To be a successful player in southeast Asia's burgeoning internet economy, companies need to have an international outlook in dealing with people, employees and entrepreneurs from outside their home countries, according to Joseph Tsai, executive vice chairman at Alibaba Group.
His company's runaway success in capturing one of the largest e-commerce markets in the world was generally considered a model for other entrepreneurs to follow. But Tsai said Alibaba's experience in China was different from what companies faced in southeast Asia.
"From an internet standpoint, China is a unified market of 1.3 billion people," Tsai told investors, venture capitalists, e-tailers and start-ups at the e-conomy SEA 2016 conference in Singapore. The southeast Asian market, while lucrative, was divided by language, culture and geography — which placed additional challenges on logistics.
Southeast Asia's potential was highlighted by a joint study released Tuesday by Google and the Singapore government's investment arm, Temasek Holdings. The study said that southeast Asia's internet economy was expected to grow to $200 billion by 2025, primarily driven by growth in e-commerce.
According to Tsai, many countries in the region, such as Indonesia, were about to reach a level of growth where discretionary consumer spending would take off.
He added that in China, Alibaba's growth picked up pace after discretionary spending in the economy rose. "Between 2009 to 2010, the Taobao marketplace added about $50 billion in gross merchandise value," Tsai said.
While the potential for e-commerce was evident in southeast Asia, Nick Nash, group president at Singapore-based internet company Garena, said most online transactions in the region were currently informal, taking place in "the electronic version of wet markets" such as online blog shops and with sellers on Instagram.
Added to that was the fact that 97 percent of potential buyers weren't even online yet.