Alibaba and Tencent’s growing tentacles in Southeast Asia

In recent years, the saturation of China’s internet market coupled with untapped opportunities in Southeast Asia’s growing mobile economy has been driving the influx and outflow of money from Chinese big tech.

Chinese ecommerce titan Alibaba and gaming giant Tencent have become two of the most powerful investors in the tech scene.

Southeast Asia’s top technology startups and companies including Lazada, Tokopedia, Sea Group, and Gojek are funded by Alibaba and Tencent. These local players are proxies in the intense rivalry between Alibaba and Tencent, which has spilled over to the region.

However, with Alibaba and Ant Financial facing more scrutiny at home, there’s no telling how that will impact their investment plans abroad.

Growing presence

In the last five years, Alibaba and Tencent gradually ramped up efforts in Southeast Asia by making direct and indirect investments to boost their presence.

Alibaba took an interest in the region early on. To widen its footprint in the budding market, the company acquired ecommerce platform Lazada in 2016. A year later, Alibaba made another investment in Indonesian ecommerce unicorn Tokopedia to expand further in the space.

Alibaba’s direct investments in recent years have mainly focused on the ecommerce vertical. However, the company also made indirect investments via its fintech arm Ant Financial, which has funded mobile payment companies across the region.

The Hangzhou-headquartered company also invests in Southeast Asia and India through its Alibaba Hong Kong Entrepreneurs Fund, Ant Financial backed-BAce Capital, and eWTP Technology & Innovation Fund.

BAce Capital, for instance, invested in Singapore-based fintech firm Wallex and India edtech startup Lido Learning.

Tencent’s investment in Sea Group in 2010 was a major move to bolster its gaming business in the region. Sea Limited – also known as Garena – is one of the world’s top game developers. Prior to Sea’s initial public offering on the New York Stock Exchange in October 2017, Tencent was the biggest shareholder of the company, with 39.7% of the shares.

After the Sea IPO, Tencent’s investment portfolio grew larger and more diversified. The Shenzhen-based company made strategic investments in industries ranging from the internet and entertainment to ride-hailing.

In China, it is a well-known fact that Alibaba and Tencent employ different investment strategies. Alibaba exerts more control over the companies it takes a stake in, whereas Tencent takes a relatively hands-off approach, according to analysts.

Influx of China money

Credits