Commentary: Why Grab, Gojek, Tokopedia and C are the new favorite items in the US market

    Singapore: If everything goes according to plan, Grab will soon raise US $ 4 billion in funding in the listing of the largest SPAC (Special Purpose Acquisition Company) to Anthony Tan, the company’s founder, a spot in the history books Dega, just wanted it. .

    Hold the listing price at US $ 40 billion. Riding-to-food delivery giant is a major force and a household name in Southeast Asia. This is the talk of the city on Wall Street.

    However it is worth noting that the evaluations are eye-popping and increasing questions about the feasibility of SPAAC.

    Jim Kramer, host of the famous CNBC show, mad MoneyOften investing in SPACs and tech companies put a strong dose of caution. But he is talking grab deal. “I don’t like the price right now, but if you wait for some weakness … you’ve got my permission to buy something,” he said last week.

    READ: Commentary: Why haste is listed for grabbing

    The fact that Grab’s acquaintance, Altimeter, has a three-year lock on its shares shows a healthy dollop of confidence.

    Not too long ago, American investors were struggling to get their hands on anything to do with China and roaming the US equity markets to capitalize on the enthusiasm of Chinese companies.

    Despite the rise of its Shanghai equivalent, the depth and sophistication of the American market is still unmatched. But the focus is now moving towards South-East Asia in a big way.

    Story of southeast asia

    It does surprise some in some ways.

    With a population close to 700 million, the market size is massive. It is half of China, but consumers are digital natives and young. Looking at Indonesia only, the average age is 30.2 years.

    Digital consumption, or buying products or services online, is growing rapidly. Bain & Company had previously estimated that by 2025 the number of digital consumers in Southeast Asia would reach 310 million.

    China plans to help pensioners maintain their legacy with a rapidly evolving digital economy

    China plans to help pensioners maintain their legacy with a rapidly evolving digital economy. (Photo: AFP / NOEL CELIS)

    It reached that number five years ago. In this context, these 310 million digital consumers represent nearly half the population of Southeast Asia. Last year, 40 million people from the region came online for the first time.

    Grab, Gojek, SEA Group (Shopie) and Lazada are all joining the trend, with rideshare, online shopping and delivery and increasingly happening in other areas such as banking and insurance. Shoppy was the third most downloaded app in the world in 2020 in the shopping category.

    Of course, South East Asia markets can be very different. Sometimes, the market is dominated in some countries and regions, as players like HomeCon can achieve in Indonesia.

    Yet what is even more remarkable is how many of these new big techs have demonstrated the ability to do well in many uneven markets in South-East Asia, a way of entry for other new challengers. Creates a natural barrier.

    Southeast Asia accounts for 5 percent of the total number of online retail markets, but it is increasingly tearful. According to Bain, e-commerce gross merchandise value increased by 23 percent per year from 2018 to 2020, higher than the compound annual growth rate of GMVs in China, India and the United States.

    READ: Commentary: China’s tech firms had to help achieve the Chinese Dream

    The fact that Grab wants to focus on this “large-scale” ASEAN development story rather expands even further, saying something.

    Alternative game for china

    In contrast, Chinese companies listed in US markets now represent a large risk to investors. As the US-China geopolitical rivalry heats up, so too does the decline in the list of Chinese companies in the US. So far this year, the list of Chinese companies in the US markets has increased, but due to geopolitical concerns, there are weak debates.

    File photo: Chinese electric vehicle start-up Nio Inc. in front of NYSE  Vehicles are

    FILE PHOTO: Chinese electric vehicle start-up Nio Inc. The vehicles are on display in front of the New York Stock Exchange (NYSE) on September 12, 2018 in New York, US, to celebrate the company’s initial public offering (IPO). REUTERS / Brendan McDermid / File Photo

    As Grab was gearing up to receive billions in its SPAC listings, Alibaba was hit with a record retaliation of $ 2.8 billion for a state that abused its market dominance. The Chinese government’s steadily growing stance towards tech players is part of a major shift in China’s digital space regulation.

    Interestingly, the Gojes and Grabs of the world have been particularly good at staying on the right hand side of governments, as regulators hold on to their increased growth.

    Grab helped tapping the existing fleet of taxis to provide customers with a “catch a bus” to any taxi instead of calling various companies. It now offers many services including privately rented cars. It was a different approach for Uber, which went head-to-head with taxi companies, sparking social concerns and lawsuits.

    READ: Commentary: US Proposed Global Minimum Corporate Tax Has Implications for Singapore

    For Gojek, the decisive decision to focus initially Ojas (Motorcycle Taxi), for example, was doubly context-savvy: it increased direct competition with Jakarta’s existing taxi industry, while dodging the country’s transportation regulations, which applied only to four-wheel vehicles.

    By the time the app introduced four-wheelers in 2016, Gojek had already cultivated a public profile and patriotic symbol of Indonesian progress as a boon to the local economy.

    Super apps thrugh cut the super complex

    For all its merits, Southeast Asia is complex. It is difficult to negotiate transport infrastructure and deliver services, especially in Indonesia.

    Riders helped a lot by opening apps like Gojek to open a customer base where they found themselves and offered them a second delivery job when the demand for the ride decreased during the day.

    FILE PHOTO: Gojek driver dressed in helmet during Go-food festival in Jakarta

    FILE PHOTO: Jakarta, Indonesia, Gojek driver helmet was seen during the Go-Food Festival on October 27, 2018. (Photo: REUTERS / Bewilderment)

    The approach of Super Apps also differs widely from that of Amazon and Ubers of the world, which focus on some services and do really well.

    A large population of ready servers helps Grab and Gojek to add more services and spread them over a wider area. A deep and local understanding of Southeast Asian nuances helps.

    Rather than going into these segments, it is interesting that Amazon is making a large investment in cloud computing to support growing technological developments in Southeast Asia rather than trying to eat either Lazada or Gojek’s lunch.

    There are also cultural nuances. Shopee is capturing the eyeball with bargain hunting and flash deals. Such social commerce (buying groups and games) is the next frontier in e-commerce.

    READ: Commentary: What’s SPAC Listing Report Behind Grab

    There are two main reasons for the increasing interest in social commerce.

    The first is that people are tired of big technology’s advertising-driven approach to e-commerce. For example, users are getting tired of being bombarded by advertisements and bombers and telling them what to buy.

    Another is that privacy concerns are weighing on the minds of consumers and legislators. More customer-driven group buying models avoid this approach.

    Super Apps is also backed by heavy investments from US and Chinese money, with investors content to exit it through their proxies rather than outright competition.

    Shopee 2.2 CNY Sales

    Shopee 2.2 offers CNY sales deals and discounts. (Photo: Shopian)

    Other tech units in the region, such as Travelloca and property gurus, are also considering listing in the US through Blanc-Czech SPAC and strengthening their position by merging with Gojek Tokopidia, which makes it a transport and e -Commerce will make huge.

    The competition is heating up and it looks like we are just getting started.

    As my colleague, Strategy Professor Guoli Chen of INSEAD pointed out that a major reason for Grab’s listing is the need for additional capital to maintain its leading position in ride hailing, food delivery and digital finance, so that accidents from the sea To be saved from. The largest tech firm in Southeast Asia.

    READ: Commentary: Deliver IPO is a lesson to investors not to underestimate

    Finally, these lists could benefit the entrepreneurial ecosystem more broadly. Major liquidity events, like Grab listings, will also help private investors exit, which typically unlock capital to start other companies and make other investments.

    Jason Davis is an Associate Professor of Entrepreneurship and Family Enterprise at INSEAD.


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