NOVEMBER 2024MARTECHOUTLOOK.COM8IN MY OPINIONMetaInvestors should avoid using China as a roadmap for success in ASEAN's digital economy. This `time capsule' approach doesn't work in markets like Indonesia and is not a wise way to make deals.While there are business models and novel tech from China that could play well here, most often, the degree to which they must be localized is such that by the time a company achieves product-market fit, it looks drastically different than the original version. Much of what makes an early-stage tech company live or die in any market, Indonesia included, depends on local nuances. Single vs. Regional MarketLet's zoom out for a moment to look at the region. In the past, some Chinese and Western investors I'd spoken with thought of ASEAN in an overly simplistic way as a single market that startups could capture with the right playbook. While the region's population is large and the aggregate middle class is surging, this monolithic thinking misses significant differences across the ASEAN countries.China is one nation with its own highly centralized government, five-year plans, funding subsidies, and a well-oiled supply chain. Its digital economy functions like clockwork, and an investor's ability to predict what the near-term regulatory landscape will look like is also incredibly important.ASEAN, on the other hand, is a collection of smaller nations, each with its own government, language, culture nuances, multi-year plans, capital markets, logistics challenges, incentive programs, and regulatory and corporate governance climates. Further, anyone who says they can confidently predict how regulation and macro policies will unfold regionwide is likely painting with too broad of a brush.Universal Appeal vs. Localized AdaptationWhen it comes to tech companies, the strategies of those in China and ASEAN markets, such as Indonesia, significantly differ. Chinese tech firms, often product-led, have thrived with their immense domestic market, creating world-class products and services that resonate globally. This approach often prioritizes universal appeal over localized adaptations and, while successful in China, can face challenges in culturally diverse markets.In contrast, many tech startups in Indonesia have adopted a different strategy. Rather than aiming for product-led universality, they focus on the effective localization of their operations. This strategy, rooted in a deep understanding of local cultures, behaviors, and market peculiarities, equips them with a profound advantage in their home markets.Operational localization is more than just language translation or superficial adjustments. It involves adapting products and services to meet unique local demands, whether it's Astro's 15-minute grocery service that has figured out how to cope with Jakarta Metro's sprawling geography and By Adrian Li, Managing Partner, Convergence VenturesTHE CHINA TIME CAPSULE THEORY DOES NOT APPLY TO ASEAN'S DIGITAL ECONOMYAdrian Li
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