Have you tried to book a hotel room in Singapore this September?
Even before the F1 Weekend (after two years of absence!) the prices are off the charts: it is almost impossible to find a 5-star hotel room in the city centre for less than S$900 (~US$640), and even some 2-star hotels are charging S$400 (~US$280) per room per night.
There is a saying that so many investors, entrepreneurs and tech executives from China have been crowding the Island that they actually drove the prices up.
The wave of tech ecosystem people coming from China is very noticeable. The colleagues at Momentum Works have, throughout the last two months, been approached multiple times on a daily basis by many who have just landed in Singapore, or about to arrive.
I believe it is the same for our friends who are deeply connected with the Chinese ecosystem. A Singapore-based managing partner of a prominent Chinese VC fund went on a hectic trip to Jakarta last week and said: “I actually felt so relaxed while in Jakarta, because I do not have to meet all these friends from China who are landing in Singapore every day!”
Aside from attending the occasions of Token2049 (a big crypto conference) and SuperReturn (a gathering of funds and LPs that used to take place in Hong Kong), many are here to explore the opportunities of investment or venturing in Southeast Asia.
That actually triggered an interesting question: are they here to stay, and disrupt the Southeast Asian tech ecosystem?
Because we all knew that in 2017-2019, a wave of Chinese investors descended across Southeast Asia – most did not make any investments eventually, and almost all returned promptly to China. Local VCs and founders called this a wave of “tourism”.
That was understandable – while many were drawn by the macro opportunities in Southeast Asia, and came to check out. They quickly realised that the Southeast Asia opportunities, while collectively big (600+ million people), were very fragmented.
China, in contrast, as a large, single market, meant every business model could scale faster, and bigger. So only those who could not find opportunities in China, or those who had truly great foresight, would actually settle in Southeast Asia. (excluding those who decided to retire to a quiet life in Singapore, of course).
For the same reason, as we have mentioned in “Seeing the unseen: behind Chinese tech giants’ global venturing”, large Chinese tech companies have this dilemma: their leaders find it very hard to dedicate their time and mental space to nascent overseas markets, and their best lieutenants will prefer to run a business unit in China, rather than a far flung market overseas.
These leadership and people challenges are, in our opinion, key reasons why many attempts by Chinese tech companies in global markets failed to achieve meaningful results.
What is different this time round?
Will these investors, entrepreneurs and executives stick around this time, for Southeast Asia and beyond? Or will they again be tourists?
It largely hinges on whether (and when) China will open its doors, and the investor sentiment will recover. Our bet is that a significant percentage of them will go back if (and when) that happens – a large single market will never run out of interesting opportunities.
But there might not be enough opportunities for everyone, and some might be genuinely exhausted by the incessant competition in tech in China. If only 2-3% of the top people in this cohort decide to stay in the region, and stay put, meaningful impact can still be felt.
In that way, Singapore’s new ONE Pass work visa would be really timely, and attractive. That said, the comfort of Singapore might be very different from the ground reality of building actual consumer facing businesses in Southeast Asia, and beyond.
A big thank you to all who have purchased “Seeing the unseen: Behind Chinese Tech Giants’ Global Venturing” which is now available in bookstores and online (Amazon or Wiley). We have also received corporate bulk orders which we can help process directly.
For those who love the travel light, the Kindle version has just been made available on Amazon.
I am happy to answer any questions about the book, or discuss the topics covered. Feel free to drop me a note by replying to this email!
Have a great weekend – and if you are attending any of the events mentioned above, have a good time!