Businesses are looking to Asia for expansion as the region continues to recover from the impacts of the Covid-19 pandemic. The reasons for the region are manifold: The Asian Development Bank has revised Asia’s economic growth forecast for 2021, raising it from 6.8% to 7.3%. Asian countries have also been climbing in the rankings of the World Bank’s Doing Business report. Governments in the region provide more incentives to attract foreign investors, such as free trade zones, business grants, and lower tax rates and tax rebates.
Furthermore, Asia has experienced a surge in technological advancement, particularly in digital technologies, e-commerce, and fintech over the past decades. During the pandemic, Asia saw e-commerce transactions grow significantly. The 2020 E-Conomy Report revealed that e-commerce volumes went up by 63% to more than $62 bn.
Several companies have announced plans for their Asia expansion, including those in the e-commerce, fintech, hospitality and food, and gaming and entertainment industries.
Asia’s expanding E-commerce market
In the e-commerce space, Chinese giant Alibaba has partnered with Baring Private Equity Asia and others to purchase a 5.5% stake in Vietnamese conglomerate Masan’s subsidiary The CrownX. The consortium plans to invest $400 mn in the VinMart retail chain operator. The deal will allow The CrownX to partner with Alibaba’s Southeast Asian e-commerce firm Lazada to boost its online market in Vietnam. The VinMart outlets will serve as pick-up points for orders made online through Lazada in Vietnam.
The Chinese e-giant plans to invest all incremental profit in FY22 in technology innovation, support programs for merchants to lower operating costs, user acquisition, merchandising and supply chain capabilities, infrastructure development, and new businesses.
Besides Alibaba, Tencent Holdings and Baidu Inc among other Chinese internet companies are prioritizing investments in 2021, said Fitch Ratings. These companies are aiming for investments to strengthen technology and content, support ecosystem partners, and improve access to new markets. Tencent is investing a portion of the incremental profit, particularly in business services, games, and short-form video content.
As per the rating agency, Baidu’s financials are reflecting an increase in channel spending and promotional expenses, higher R&D expenditure, and expansion of the sales force. The company is aiming to expand in artificial intelligence (AI) cloud solutions for enterprises and smart transportation projects for the Chinese government. The company is hiring sales staff for the new AI businesses and also plans to start investing in its smart electric vehicle business.
New players for Asia’s FinTech space
Capgemini’s 2020 World Payments Report showed that the pandemic helped boost the growth of digital payments in the Asia-Pacific region, particularly the use of card payments for small businesses. Regulators in the region have initiated standardising digital payments to push economic growth further. And foreign players have also cast an eye on the market.
Uruguay-based payments platform dLocal has announced its expansion efforts in Southeast Asia, establishing operations in Malaysia, Vietnam, and the Philippines. The company will integrate several services to its dLocal 360° payment platform in these countries.
In Malaysia, dLocal will enable merchants to accept payments from e-wallets such as Maybank2u, Boost, Grab Pay, and Touch ‘n Go, as well as bank transfers and cash payments via 7-Eleven stores. It will also allow sellers to Vietnam to accept local credit cards and wallets and international cards. In the Philippines, the platform will accept international cards such as Visa and Mastercard, card payments of up to 12-month installments, and non-CVV sales.
US Financial services firm Stripe announced plans to expand its presence in Southeast Asia, Japan, India, and China to take advantage of the e-commerce and digital payments growth. This year, the company ramped up its hiring and increased its Asia-Pacific staff by 40% to 200 employees. Stripe plans to provide payment systems to the dominant e-commerce sites in the region, including Alibaba, Shopee, and Rakuten.
Hospitality sector-based expansion in Asia
Wyndham Hotels & Resorts is expected to increase its hotel openings in the Asia Pacific by 40% or around 180 hotels in 2021. The hotel franchising company is on pace to have 2,000 hotels in the region over the next three years. The firm’s expansion in Asia hinges on its successful launch of five of its brands across the Asia Pacific in 2020. Wyndham launched its Howard Johnson by Wyndham in Cambodia. In the meantime, it also introduced its first Wyndham Grand and Wyndham Garden hotels in Japan. Vietnam welcomed Asia Pacific’s first Dolce by Wyndham hotel. The La Quinta by Wyndham hotel was also launched in New Zealand.
Also Shangri-La is expanding in Asia. According to hospitalitynet, the hotel giant increased hiring activity since March 2021 to staff for new openings in China and Saudi Arabia this year.
Strategic expansion by Gaming and Entertainment gaints
Japanese conglomerate Sony Group announced plans to spend $18.39 bn on strategic investments over the next three years. The move is aimed to expand subscriptions to its gaming and entertainment services. According to Sony, these investments will focus on increasing its mobile and online services consumers from 160 million to 1 billion people. Amongst others, Sony targets India to grow its consumer base. According to President and CEO Kenichiro Yoshida, the market has “big” potential. With SonyLIV, the company offers a direct-to-consumer video service in India.
Esports brand Fnatic raised $17 mn in funding for its planned expansion in the Asia Pacific. The fund came from Japanese conglomerate Marubeni and other investors. As per the firm, this will be used to accelerate the company’s growth not only in Japan’s esports market but also in other Asia Pacific countries. Fnatic, which was able to grow its revenues by 80% YoY, is looking to capitalize on the rapid growth of the esports market. According to research firm Niko Partners, Asia generated nearly half of all global eSports revenue at $519 million in 2019.