China’s Major Tech Firms Will Dominate SE Asia’s Emerging Markets: Who Wins And Who Loses?
KUALA LUMPUR, MALAYSIA – NOVEMBER 03: Alibaba Group Chairman Jack Ma and Malaysian Prime Minister Datuk Seri Najib Razak attend a ceremony for the first eWTP hub outside of China at Digital Free Trade Zone (DFTZ) on November 3, 2017 in Kuala Lumpur, Malaysia. (Photo by VCG/VCG via Getty Images)
China’s giant tech firms are primed and ready to dominate Southeast Asia’s emerging markets.
Special attention is being given to micro, small and medium enterprises (MSMEs). Small businesses hold the key to unlocking Southeast Asia’s next phase of economic growth, and, as MSMEs begin to harness the power of the platform economy, Chinese tech firms are mounting well-orchestrated campaigns to pull new customers into their digital ecosystems.
This presents a tempting scenario for policy makers as they pursue their own agendas for economic growth. Partnering with Chinese companies would seem like a no-brainer: they bring scalable leading edge technology and provide plug-and-play opportunities that produce instant results.
But there might also be reason for fear and mistrust.
Today, the first question being asked about Chinese companies is not what benefits they bring, but rather, whether they pose an existential threat.
There are reasons to be concerned. First, China’s tech firms are large monopolies with the power to crush small local firms and crowd out home grown businesses—not unlike their western rivals. Second, these tech giants are linked to Beijing’s political apparatus—which provides generous state-backed funding and other crucial support—thus, China’s tech champions are viewed as proxies for China Inc.
Beijing has announced that it intends to take a 1% stake in China’s largest tech companies, including Alibaba and Tencent. This includes placing a representative of the communist party on every company’s corporate board, which amounts to the quasi-nationalization of the tech industry.