26 Aug 2020

5th FC Global Business Series shed insights on China and ASEAN’s Venture Capital Markets

Business China was pleased to partner the Singapore Economic Development Board once again to co-organise the 5th FC Global Business Series held on 25 August 2020. Titled “Accelerate China-ASEAN Venture Capital Investment and Start-Up Innovation beyond COVID-19”, the webinar featured esteemed speakers who include Mr Chng Kai Fong, Managing Director of Singapore Economic Development Board, Mr Chua Kee Lock, CEO of Vertex Holdings, Ms Aileen Lai, CEO & Founder of Healthbeats, Mr Terence Tan, Managing Partner of IPV Capital and Mr Lawrence Wu, President & Executive Director of Sunseap Group Pte Ltd. The moderator of the session was Mr Keoy Soo Earn, Regional Managing Partner, Financial Advisory of Deloitte Southeast Asia.

The panel comprising of venture capital firms (VC) from Singapore and China as well as early stage and mature stage of start-ups brought different perspectives to the discussion.

The webinar gained the strong support of various organisations such as Action Community for Entrepreneurship, Singapore Venture Capital & Equity Association TiE Singapore and NTUitive, together with Bank of China, Oversea-China Banking Corporation and Temasek as special partners for the event.

Mr Keoy kickstarted the session by posing the question to the two venture capitalists in the panel on whether there had been greater interest in investing in China and ASEAN nowadays. Mr Chua started off by sharing that the two markets are very different in terms of development. In China, the tech sector is highly-developed and VCs are very well-established in the country, as well as relying more on domestic consumption. As for ASEAN, while the region is still relatively new in the tech space, the rise of the middle class has driven demand as well as create opportunities for the region. Mr Tan also concurred with Mr Chua’s viewpoint and further elaborated that China has a self-sustaining and well-established ecosystem ranging from end products to the manufacture of fundamental components. Chinese enterprises have also been actively venturing overseas whereby Southeast Asia is one of the regions that they are heavily investing in.

Next, Mr Wu and Ms Lai shared from the start-ups’ perspectives on whether ASEAN and China are key markets for their current operations and future expansion. Mr Wu explained in detail with regards to his company’s operations in both regions, particularly in the renewable energy sector. He felt that China’s energy market is growing faster as compared to ASEAN because China has a more liberalised energy market whereby the country is moving towards using renewable energy whereas the ASEAN market is getting increasingly more competitive as countries in the region are still inclined towards using fossil fuels as the main energy source. As the founder of a healthcare start-up, Ms Lai shared more on the rapid rise of telemedicine especially during the pandemic period. She is also seeing a lot of opportunities in the ASEAN region and aims to bring global best healthcare practices into the region where patients are also well taken care of outside healthcare settings.

Mr Chng gave an overview on the Chinese and ASEAN markets as well as how Chinese companies are venturing into ASEAN. The Chinese companies are well established where their technology and innovation are emulated by other companies in the region, for instance the integration of many functions into one single app. They have also developed the synergy to expand into Southeast Asia where many of them are investing behind the scenes in areas such as artificial intelligence and business analytics. ASEAN is also growing rapidly in terms of demographics and purchasing power parity. Companies are also trying to de-risk supply chains by adopting the “China +1” model and hence expand operations into ASEAN countries such as Singapore, Vietnam and Malaysia.

With regards to the key trends in the new normal that will shape China and ASEAN moving forward, Mr Chng identified 3 areas – (1) geopolitics, (2) technology and business models and (3) climate change. With US and China relations changing fundamentally, this will affect business dealings and supply chains due to the tariffs imposed. On the other hand, ASEAN will benefit as the countries had a shared purpose in developing the region’s economy. Secondly, he shared that technology has started to divide the society with signs of a “K-shaped recovery” which is happening in the US. The top few US companies are doing well whereas the rest of the country is doing their best to stay afloat in the economic downturn. This has caused issues for companies as they have to relook into new business models and tech structure in the new normal. Lastly, the issue of climate change is vital where businesses must  think about sustainability as this will impact their operations in the long run.

The other panelists built upon the points raised by Mr Chng where they shared more on how sustainability is one of the key agendas for businesses as well as how US-China relations will impact both countries. In addition, they cautioned that the next two to three years will be different from what everyone has been accustomed to and it is important to be adaptable to the changes happening in the world.

Very positive response was garnered from the audience where questions were raised regarding cities with the potential to be “nodes of growth” in ASEAN and China, as well as the plans for China to develop Hainan province into a Global Free Trade Port. A poll was also conducted towards the end of the session where participants were asked about the challenges and opportunities that start-ups face during post COVID-19 and majority of them opined that funding was the major factor in play.

As a closing note, the panelists urged the attendees to diversify and expand their businesses further into China and ASEAN markets, while at the same time be mindful of the different cultures in various regions in order to  localise their operations there. 

The session was well-received with 380 attendees joining the webinar.