Chinese Money Fuels Asia's Startups
A Grab logo is pictured at the Money 20/20 Asia Fintech Trade Show in Singapore, March 21, 2019.

(Photo: REUTERS/Anshuman Daga)

Fintech Refinitiv reports that there is an eightfold increase over the same period in 2018 when it comes to Chinese investments in Southeast Asia's startups.

Analysts say the influx of Chinese money is brought about by China's tech scene and Southeast Asia's maturing mobile economy.

Beneficiaries of Chinese money are the unicorns, firms valued at US$1 billion and above, and aspiring unicorns in the region.

Just this July, Gobi Partners with Teleport co-invested US$10.6 million in EasyParcel of Malaysia.

In May, Singapore's Bigo, a live-streaming platform, got acquired by YY, a Chinese social network, for US$1.45 billion.

Even Alibaba, China's e-commerce giant, bought the South East Asian e-commerce company Lazada Group.

China's Internet-based company Tencent invested in the Singapore-listed Internet and gaming app Sea and mainland's JD.com, a Chinese e-commerce company, put in US$19 million in the Thai fashion brand Pomelo.

Two of China's biggest capital venture firms - GGV and Qiming Ventures' newly opened offices in Singapore are seen as a sign of China penetrating the regional market.

Tokopedia, a technology company of Indonesia, also benefitted from the Chinese tech giant Alibaba and Japan's SoftBank US$1.1 billion while Indonesia's e-commerce Bukalapak has Ant Financial as one of its owners.

Singapore's ride-hailing and food delivery Grab is likewise up for partnerships with ZhongAn International and Ping A Good Doctor.

Boh Wai Fong, a professor at Singapore's Nanyang Business School, said Chinese venture capitalists found other Southeast Asian markets to finance because of the very saturated tech market in China and also because of the similarities of these markets to their own.

Chua Joo Hock, the managing partner at Vertex Ventures for Southeast Asia and India, pointed out that Chinese investors view Southeast Asia as a "new market" with strong GDP and the right macro factors.

Chua also pointed out the region's young population, rising income and high social media usage as contributors to Chinese investors' decisions.

Kay-Mok Ku, the managing partner of Gobi Southeast Asia, also said Chinese investors want greater worldwide market share with proofs like Alibaba and Tencent globally expanding.

Chua said that Chinese money definitely went to e-commerce, peer-to-peer lending, and ride-hailing.

Ku stated that Chinese investors like businesses with similar business models as successful Chinese enterprises.

Likewise, with the Southeast Asian' Internet economy to hit US$300 billion in 2025, it didn't hurt either.

Temasek, Singapore's state investment firm, together with Bain & Company and Google found out that the number of Internet users in Asia had gone up drastically with ninety percent of the population going and shopping online using their mobiles.

When it comes to competition with American companies funding businesses, Ku said Chinese investors are into the consumer sector that includes logistics and fin-tech unlike American companies that are into hi-tech engineering innovations and deep tech.