- Feb. 10, 2022 -
The B2B technology track in Southeast Asia is full of opportunities, and Singapore is the first choice for corporate service companies to go to sea.
The population of more than 660 million, the younger population structure, the continuous improvement of network infrastructure, and the increasing consumption level have become a powerful boost to the development of Southeast Asia's Internet economy. A number of super applications have emerged under the impetus of the Internet, covering the fields of takeaway taxis, online shopping, and online payment. In recent years, the rise of the C-end market in Southeast Asia has been put in the spotlight and attracted the world's attention. But beyond that, the B2B technology wave has also quietly emerged in Southeast Asia.
When the Revolution Was Underway: B2B Technology in Southeast Asia
How to efficiently display shelves and obtain product sales dynamics in complex and diverse offline retail scenarios has become a key concern for retailers and brands. With 1-2 minutes to complete the information collection work that used to take tens of minutes or even hours, retail technology unicorn Trax provides retailers with real-time and reliable data services and analytics solutions through technologies such as computer vision. Starting in Singapore, Trax brings its presence to more than 90 countries. In recent years, more and more high-quality enterprise services companies like Trax have emerged in Southeast Asia.
The wave of digitalization in Southeast Asia has accelerated the rise of the B2B industry. On the one hand, the epidemic has accelerated the upgrading of Southeast Asian industries, which has brought huge business opportunities for corporate service companies. Advance Intelligence Group, an artificial intelligence and big data technology company that helps enterprise customers solve problems such as intelligent digital transformation, anti-fraud, process automation, etc., has successfully served more than 1,000 enterprise customers in the fields of banking, fintech, retail and e-commerce; communications network infrastructure provider HyalRoute for telecom companies in Myanmar, Cambodia and other countries. TV and network service providers provide fiber optic networks and other infrastructure; financial technology company NIUM redefines the cross-border payments and receipts experience for businesses.
On the other hand, Southeast Asia's huge demographic dividend and expanding middle-class consumers have made C-end applications develop rapidly, and super apps such as Grab and Gojek have emerged. However, the technology and talent development of many local companies cannot keep up with the rapid growth of business volume, laying the foundation for the demand of enterprise service companies to carry out business. At the beginning of its establishment, the rapid growth of demand overloaded Gojek's servers and collapsed several times under pressure. Gojek has survived this painful period by recruiting talent and partners, and the same scenario is playing out in Southeast Asia. Kumu, the philippines' most popular social app, has doubled its user base to 12 million in 2021, but teams and technical infrastructure have become strained in the face of increased traffic and need to look for outside support. These all provide room for corporate service companies to grow.
Rethinking Southeast Asia: From Manufacturing Hubs to B2B Blue Oceans
Before today's B2B revolution and digital wave, Southeast Asia's history was closely related to manufacturing. Many advantages, such as abundant manpower, low labor costs, and abundant natural resources, have made Southeast Asia gradually become a global manufacturing hub. Manufacturing plays an important role in the economies of Southeast Asian countries and contributes more than 20% of GDP in several major markets, such as Singapore and Indonesia. Before the outbreak of COVID-19, according to the ASEAN Secretariat, the FDI absorbed by ASEAN in 2019 increased by 21.77% year-on-year to US$182 billion. One of the most important inflows of foreign capital into the industry is manufacturing, accounting for nearly 27%. Many multinational companies such as Apple, Home Depot and Amazon have moved their assembly companies to Southeast Asia, which has gradually become the "world's factory".
However, under the impact of the epidemic, Southeast Asia's manufacturing industry has been affected to a certain extent, and foreign direct investment in this sector has fallen to $22 billion, contracting by 55%. Taking Vietnam as an example, many advantages such as superior geographical conditions, many port cities, and low labor costs have made "Made in Vietnam" favored by foreign-funded enterprises in recent years. More than half of Nike's shoes are produced in Vietnam, and leading semiconductor electronics manufacturers such as Intel and Microsoft have set up factories in Vietnam. But since July 2021, the Vietnamese government has imposed a strict lockdown for three months, resulting in widespread factory shutdowns and workers being quarantined. According to the Vietnam General Bureau of Statistics, in the third quarter of 2021, the country's GDP fell sharply by 6.17% year-on-year, the largest quarterly decline in the country in 35 years. The long-term epidemic has shut down some factories, and the loss of workers, orders and even foreign investment has cast a haze on the local manufacturing industry.
KPMG's "2022 Macroeconomic Ten Trends Outlook" report released in December 2021 proposes that in the post-epidemic era, while focusing on low cost and low inventory, enterprises will pay more attention to the security and stability of the supply chain, pay more attention to the resilience and anti-risk ability of the entire chain, and emphasize emergency preparedness before unknown risks occur. While better responding to the pandemic, the global common emissions reduction target has not been relaxed – ASEAN's proposal to achieve 23% of primary energy from renewable sources by 2025 is another challenge in addition to supply chain stability. ASEAN countries need to address their dependence on fossil fuels in their power generation portfolios or strengthen carbon capture storage to meet their climate goals. With the demand for resilient supply chains and abatement and efficiency solutions growing, digital transformation is becoming both a challenge and an opportunity for businesses. Southeast Asian businesses need high-quality B2B services that meet their digital needs.
Among the many B2B tracks, Industry 4.0 technology, B2B software, biomedicine, B2B2C logistics solutions and other fields are very promising.
Industry 4.0 technology: A survey conducted by Singapore-based growth consultancy AIBP and Oracle found that nearly half (46.6%) of manufacturing and supply chain professionals in Southeast Asia believe their companies are still lagging behind in digital transformation. With a huge stock market and digital needs, Industry 4.0 technology has broad prospects in Southeast Asia.
B2B software: Southeast Asia's e-commerce booming, SaaS software serving the e-commerce industry is quietly improving merchant operational efficiency; traditional management models can not keep up with the expansion of small and medium-sized enterprises, HR SaaS, financial management systems and other service tools to reduce the worries of enterprises; cloud services, information security protection, data center support and other IT construction services are also expanding in Southeast Asia.
Biomedicine: Choi Chung Lun, Director of the Beijing Representative Office of the Singapore Economic Development Board, introduced at the "China Biomedical Singapore/Southeast Asia Expansion Online Seminar" that of the world's 100 largest pharmaceutical companies, 79 have built factories in Southeast Asia, and 8 of the world's 10 top pharmaceutical and biotechnology companies have landed in Southeast Asia. The demographic dividend, the booming economy, and the rapid development of the healthcare industry have made Southeast Asia one of the largest potential markets for the biomedical industry.
B2B2C Logistics Solutions: The broad market prospects for e-commerce in Southeast Asia provide fertile ground for logistics development. In recent years, the logistics infrastructure in Southeast Asia has been greatly improved, but there is still room for improvement in various aspects such as order integration, warehouse commodity sorting, post-shipment distribution and transportation management, logistics information synchronization, customer signing, and after-sales processing, and digital means and robotic services can play a role.
Singapore is a growth hub for B2B businesses
For enterprise services companies looking to enter the Southeast Asian market, Singapore is the ideal choice for regional headquarters. First, big businesses and tech companies are converging in Singapore. 46% of The Global 100 companies have chosen to set up a regional headquarters in Singapore, and 59% of technology multinationals have set up a regional headquarters in Singapore. It's easier for corporate services companies to find customers and partners in Singapore, which is home to opportunities for B2B businesses. Second, Singapore has good infrastructure and remains politically neutral. Many B2B companies, involved in sensitive issues such as data, have chosen to locate their data centers in Singapore, or have adopted flexible strategies to use Singapore as a control center and use industrial parks in neighboring countries to stabilize in Southeast Asia. In addition, Singapore is rich in talent thanks to the economy of the headquarters and the excellent educational environment over the years. B2B companies have high technical requirements and great demand for talents, and Singapore has great advantages in terms of talents.
Singapore has also developed an ecosystem that encourages and supports B2B technology. Singapore's biomedical, financial, intelligent manufacturing and other industries are at the world's leading level, and have introduced innovative policies based on industrial advantages. For example, Singapore launched a "sandbox" of fintech supervision to assist financial service innovation and launch innovative financial services of fintech companies to the market faster. Global venture capital firms are pooled in Singapore, and the market is well funded. According to the latest data from Duff & Phelps, private equity and venture capital in Singapore have conducted 303 investment deals since 2021, attracting investments totaling US$16.5 billion.
On the basis of policy innovation and abundant funding, Singapore is also actively promoting business transformation. The Infocomm Media Authority of Singapore launches the Open Innovation Platform (OIP) and SG:D Spark plans to provide a platform and resources for the commercialization of technology companies. OIP brings together the needs of businesses and governments, giving technology companies the opportunity to collaborate and innovate with industry and other technology providers on multidisciplinary and complex issues; SG:D Similar to a start-up accelerator, the SPARK Certification Program provides information, legal, communications, marketing and technology assistance to high-potential start-ups, and companies that pass through the certification program receive priority from local governments and local companies. These are all tangible commercialization aids for B2B companies. For example, the Singapore branch of Twin Technologies, a Chinese digital twin solution provider, successfully cooperated to build a digital twin project for municipal utilities in Singapore after passing SPARK certification.
Whether it is helping traditional enterprises transform or serving fast-growing new economy companies, the B2B market in Southeast Asia has great room for growth. Singapore's strengths also make it unique in Southeast Asia, becoming a bridgehead for B2B companies to expand into Southeast Asia. Enterprise services companies can come to Singapore to polish their technology, validate their business models and play a role in an open, stable and inclusive ecosystem.