Alibaba, Tencent’s SEA investment spree in 2021

Amid intensifying regulatory headwinds in China, Alibaba and Tencent, the country’s two biggest tech giants, have accelerated their investments in key battlegrounds abroad.

Southeast Asia, in particular, gained significant attention from both firms in 2021. The two companies were early investors in the region’s ecommerce scene, but their presence is now felt across even more industries.

As the Alibaba-Tencent rivalry heats up in Southeast Asia, new alliances are being forged, and more industries in the region are set to be disrupted.

Tencent’s year-long shopping spree

In 2021, both Alibaba and Tencent expanded their footprint in Southeast Asia.

In mid-December last year, Alibaba laid bare its plans to grow Lazada’s gross merchandise value fivefold to US$100 billion by 2030.

But while the Chinese ecommerce titan focused on its existing investments, Tencent grew its regional portfolio instead.

Globally, the Chinese gaming giant racked up 34 investments in just the first half of 2021 – 11x more than the same period two years ago.

In terms of industries, Tencent also appears to have a broader investment mandate than Alibaba. That’s unsurprising, given that Tencent has placed its bets on a wider range of industries in the past.

Tencent’s regional portfolio includes firms in industries like logistics and transportation, which are not integral to its core online entertainment business. This stands in stark contrast from its domestic strategy, which centers on investments in artificial intelligence and mobile app startups.

What the firm’s regional moves hint at is the growing importance of Southeast Asia in the global supply chain, particularly as a “way station” between China and the US, says Orient Capital Research managing director Andrew Collier. Over the last decade, Collier has closely observed economic and financial trends in China.

The data on last year’s investments also suggests that Tencent is overlapping more with Alibaba. While our previous analysis found competing investments in only the fintech sector, Tencent entered into ecommerce with three investments in late 2021: Singapore-based collectibles e-tailer Mighty Jaxx, Philippine B2B platform Growsari, and Indonesian ecommerce marketplace Ula.

Befriending investors

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