For scooters and other light two-wheelers, the proposed deadline is 2025. Previously, authorities suggested that all vehicles sold should be electric by 2030.
US-China tech war victim: A big slump in Chinese VC investment into US biotech is under way, with Chinese investors taking part in $725m in US biotech funding rounds in the first half of this year, down by nearly 60 per cent from $1.65bn in the same period last year, according to Seattle-based data provider PitchBook.
India-based budget hotel network Oyo, whose investors include Airbnb, wants to expand its tech development team in Indonesia as it doubles down on expanding in south-east Asia’s fastest-growing economy.
Alibaba-owned Lazada Group, one of south-east Asia’s biggest ecommerce companies, has appointed James Dong to head up its growing Vietnam business. The role will be in addition to his current role of chief executive of Lazada Thailand.
Singapore’s private car hire industry could be in for a shake-up. A new bill seeks to expand the regulatory scope of the city’s public transport council to cover fares set by ride-hailing operators including Grab and Go-Jek.
Samsung is in hot water in Australia. The country’s consumer watchdog has sued the South Korean company’s Australian unit for allegedly misleading consumers by promoting water-resistant Galaxy smartphones as suitable to use in swimming pools and the surf. The case could result in multimillion-dollar fines.
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