I recently decided to move from Stockholm to Singapore to challenge myself and seize the Asian emerging market opportunity.
Since October last year I have been extensively mapping Southeast Asia and more specifically Thailand, Indonesia, Malaysia and Singapore, comparing it with the experience I have doing business in China since August 2009.
On a macro level the first thing that comes to my mind is that we are seeing similar trends that happened when China pulled part of its population out of poverty, strengthening the middle class, especially in terms of purchasing power.
It is happening in Southeast Asia, in Indonesia, Thailand, the Philippines and Malaysia.
It may not be at the same 10% growth year-on-year as the statistics show in China but when you look at the real economy and what you see with your own eyes, you can touch, feel and see that the opportunity is real. Payments is an interesting area. We recently saw MOL, based out of Malaysia, doing an IPO on NASDAQ just after Alibaba IPO’d.
The Singaporean government just invested in Square. Americans thinks it’s crazy, but maybe there is a reason why they invested that we do not see clearly.
Strong Smartphone Growth
And a large telco based out of the Philippines just invested $353 million in Rocket Internet to develop payments for emerging markets.
The smartphone growth is much stronger than the credit and debit card growth which gives room for innovation not only in payments but also other areas.
On the micro level what surprises me is the number of European entrepreneurs who have made it by building up their own great companies in the region.
Jani Rautiainen founded PropertyGuru in May 2007 and today his company is the number one Internet classifieds real estate site in the region. It is likely to be the first company to IPO out of Singapore in a decade. Certainly local Nordic stars like Rovio and Supercell deserve lots of credit but what about Rautiainen, who has built a regional market leader in Southeast Asia, which is not his home turf?
He is not alone. Another example is Jakob Lykkegaard Pedersen, a serial entrepreneur from Denmark who founded Pocket PlayLab out of Bangkok; it’s one of the fasting-growing companies in the gaming sector in the region.
Magnus Grimeland and Fredrik Næss Thomassen, two Norwegians, are running Zalora, a fashion e-commerce site and the most successful Rocket Internet company in Indonesia, out of Jakarta.
European Countries Have A History In The Region
This is not just another copycat. Grimeland and Thomassen realized that delivery was not possible the way they originally conceived, so they built their own delivery channel with thousands of moped drivers.
What about other Europeans? Serial entrepreneurs Simone Ranucci Brandimarte, an Italian, and Etienne Van den Bogaert, a Belgian, are running as CEO and COO a great emerging-market payments company called goSwiff, which is already present in 25 countries, most of them emerging markets.
There are many more other examples of Europeans, Aussies, Americans and other nationalities who are finding success in Southeast Asia.
Why is it so? I do not have a scientific argument but I see that many of the Southeast Asian communities are melting pots already with strong Chinese as well as strong Indian communities and many others.
Also European countries have a history in the region, from the Dutch in Indonesia to the Spanish in the Philippines.
I believe the emerging connections between Europe and Southeast Asia give rise to two distinct opportunities. On the one hand those who have been around since the dot.com bubble days and survived and really understand e-commerce can leverage that knowledge to set up businesses in Southeast Asia as entrepreneurs, invest in the region or expand their current Western European operations there.
What About Establishing A Corridor Between Emerging Europe And Southeast Asia?
The other opportunity focuses on leveraging expertise in Southeast Asia and applying that in Europe. There is loads of leapfrogging innovation happening in Southeast Asia, places where fixed telephone lines never existed, people do not use mobiles for voice (messaging services like WhatsApp and Line are used); a whole generation has gone from cash to using mobiles for payments without the steps in between.
We might see Southeast Asian entrepreneurs, investors or existing companies expand into Western Europe with leapfrogging innovation.
A more likely alternative is that as an intermediate step Southeast Asian companies, entrepreneurs and investors will first enter “emerging Europe” — that is, parts of Central and Eastern Europe as well as Russia and Turkey. Bringing payments services in particular to “emerging Europe” from Southeast Asia makes sense. Having ”Emerging Europe” companies going to Southeast Asia for very much the same reasons could be a scenario as well.
Until now the emphasis has always been on increasing ties between the tech communities in the U.S. and Europe. But what about establishing a corridor between Emerging Europe and Southeast Asia?
Who is up for that?