Will China’s regulatory crackdown benefit Southeast Asian tech firms?

As China tightens its grip on Big Tech, start-ups in the region could be a safe haven for global investors

But while Asean’s rising stars can expect positive capital flows from US and Chinese investors, the size of China’s market remains attractive to VCs

Reading Time:6 minutes

Surveillance cameras outside a shopping mall in Beijing. China’s recent regulatory crackdown shows how close an eye the government is keeping on tech firms. Photo: Bloomberg

Published: 12:00pm, 30 Jul 2021Updated: 1:13pm, 30 Jul 2021

With several of China’s tech winners in the crosshairs of regulators, leading to a sharp sell-off of stocks in sectors from property to education earlier this week, market watchers say Southeast Asia is increasingly seen as a safe haven for investors looking to expand their tech portfolio in Asia.

But this doesn’t mean international investors will pivot fully from China to Asean (Association of Southeast Asian Nations) countries, even as Beijing continues with a clampdown on tech enterprises the government deems to have exerted too much influence on the world’s second-largest economy.

“In the immediate term, Southeast Asia definitely represents safer pastures for global investors. It is relatively cushioned from East-West trade tensions and home to a rising consumer class supercharging its economic growth,” said Michael Lints, a partner at Singapore-based venture capital (VC) firm Golden Gate Ventures.

“Global investors still have a strong appetite for Chinese tech companies for their growth opportunities, but there are serious concerns about regulatory constraints.”

According to financial data company Dealogic, tech sector deal making in Southeast Asia reached a record US$19 billion in the first half of this year, driven by mega merger and acquisition activities, which still dominate exit strategies in the region’s tech sector.

Southeast Asia is home to 16 unicorns, or tech companies with a valuation of at least US$1 billion, ranging from superapp operators such as Singapore-based SEA Group and Grab as well as Indonesia’s Gojek to payment companies like VNPay and OVO, which are headquartered in Hanoi and Jakarta, respectively. Nium, a Singapore-based digital payment firm, became the region’s latest unicorn after raising more than US$200 million in its latest funding round, the company announced on Tuesday.

Select Voice

Choose your listening speed

Get through articles 2x faster

1.25x

250 WPM

Slow

Average

Fast

00:0000:00

1.25x