China’s tech entrepreneurs are getting venture capital funding at home in push into Southeast Asian markets

China’s technology firms are stepping up their efforts to expand into Southeast Asian markets with home-grown capital, even as funding from private equity and venture capital giants has plunged this year amid uncertainties caused by the US-China trade war.

They are bringing their industry know-how and experience to seize untapped businesses in the region while opportunities at home diminish, according to Michael Zhu, a Shanghai-based managing partner at Gobi Partners, which manages about US$1.1 billion of assets.

“Chinese entrepreneurs have gained maturity in the fields of social media network and consumer internet, and they are bringing that experience from China into the Asean region,” said Zhu, whose form has headquarters in Shanghai and Kuala Lumpur. “We see that China is shaping up as a hub of talent and growth capital in Asia-Pacific” for such technology firms, he said.

Private equity and venture firms in China and Hong Kong are picking up the slack in funding such ventures in Asean at a time when a trade war has dented China’s economic growth to the slowest on record last quarter. Outbound investments by these firms fell 47 per cent to US$12 billion in the first nine months this year, according to Mergermarket data.

While Chinese technology giants have been directly investing in Asean start-ups from their corporate coffers, the trend has shifted in recent years with venture capital managers filling the vacuum, analysts said.

Gobi Partners has seven China-focused funds and typically allocates up to a third of each fund’s capital to support the regional ambitions of its target companies. One example, Zhu said, is its bet on Arsys Media in the Philippines.