Firms prepare for China tech investments
KUALA LUMPUR: Asean's digital economy is projected to exceed US$200 billion (US$1=RM4.17) by 2025 and many Chinese companies are looking to capitalise on this potential, said HSBC Malaysia, quoting a Google/Temasek report.
HSBC Malaysia chsief executive officer Stuart Milne said Chinese companies had signalled their intention to expand, and Asean seemed keen to reciprocate.
“Asean's urbanisation, digital adoption and consumer growth make it an attractive investment destination. However, its geographic diversity, ease of business, and different foreign investment laws can sometimes make it a tough nut to crack,” he said in a statement yesterday.
The digital marketplace is both an opportunity and a challenge to businesses as it brings both customers and competitors to corporate doorsteps.
Investment and growth-hungry local companies are alive to the commercial opportunities spinning out of Asean's burgeoning digital consumers as well, seeing the potential of china's tech companies as potential partners or investors.
But the competition for funds is heating up, he said.
“Attracting investment requires setting up the right environment, culture, and mindset within the company to actively seek technology disruption before it gets thrown upon you.
“More specifically, this means adopting an open and digital-first mindset to engage the tech community, encouraging innovation, and being open to new ideas.
“It also requires an openness to see investors as partners who can drive a business to higher levels of growth and performance,” Milne added.
The sectors are only going to widen into areas like construction, real estate, and logistics, and what's next for China's tech investment into the region will be tier-two tech players in Southeast Asia.
According to HSBC, China was among the top three countries for venture capital investment in digital technologies, and Asean remained relatively under-represented in terms of start-ups, so the potential to scale up was huge.
“This is starting to happen with the likes of Malaysia-based Glueck Technologies which develops sophisticated artificial intelligence and Singaporean e-grocery site RedMart having both received substantial investment from mainland investors,” it said.
A further avenue could be Asean's Smart Cities Network which aims to use technology to improve urban planning in areas like transport management and other utilities across 27 Asean cities.
With more than 500 smart city projects underway, China has the largest number of smart cities in the world and certainly has the experience to make a meaningful contribution.
A third area could be improving Asean countries' ability to further insert themselves into global supply chains in areas like electronics and automotive.
Chinese businesses want to see Southeast Asia position itself as a viable alternative for lower-end production, but the region cannot expect a wide-scale widening of supply chains unless production technology and capacity increases.
A clear example is Chinese car maker, Geely, being able to cut production costs for Malaysian car maker, Proton, through technology transfer.
But for every Geely there are others staying in China. For example, Tesla sees China's production reliability, technological sophistication, and ease of business as unparalleled and are moving their production from the US to the mainland.