Origin Indonesia | Why Chinese entrepreneurs are going abroad

By Suzanne Loo
3 min read
Left to right: TR Harrington, Program Director Accelerator at MOX, SOSV; Johnny Li, Co-founder at SuperAtom; Devin He, Investment Director at Grand View Capital; Andy Li, CEO at Silot; and Dimitra Taslim, Investor at GGV Capital speaks at Origin Indonesia 2019 on the Chuhai phenomenon. (Image credit: TechNode)
Left to right: TR Harrington, program director accelerator at MOX and SOSV; Johnny Li, co-founder at SuperAtom; Devin He, investment director at Grand View Capital; Andy Li, CEO at Silot; and Dimitra Taslim, investor at GGV Capital, speak at Origin Indonesia 2019 on the chuhai phenomenon. (Image credit: TechNode)

 The chuhai phenomenon

From Chinese technology giants to PE & VC firms, Chinese players are setting their eyes on emerging markets such as India and Southeast Asia, to sustain their growth. As China’s digital economy reaches saturation and experiences a slowdown, tech firms are betting big on Southeast Asia’s maturing digital economy with abound opportunities.

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.

Southeast Asia’s digital economy is forecasted to hit US$300 billion by 2025, according to e-Conomy SEA 2019. It has become a highly scrutinized and favored region among both investors and businesses considering expansions. TR Harrington, program director accelerator of the cross-border mobile internet accelerator MOX and SOSV, and moderator for the panel, began the talk by asking, “What is driving this going-abroad (chuhai) phenomenon? What are some lessons learned back home [China] which can be applied when expanding to SEA? How should these companies choose their first international footprints in SEA?”

Localization is key

Chuhai also means building a local business for the locals,” said Andy Li, CEO of Singapore-based fintech company Silot. Having lived in local communities long enough to understand both China and the local market helps him to comprehend the similarities and differences. Startups should evaluate their own strengths and analyze the product-market fit when identifying the right Southeast Asian country to land in, added Li.

“Localisation 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.

Emphasizing the importance of adapting quickly, Johnny Li advises companies to engage with the local talents and understand regulatory compliance. “The key to success is the ability to understand the local market, coupled with the capital and cutting-edge technology from China,” said Johnny Li.

Building the right product

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.

“On the other hand, Chinese super-app WeChat is struggling to replicate its success in Vietnam as the locals have a preconceived notion that their chat data will be leaked due to the political history between China and Vietnam,” said Taslim.

Ultimately, he encourages businesses to focus more on the product itself than on operational matters. “Prove that you genuinely care about the local people and their needs,” he added.

The past and the future

“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.

With the passing of time, Chinese companies equipped with the right capabilities are foraying into new verticals such as entertainment, gaming, financial services, and e-commerce, He added.

Chuhai doesn’t necessarily apply to just Chinese entrepreneurs,” said Taslim. He shared that Indian entrepreneurs and the first generation of India-based unicorns are also on the lookout for new emerging markets, such as Southeast Asia.