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Alibaba and Tencent in fierce battle to win the Southeast Asian market

The two Chinese tech behemoths have been locked in a fierce battle to dominate the consumer internet business including bike-sharing, ride-hailing, and food delivery

While they always have been intensely competitive in their home country, over the last several years, the battle for supremacy has extended beyond China and has moved into Southeast Asia overall.

Both conglomerates have invested huge sums of money, as well as the prestige of their brand names, in multiple startups. Increasingly though, their investments are starting to present a dilemma of sorts for companies seeking new investors – as they are left with no option but to choose one or the other.

In Southeast Asia, Alibaba has focused on e-commerce acquisitions, while Tencent is spread across games, ride-hailing, bike-sharing, and e-commerce. Both companies are expected to go head to head in more investment areas, according to marketwatchers – as they both expect to tap into businesses using mobile payments.

Since both the tech giants are not known to co-invest with each other, this could put fundraising startups in a tight spot. The rivalry between the two companies might mean that to take money from one, might permanently severe ties with the other.

Ms Grace Sai, who runs co-working space ‘Found.’ in Singapore said: “From the talks that are going on within our (start-up) community … I think (company) founders are starting to strategise around picking their camps – are they picking the Alibaba camp or are they picking the Tencent camp?”

In last year August, Alibaba had beat Tencent to take a minority stake in online retailer Tokopedia, also known as Indonesia’s Taobao. In May 2017, Tencent led a $1.2bn funding round for Indonesia-based ride-hailing firm Go-Jek. In both cases, Alibaba and Tencent both were reportedly involved in initial talks.

As Chinese tech funding flows into Southeast Asia, the region’s largest unicorns – startups valued at $1 bn or more – have raised eye-popping levels of investment this year. Marketwatchers have stated that Chinese tech giants and private equity investors are particularly drawn to Southeast Asia. It is seen as a market with few competitors of significant scale, and comparatively lower regulatory barriers than the US and Europe.

Ms Sai noted that as a region, Southeast Asia boasts favourable demographics, with 640mn people, a combined economy the size of the UK, and 340mn Internet users.

Alibaba and Tencent are the key players in China by far, dwarfing Baidu with revenues exceeding US$30bn each.

-GBO Correspondent.

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