Attention Startups: Read this before entering Southeast Asian Market
“Global Vision, Local Wins” — Jack Ma, Founder of Alibaba

The Southeast Asian (SEA) market is the next rising Star of Asia. Whether you are a new founder looking for a fresh industry to disrupt or an existing startup looking to launch in a new country, SEA should be at the top of your list. Sitting in your office thousand of miles away will not help you win over the market.

Born and raised in Southeast Asia, I have seen the dynamic transitions of the tech scene over the past 20 years. In recent years, large players have entered the market and created a tech boom. Alibaba, the giant Chinese e-commerce platform, just acquired Lazada, the local online marketplace platform with valuation of $1 billion, to dominate the SEA e-commerce market. Grab and Go-Jek, both local on-demand transportation start-ups, are intensely competing against Uber.

What can we learn from this?

Map of Southeast Asia

Tech startup giants’ eyes are fixed on the rise of SEA market. SEA has 625 million people, twice the size of the US. It has a fast growing middle class of 190 million, that’s expected to grow 110% by 2020. This demographic is a key market driver as they gain purchasing power. Among them are 260 million internet users and 3.8 million new internet users coming online every month.

Unique characteristics make this market especially appealing. Players will not succeed in the market unless they know the audience well.

Here are 3 things startups need to know about the SEA market:

#1 We are Smartphone addicts

We all know the stereotype of Asians with selfie sticks. We take photos before eating each meal and frequently share on social media. You would be amazed how many SEAs post to Facebook almost hourly.

Shoot-Post-East common smartphone behavior usage of Asians

The top six SEA countries by number of smartphone users reached 134.3 million users in 2015, which is fast approaching the US which boasted 171 million users. The number of smartphone users in SEA is growing twice as fast as the US. Smartphone users in SEA countries spend nearly double the hours on their devices compared to average US users.

Extensive smartphone engagement is key to capturing SEA users. SEA countries have a significant online user base, especially with smartphones users, and it continues to grow rapidly.

My advice on Launch strategy to startups is to focus on smartphone and social network applications. Since apps like Facebook and Line are fully integrated in daily life of SEA users, alliance your products or services to these platform will hugely accelerate your growth.

#2 We are feverish shoppers, but online shopping?!

Asian consumers shop like crazy, and SEA is no exception. We are big spenders both by volume and frequency. If you have travel to SEA, you will notice shops range from luxurious shopping malls to local, open-air markets on every street corner — yes, EVERY CORNER.

Asian Luxury shopping tour in Paris

Surprisingly, SEA makes up only 3% of sales of the $6 billion online retail industry. The US and China account for 14% of online retail sales at $293 billion and $270 billion, respectively. What stops SEA consumers from buying online?

Interpersonal trust between a buyer and seller still greatly influences most SEA purchases. In countries like Indonesia, consumers are most comfortable with traditional shopping where cash is the common payment method. In most SEA countries, consumers and retailers both feel more comfortable with the traditional method of paying cash for purchases.

E-commerce in SEA has just begun, and it is expected to grow from 3% to 12% by 2020. Technological advances such as secured payment platforms, e-commerce data protection, and an enhanced user experience while shopping online will be key to bridging this gap.

#3 We are similar but diverse

There is no one size fits all for this region.

It is difficult to distinguish Southeast Asians based on their appearance. We have similar characteristics and share many common traits, but we are diverse. We have different religious views, political backgrounds, education systems and lifestyles shaped by our geographical proximity. Companies will need to localize the products or services to earn our sales.

Diversity in Southeast Asia

In 2013, Amazon aggressively targeted Asia, however, SEA was put on the shelf. Amazon found that SEA was not a piece of cake, due to the region’s fragmentation. The company experienced challenges in logistics and varying legal systems. This year, Amazon relaunched a modified plan to focus on Indonesia first.

For on-demand transportation services, local startups like Grab and Go-Jek seem to know their way around the market. Locals avoided using services like Uber that rely on credit card payment. Instead, they chose to pay cash on delivery, which fits the shopping behavior of SEA. Grab formed partnerships with local taxi drivers to reduce the opposition on-demand transportation services are experiencing in the US. Go-Jek selected two-wheel drivers for on-demand delivery, which suits a heavy traffic country like Indonesia. It looks like Uber’s path into SEA is not going to be easy.

Localization is a must to firmly grasp the heart of SEA consumers. Obviously, languages and religion are the major drive of diversity. We all uses different local languages, and except for Singapore, none of us are English native. We have three major different religions in ten countries, Buddhism, Islamic, and Christian. The lifestyle of Muslims, especially during Ramadan period in Indonesia and Malaysia are very different from other remaining countries. It is important to be adaptive to local culture when thinking of launching in SEA.

It may take longer to build market strategies for SEA than for the US or China due to the fragmentation. These challenges can be overcome by finding trustworthy local partners who can help you enter the market.

At the end of the day, the fast fish wins

“In the new world, it is not the big fish which eats the small fish, it’s the fast fish that eats the slow fish”. Klaus Schwab

In a giant market like SEA where the population is twice that of the US, the number of unicorns are still few. The sooner you enter the market, the better your chances of having an advantage in the market.

The SEA tech arena is quite young, having begun in just 2011. Big name VC’s like Golden Gate Ventures and 500 Startups invested over 1 billion USD in SEA in recent years and funding has increased 90% annually for the past three years. There are few big players and ample opportunity for new, hungry players to become the next unicorn.

One caveat. It will not last for long.

In Summary

Southeast Asia has a huge market of untapped potential. Consider everything from the fast growing pool of online and smartphone users to the superficial e-commerce penetration and scant competition. SEA’s developing tech startup ecosystem is preparing to serve its robust market in the near future. You must understand the unique characteristics of each country to penetrate the SEA market.

Take my advice: Be fast and be there!

I am currently in San Francisco and would love to connect to anyone excited to launch their startups in Southeast Asia.

I am also developing Cocolo (still beta), a platform which connects Tech nomad with Local startups. My goal is to bring silicon valley culture to anywhere in the world. I would love to get in touch and hear your feedback.

Mail me at

Special thanks to Misha Chellam, Nick deWilde, Tom Hwang, Megan Kennedy and Dwi Choong for editing.