THE BACKGROUND

Ranked as the 11th largest cosmetics company in terms of sales worldwide, South Korea’s Amorepacific booked $4.8 billion in sales for 2016, all accumulated from 25 brands under its umbrella, including Sulwhasoo, Laneige, Innisfree, and Etude.

The company is known for its low to mid-range prices but high-quality products targeted towards the masses, especially young females.

By establishing Korea’s first cosmetics research lab in 1954, less than a decade after being founded in 1945, the company pioneered popular skincare trends such as boosting essences, sleeping masks, cushion foundations, and two-tone lip bars.

Forbes placed Amorepacific at No. 16 on its 2016 list of the world’s most innovative companies, and No. 7 in all of Asia.

Riding the ‘Hallyu Wave’ or South Korea’s pop culture phenomenon, the company has been largely credited to enhancing the Asian-ification multi-step beauty regime around the world.

Amorepacific Southeast Asia expansion
Amorepacific Southeast Asia expansion

The expansion of Korean Wave or “Hallyu” influenced the rise of Korean cosmetics brands. Source: Korean Joongang Daily.

THE CHALLENGE

The company reported a drop in its net profit by nearly 60% in Q2 2017 as geo-political tension between South Korea and China worsened due to the implementation of the THAAD anti-missile system earlier this year.

China was the company’s biggest overseas market, accounting for approximately 20% of total sales.

The tensions impacted a 22.5% drop in domestic sales and nearly 40%less Chinese tourists traveled to the country after travel agencies stopped selling packages to South Korea as insisted by the Chinese government.

With its two top markets performing poorly, Amorepacific had to look to other markets in order to grow and lessen its dependability on China.

THE STRATEGY

While the long-term focus was on typically homogenous markets in East Asia, the company’s ambition to tap into the global market was accompanied by a commitment to creating attractive products for new markets.

“Our growth strategy remains firmly focused on creating innovative, singular brands, and products that appeal to consumers in target markets, and we will continue to work towards becoming a great company delivering new beauty values to customers around the world,” said Amorepacific Chairman & CEO Suh Kyung Bae.

Amorepacific globalization plans seemed to start with Southeast Asia, as the company began dedicating more resources to efforts in the region.

Amorepacific Southeast Asia expansion

Amorepacific presence in Southeast Asia. Source: Pulse News.

 

“The market (ASEAN) is particularly important in that it is a gateway to India and the Middle East because ASEAN consists of multiple ethnic groups, including Indian, and is closely related to those markets,” said Na Jung Kyun, Head of Amorepacific ASEAN Regional Headquarters.

To penetrate the market, Amorepacific reformulated its products to compensate for the region’s humidity, darker skin tones, and the needs of Muslim women (“Muslimah”).

Examples include a lighter washable makeup that can be easily removed and applied for Muslimah that conducts daily prayers, which require a light washing of the face.

The company also developed darker shades of foundation for Laneige and Innisfree specifically sold in the region and aptly named “ASEAN Cushion Shades”.

In addition to localizing its product lines, the company also opened its first research and innovation lab earlier this year in Singapore. The aim is to develop highly tailored products for the ASEAN market and address regulatory issues.

Malaysia, in particular, has caught the cosmetic giant’s fancy as it invested 110 billion won ($95.7 million) to build its third overseas factory in the Nusajaya area – completion scheduled for 2020 – and opened an Etude flagship store in Kuala Lumpur early this month.

Amorepacific Southeast Asia expansion

Etude’s large range of lipstick in its flagship store.

“I believe among ASEAN member countries, the Malaysian market has the highest growth potential. In fact, it has been our goal to open a flagship store in Kuala Lumpur, and introduce the new core values of Etude House to a wider range of customers,” said Etude House CEO Geum Joo Kwon.

Not only has the company focused on traditional brick and mortar stores, Amorepacific has also taken its brands online with Innisfree launching an official brand.com web store, to offer its products worldwide.

Laneige has also opened an official store on popular Southeast Asian marketplace Lazada Indonesia and Thailand.

Often the other way around – first developed then developing markets – the company is eyeing North America for further expansion.

“Our company is operating in the Korean market, the Chinese market, and the ASEAN market. The US market will be our fourth pillar for our business, so we are very much committed to developing the US market,” revealed Amorepacific Chairman and CEO Suh Kyung Bae.

Through Innisfree, the company made its official introduction to the US market earlier this month with a grand opening of its first store in NYC, where it currently offers 900 different items from skincare, makeup, and home scents.

It also expanded to 14 different shades in its cushion foundation to serve a wider range of skin colors.

Amorepacific Southeast Asia expansion

THE FUTURE

The company’s decision to place a bet in Southeast Asia has reaped fruitful results as it overtook competitor brand Estee Lauder and doubled its market share in Asia Pacific to 6% in 2016.

Amorepacific Southeast Asia expansion

It has lagged behind L’Oreal and Shiseido, two companies with the strong digital presence in Southeast Asia.

But the experience and knowledge it picked up in this region are expected to be helpful for its venture into other new markets.

“If we can achieve success in Southeast Asia with this much diversity, it can also be a very good experience for us to enter different countries with great diversity as well,” commented Na Jung Kyun, Head of Amorepacific ASEAN Regional Headquarters.

The Muslim population is projected to reach 3 billion people in 2060, increasing at a growth rate faster than the world’s population and set to make up 31% of total population. As their consumer affluence becomes more prevalent, this demographic has become key for certain retail brands trying to grab market share.

In Southeast Asia, where 25% of the global Muslim population lives (1.6 billion), the young female Muslims, also known as Muslimah, present a new opportunity with their religious yet more worldly outlook than the previous generation.

This influential, trend watching group is open to a wider range of fashion, travel and product choices — prompting the Halal industry to move beyond the food sector.

Southeast Asian Muslim preference

Other sectors quickly catching up in Halal industry. Source: Global Islamic Finance Report

 

“Young Muslim women are showing a new set of aspirations and behaviors which represent both opportunities and challenges for brands,” said Chen May Yee, APAC director at The Innovation Group

But they also present new challenges and to better target this tech-savvy audience, companies need to combine trends, digital channels while meeting religious requirements.

Muslimah representation matters

A recent survey by JWT Intelligence’s Innovation Group focused on the Muslimah population in Indonesia and Malaysia, two of the biggest Muslim populations in the region, found that Japanese brands are regarded the highest among the 1,000 individuals surveyed.

http://gifr.net/gifr2013/ch_13.PDF

Japanese brands are the most popular among Muslimah in Indonesia and Malaysia compared to brands from other countries. Source: JWT Intelligence’s Innovation Group

It’s not too surprising given that more Japanese brands have geared marketing efforts towards the Muslim population, especially in fashion and beauty.

For example, Uniqlo recently collaborated with Muslim designer Hana Tajima and while textile brand Fukusa launched a silk-kimono hijabi fashion line in Indonesia.

Clothing remains the most popular category, followed by beauty, technology products, travel, and groceries.

Southeast Asian Muslim preference

More Indonesian Muslimah shop online as local players provide more options for them. Source: JWT Intelligence’s Innovation Group, Daniel Abd Halim.

As with the rest of the region, this demographic is showing a higher aptitude towards digital. They are spending at least four hours online every day, and one of the activities of choice is online shopping.

24% of Malaysian Muslimah shop online once a week and 56% do it at least once a month. The number is higher for their Indonesian counterpart, likely because of more Muslim choices provided by local players in Indonesia like HijUp, MuslimMarket, and Wardah.

However, the two cohorts differ on their opinion regarding representation in the ads that circulate in the market. Majority of Muslimah in Indonesia (82%) feel that the ads reflect the reality of the needs of their everyday life, while only 56% of Malaysian Muslimah feel the same — showing the gap for brands to provide more relatable products or experiences for this audience in Malaysia.

Tapping into a multi-trillion industry

The Halal or “lawful/permissible” industry is estimated to be worth around $2.3 trillion worldwide, growing at an annual rate of 20%. The products are not only for Muslims and also gaining more popularity among non-Muslims as a symbol of quality assurance and a lifestyle choice, but in order to capture more customers, brands need to be more than Halal.

Recognizing that Muslims have different experiences and reasons to purchase such as increase in shopping for household or beauty goods during certain holidays, brands can optimize marketing strategies to attract more loyal customers.

ecommerceIQ, together with Sasin SEC, created the Leadership Ecommerce Accelerator Program (LEAP) to provide the fundamental knowledge and skills needed to successfully run an ecommerce business in the world’s fastest-growing market.

The third week of LEAP dove into a session disproving what most marketers still commonly think of as the “magic dust of strong sales” and introduced digital marketing concepts such as SEO, SEM and retargeting tools to students looking to grow their customer base.

Here are some of last week’s LEAP highlights:

1. “Growth hacking is bullshit, there is no shortcut to growing your business”

SHEJI HO, GROUP CMO, ACOMMERCE
ecommerce growth marketing

Sheji Ho, aCommerce Group CMO at LEAP 2017

The biggest takeaway from Sheji’s two hour lecture on digital marketing is that companies should ask themselves “if the market needs their product” before spending money on Google and Facebook ads. Popular businesses like ofo, Seekster and Blue Apron, may run into trouble because they lack what Brian Balfour refers to as “market-product fit”.

Examples below:

ofo – Thailand’s roads are the second deadliest in the world, does it make sense to have bike sharing in Bangkok?

Seekster – home service on demand started in the US but churn rate began increasing because once a user finds a suitable cleaner through the platform, most home owners would take the transaction offline.

Blue Apron – once people learned what ingredients to buy and how to cook the meals, would they continue ordering expensive meal kits?

ecommerce growth marketing“Before you spend money at your product, does your business make sense in this time and this market? Because if not, people won’t use your product regardless of how much money you throw at it.”

2. Ok Google, teach me about SEO

KORAVUT PAVITPOK, HEAD OF GROWTH MARKETING, ACOMMERCE
ecommerce growth marketing

Koravut (Bom) Pavitpok, aCommerce Head of Growth Marketing

What is Google’s market share in Thailand?

A whooping 99%.

It’s almost essential then to understand how Google search can drive quality online traffic to your website through proper SEO (search engine optimization), SEM (search engine marketing) and dynamic retargeting.

Based on factors such as search volume and intent, companies can bid on keywords to capture the attention of Thailand’s most likely buyers.

ecommerce growth marketing

The more accurately you can target users on the lower end of the funnel, the more likely to see conversions on your ecommerce channels.

Think of Google search like street names,” says Bom Pavitpok. “You want to be on the most popular street for your particular category.”

The next LEAP class is on Thursday September 28th, 2017 taking a look at social media marketing, Google analytics and a Central Marketing Group case study. Stay tuned for next week’s takeaways.

[LEAP Week 1] eIQ Insights: The New Ecommerce Opportunity in Thailand

[LEAP Week 2] eIQ Insights: Refinement of an Ecommerce Channel Strategy


Sign up for the eIQ Weekly Brief to receive weekly ecommerce insights.

GUEST POST BY: JEFFREY TOWSON

H&M and Zara are two companies I pay a lot of attention to in China.

  • They have great business models. Fast fashion is really impressive in general.
  • They are popular with Chinese consumers.
  • They are both following market leader Uniqlo in terms of expansion into second and third-tier cities.
  • They seem to be growing steadily, despite slowing growth in apparel overall.

Overall, both look like big winners in China going forward. But I think there are two potential threats emerging. More on this in a second. First a quick diversion.

I keep a list of questions that I think are both important but difficult. These are things I try to figure out over time. One of these questions is “will fast fashion work the same in China as elsewhere?”. As exemplified by Zara and H&M, fast fashion has been a stunningly powerful business model. It continues to expand in the Europe and US – and is now growing in emerging markets. But it’s still not clear to me how well it will do in China, where consumers are fickle, competitors are ferocious and mobile/ecommerce appears to be changing almost everything in retail.

My answer to this question, thus far, is that the Western fast fashion giants are well positioned for China and for rising Chinese consumers.

The Zara and H&M business model has been studied extensively. It relies on syncing consumer behavior in stores with centralized design/manufacturing capabilities. Zara is the more extreme case with manufacturing in-house and re-design and shipping done on almost a weekly basis based on customer purchases. H&M, in contrast, has most of its manufacturing outsourced to Asia.

This “quick reaction” apparel platform makes great sense in China. If >50% of a season’s merchandise is re-mixed and re-designed during the season, that enables you to change with rapidly changing Chinese consumers. In this, “quick reaction” has a strength (i.e., reacting in real time to changing tastes) where many other Chinese consumer-facing companies have a perpetual problem.

This operating model also enables them to push discount versions of the latest designs from the fashion capitals (Paris, Milan, etc.) to China stores in a couple of weeks. Having design centralized in Europe also probably helps these stores in China. It is a differentiating strength relative to both local Chinese competitors and to “slower fashion” houses like Gucci and Prada.

Overall, fast fashion still looks like a great approach for rising Chinese consumers.

One more quick aside

(skip to the below points if you’re reading quick).

One of the benefits of fast fashion is you can have multiple style waves instead of 2-3 fashion seasons per year. One result of this is that consumers tend to come in more often as there is frequently new stuff to see. This, in theory, gets you greater revenue (people come more and buy more). You also get a greater “share of the consumer mind” (a Warren Buffett term). Greater frequency of consumer activity generally creates a stronger brand and a better relationship.

Financially, these frequent style waves also show up as less discounting of goods (a perpetual problem in fashion retail), higher revenue, and better working capital. That’s the theory anyway. And H&M and Zara do produce tons of cash, which they can then put into more scale and more stores. It’s a powerful approach when compared to traditional department stores or luxury fashion houses.

That said, it’s not clear to me that you get these same benefits in China. In particular, I don’t know if you see the same increased visits and branding benefits. Cycle times are already pretty fast in China. Most of the textile/apparel production is actually done in China / Asia. And I’m not sure you have the same historical expectations for a seasons’ new merchandise to contrast with. So I’m not sure about the revenue and gross margins of this model in China. Gross margins are typically 60% elsewhere.

Ok. Back to my main point, that there are two threats to the big China dreams of these fast fashion giants.

Threat 1: Ecommerce, mobile, and O2O are happening fast in China – and these companies are not real fast at this stuff.

Retailers are pretty much ground zero for changes in Chinese e-commerce, mobile, and online-to-offline activity. Digital transformation is hitting this sector like just about no other (except maybe auto and transportation).

First, the rapid adoption of everything mobile in China is transforming the interface with consumers. It is no longer just about walking in the mall and then going into a nice store like it might happen in Sweden. The Chinese customer experience is already a combination of the mall, a store, your activities in various online ecosystems and a rapidly developing logistics/delivery network. The two words you hear over and over in Chinese retail are digital and delivery. How this offline-online mix is going to play out and what “new retail” is going to end up looking like is unclear. But Chinese retail is where it is happening really quickly.

Against this rapidly changing Chinese retail landscape, here are some disturbing facts. Zara didn’t have an online store until around 2010 (about a decade after the Gap). And H&M didn’t start online sales in the US until around 2012. They also didn’t open a shop on Tmall until 2014. These companies are notoriously slow in digital stuff.

Both Zara and H&M are awesome in inventory and logistics. That is their strength. They have a powerful supply chain that connects retail activity around the world with centralized design and manufacturing, almost in real time. But they have been pretty slow when it comes to ecommerce and mobile. And these are precisely the things that are happening quickly in China – and that their Chinese competitors are particularly good at.

Threat 2: The local Chinese competition is moving upmarket.

You also need to consider the recent actions of the Chinese apparel giants such as Peacebird, Heilan, and Septwolves. They operate about 10x more stores than the foreign companies. Zara, H&M, and Uniqlo have 200-500 stores each. Helian and Septwolves have 2,000-4,000 stores each.

These big local competitors have historically been cheaper but they are now upgrading and moving upmarket. They are going to increasingly challenge Uniqlo, Zara, and H&M, especially as they continue to expand into second and third-tier cities.

When you combine #1 and #2, things get really interesting. What happens when you combine rising Chinese competitors with big digital, mobile and ecommerce disruptions? Does that change the fast fashion business model that has been so powerful in so many countries? This is the question I have been thinking about.

Anyways, that said, both H&M and Zara do appear to be in great shape in China right now. They both continue to open tons of China stores each year. They have a nicely adaptable model that is well-suited to the continually changing preferences of Chinese consumers. And Chinese consumers keep getting wealthier and wealthier. So that is all pretty great.

These companies may well turn out to be unbeatable in China, just like in most other places. But I am keeping an eye on these two particular threats to their China plans. We’ll see.


The first version of this article was published here

THE BACKGROUND

It’s safe to say that Toys ‘R’ Us is one of the most popular places on earth for kids everywhere. With an endless variety of toys stacked in high racks, it is a heaven created for kids or kids-at-heart alike.

The toy retailer was born after founder Charles Lazarus came back from serving in the World War II and decided to build a baby furniture business during the baby-boom in 1948.

Lazarus started featuring assortments of toys in the store then named “Children’s Bargain Town” after receiving a high demand from parents and soon learned that unlike furniture, toys would keep customers coming back, either for an upgrade or a replacement.

Less than a decade later, he restructured his business to solely focus on toys and opened the first Toys ‘R’ Us store in 1957 — with the iconic backward R giving a childlike impression. To date, the company has 1,600 stores across 38 countries.

“What we are is a supermarket for toys. We don’t have a competitor in variety, there is none,” told Lazarus to the Washington Post.

Toys R Us bankruptcy ecommerce

Toys ‘R’ Us founder Charles Lazarus retired as CEO and president in 1994 while remain chairman. Source: Getty Images.

For decades, the US company was so unbeatable that it had become a classic example of a category killer — a business that successfully specializes in one sector that it pushes out competition from both smaller specialty stores and larger general retailers.

So what happened to the once-booming business that the company filed for bankruptcy earlier this week?

THE CHALLENGE

When news of the Chapter 11 filing (“reorganization” bankruptcy”) by the toy retailer broke, media was quick to blame Amazon and the rise of online retail as the reason of yet another traditional retailer struggling to stay in business, known commonly as the Amazon Effect.

But the real reason for the bankruptcy is more complicated than this and what set off “a dangerous game of dominoes” was actually accumulated debt.

Toys ‘R’ Us had managed to sustain a crushing debt for more than a decade after getting bought by KKR and Bain Capital in 2005. The private equities bought the retailer, which at that time was valued around $7.5 billion, for $6.6 billion that consists only of $1.4 billion in equity.

They then used the company’s assets to raise $5.3 billion in additional debt, creating a total debt of $6.2 billion — based on the assumption that they would be able to cut the retailer’s operating costs and sell under-utilized assets to raise cash and repay the debt.

But they failed to predict the retail shift to ecommerce, which created a completely different competitor from the ones Toys ‘R’ Us had been facing in the past such as Walmart or Target.

The assumption that retail real estate would increase in value also failed them as the US became saturated with retail space once businesses began shutting down.

The company barely had enough money to repay its $5 billion debt and fight traditional retailers, let alone build a major online presence to go up against Amazon.

Given its fragile situation and end year sales around the corner, the company was forced to file for bankruptcy protection in order to provide the vendors with cash in advance as nearly all of them refused to ship products to fill the retailer’s inventory for the holiday season.

THE STRATEGY

With the new protection, Toys ‘R’ Us received a commitment for over $3 billion to help address the financial constraints in a lasting and effective way, as stated by Toys ‘R’ Us CEO Dave Brandon in the courts filling.

“Together with our investors, our objective is to work with our debtholders and other creditors to restructure the $5 billion of long term debt on our balance sheet.”

The company doesn’t plan to close stores and its operation in location around the world will continue normal operations. Toys ‘R’ Us also plans to spend $64.8 million before 2022 to make it more enjoyable to shop in its stores.

“Toys ‘R’ Us stores will be interactive spaces with rooms to use for parties, live product demonstrations put on by trained employees, and the freedom for employees to remove products from boxes to let kids play with the latest toys,” explained Brandon.

The plan also includes the creation of augmented-reality video games that customers can play on their smartphones while shopping at the store.

Toys R Us bankruptcy ecommerce

The iconic Indoor Ferris Wheel in Toys ‘R’ Us’s Time Square store that was closed in 2015 because of its high rental cost.

The suppliers’ support for the reorganization plan for Toys ‘R’ Us is also key to dragging them out of bankruptcy.

“Vendors are why they are in, they will be a big part of why they get out,” said Bloomberg Intelligence analyst, Noel Hebert.

Some of the key vendors such as Hasbro and Matte have rallied support and stated they were standing by the company.

Earlier this year, the company also expressed its commitment to take action towards the lack of its online experience with a $100 million investment to revamp its website.

“Some organizations recognize faster than others there are shifts in the ways customers want to be communicated with and the way customers want to purchase products,” said Toys ‘R’ Us CEO David Brandon. “It probably took us awhile.”

Toys R Us bankruptcy ecommerce

The company’s current ecommerce website: www.toysrus.com

CEO Dave Brandon has said that the company will not engage in a “race to the bottom” of a discount war that is usually employed by online retailers in order to gain new customers.

Despite accusations of being slow to adapt to the online shift, Toys ‘R’ Us was, in fact, one of the first companies to sign a deal with Amazon in 2000 to sell toys exclusively through the online retailer.

The exclusive agreement marked the first “click-and-mortar” collaboration between traditional and online retailers but Amazon broke the deal and began allowing other toy sellers in its platform because Toys ‘R’ Us stock couldn’t keep up with the high demand.

Toys ‘R’ Us sued in 2004, and Amazon ended up having to pay $51 million out of the $93 million that the toy retailer asked for to settle the lawsuit five years later.

THE FUTURE

Despite the woes of the company in the US, its Asian operations remained unaffected.

In April this year, the company unified its Japanese business with the operations in Greater China and Southeast Asia — bringing together 223 subsidiaries stores across Asia and 34 licensed retail locations in Macau and the Philippines.

“Toys ‘R’ Us (Asia) is open for business and continuing to serve our customers as we always do. We are financially robust and self-funding retail operation, which continues to significantly grow and invest in this region,” said Toys ‘R’ Us Asia president, Andre Javes.

The company even plans to open another 22 store in China the coming weeks.

The journey that Toys ‘R’ Us facing will not be easy but the CEO remains optimistic.

“As the holiday season ramps up, our physical and web store are ones for business, and our team members around the world look forward to continuing to put huge smiles on children’s faces,” said Brandon.

Toys R Us bankruptcy ecommerce

With the boom of technology in the region, Southeast Asia has become home to young startups, and investors hoping to help fuel its rapid growth.

Some examples of investment news surrounding the region only this year include Chinese ecommerce giant JD.com confirming a $500 million joint venture with Thai retailer Central to build up the ecommerce and fintech sector in Thailand; Malaysia Debt Ventures set aside a $238 million fund to target technology-based companies like AR, VR, etc; and 500 Startups has made its debut investment in Myanmar backing a social media monitoring and news discovery app.

A recent report commissioned by Google and AT Kearney also highlights just how much money has been funneled into the region, which market is the most attractive and where are the most deep-pocketed investors coming from.

Southeast Asia’s golden child

Although the investment for startup companies in Southeast Asia only contributed to 8% to the total $90 billion of investment into Asia, this value has grown 23 times from 2012 to 2016 from $0.3 billion to $6.8 billion.

Most of the money has been pumped into Singapore and Indonesia that captured 60% of the entire investment.

Indonesia startups investment

Singapore gained most of the startup investment in Southeast Asia

However, nothing shone brighter this year than the myriad of Indonesian startups that have been stealing the attention of global industry giants like Tencent, Expedia, and Tim Draper from Draper Associates who invested in the early days of Tesla, Baidu, and Skype.

The country has produced three startups that classify as a ‘unicorn’, a company valued at more than $1 billion. They are Traveloka, Tokopedia and Go-Jek.

The first is valued at $2 billion after a $350 million investment from Expedia in July, and both Tokopedia and Go-Jek also are worth around $1 billion and $3 billion respectively.

Where’s all the money coming from?

Attracting the Chinese investors

In a short span of four years time from 2012 to 2016, Indonesia has seen 31 times growth of investment value from $44 million to $1.4 billion. During 8 months in this year alone, this value has grown more than two times to $3 billion driven by later-stage investments.

Indonesia startups investment

The staggering growth has AT Kearney predicting the ecosystem could attract more investment than the oil and gas industry — which contributed $23.7 billion or 3.3% of the country’s GDP last year.

“Due to the massive growth, the value of startup investments in Indonesia may surpass the nation’s oil and gas investment which was $5 billion in 2016,” said AT Kearney partner, Alessandro Gazzini.

From all of the investment raised by Indonesian startups since 2012, ecommerce received the biggest chunk of gold taking 58% of the total investment value.

Transport and fintech quickly follow behind with 38% and 2% respectively.

Indonesia startups investment

Indonesia has also become a hotbed for the expansion of Chinese companies as the country sees a growing interest from Chinese investors this year.

94% of the startups investment in the country during 2017 have involved Chinese investors, up from only 2% last year. Two of the infamous Chinese BAT, Alibaba and Tencent, are raising stake in Indonesia by investing in Tokopedia and Go-Jek respectively.

Meanwhile, JD.com diversified its portfolios with investment in Traveloka making Indonesia the official battleground for Chinese companies to fight their proxy war.

Indonesia startups investment

The involvement of Chinese investors in Indonesia is something that the government has encouraged across all sectors. Indonesia’s Investment Coordinating has even set up a special China desk to attract more investors.

With the country still at a nascent digital stage, there is no precise measurement to find out the country’s true potential until company’s try but as the famed venture capitalist Tim Draper said about Indonesia, “it is a great place to be”.