image hastens e-commerce race in Southeast Asia with US$550 million stake sale to Google

Google’s investment in comes as e-commerce companies, including Alibaba Group and Amazon, race to expand their global reach and carve a larger slice of market share in regions such as Southeast Asia, where the potential for e-commerce is viewed as largely untapped.

PUBLISHED : Tuesday, 19 June, 2018, 7:03am
UPDATED : Tuesday, 19 June, 2018, 11:45am

Chinese online retailer has signed on Google as a strategic partner in a move seen to complement the former’s ambitions to expand into Southeast Asia while giving the latter a toehold in a market that it gave up in 2010.

Under the arrangement, will sell a less than 1 per cent stake to Google for US$550 million. will also join Google Shopping, an advertising platform for online merchants, where its products will be available to consumers globally.

Google’s investment in comes as e-commerce companies, including Alibaba Group and Amazon, race to expand their global reach and carve a larger slice of market share in regions such as Southeast Asia, where the potential for e-commerce is viewed as largely untapped.

Chinese smartphones brands such as Vivo, Oppo and Xiaomi have proven to be a hit among consumers in the region of 650 million people with their affordably priced models. Tencent Holdings, the online gaming and social media giant, is the largest shareholder in Singapore-based Sea, which operates Shopee, a regional e-commerce platform. Other internet services companies such as Didi Chuxing and Meituan Dianping have invested in local champions such as Singapore-based Grab and Jakarta-based Go-jek, respectively.

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Alibaba bought Singapore-based e-commerce platform Lazada and appointed one of its co-founders and most senior executives, Lucy Peng, to head the push into Southeast Asia. Alibaba is the parent company of the South China Morning Post., too, has its eyes on Thailand, with a new online shopping platform developed with Thailand’s Central Group slated to open on June 18. In Vietnam, invested in local e-commerce firm earlier this year. In Indonesia, launched a local online retail business JD.ID two years ago.

“Logistics and language sites, everything should be localised here,” Winston Cheng,’s president of international business said in an interview in Singapore last week before the Google tie-up.

“Today, people have higher and higher demand,” he said. “They want anything anytime anywhere but right away so the cross-border business model takes too long to wait for.” achieved 159.2 billion yuan (US$24.7 billion) in orders from June 1 to June 18, generating annual growth of 37 per cent for the company’s 618 Mid-Year Shopping Festival, an online shopping event similar to Alibaba’s Singles’ Day Shopping event on November 11. has also deepened cooperation with its biggest shareholder Tencent, launching a new shopping function on WeChat before the 618 Shopping Festival. The function enables consumers to shop on within WeChat, China’s biggest social network and messaging app. Product pages from pop up when consumers type product-related keywords into the search functions on WeChat.

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Google, together with other US internet companies such as Facebook and Twitter, are blocked in China, although several firms still maintain offices in the country selling advertisements to Chinese firms hoping to reach an overseas audience. Other companies, like Apple, continue to sell their products and services in China after complying with local rules, such as hosting its cloud services for the Chinese market on the mainland.

“Google’s strategy for investing in is two-pronged. On one hand, it hopes to have a significant partner in China to support the company, which could help it reintroduce services like cloud or advertisements in China,” said James Yan, research director at Counterpoint. “Secondly, is strong in areas like logistics, courier delivery and so forth, which Google can tap on to expand its e-commerce ambitions.”

The partnership is complementary as is in the business of e-commerce and logistics and is unlikely to clash with Google’s other services, such as cloud or OS services, Yan said.

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“We want to accelerate how retail ecosystems deliver consumer experiences that are helpful, personalized and offer high quality service in a range of countries around the world, including in Southeast Asia,” Karim Temsamani, president of Google’s Asia Pacific operations, said in a statement.

The Asia-Pacific region is one of the largest and fastest growing e-commerce marketplaces in the world, with people in Southeast Asia alone expected to spend US$88.1 billion online by 2025, according to Temsamani.

“This partnership with Google opens up a broad range of possibilities to offer a superior retail experience to consumers throughout the world,” Jianwen Liao,’s chief strategy officer, said in a statement. “This marks an important step in the process of modernising global retail.”

Southeast Asia consists of 11 countries with a total population of 653.4 million, about 49 per cent of whom live in urban areas, according to the latest United Nations estimates. Only three per cent of the region’s retail sales are currently conducted online.

Among the biggest barriers to developing a regional Southeast Asian market is the lack of mobile payments, with about 70 per cent of the region’s population still unbanked. The thousands of islands that make up the archipelagic nation of Indonesia also presents logistics challenges. will adopt different strategies to cater to the differences of the region, according to a spokesman. While there is no one-size-fits-all model given the different infrastructure, languages, cultures and religions across the region, e-commerce is still booming because of the commonality of a rising middle class, the spokesman said.

“Alibaba sees Southeast Asia as a priority region within our global strategy,” an Alibaba spokesperson said in comments made before the partnership announcement. “We are also committed to contributing to the growth of the digital ecosystem in Southeast Asia by driving initiatives to develop an e-commerce talent pool.”