Southeast Asia under the radar of European tech startups. But it should not be!

With a 442M English-speaking population and tech savvy people, Southeast Asia is still under the radar of most European tech startups when it comes to internationalization. But it shouldn’t be.

I moved about a month ago from Europe to Kuala Lumpur, Malaysia and I have been exposed to a world of rapid growth, passion for technology and English-speaking population.

And it made me wonder: how come European tech startups barely think of expanding in this region? They would rather aim to conquer different European markets with different languages, cultures and not so big populations. They would rather aim to conquer the very competitive US market. And they are not even considering the opportunity of expanding in Southeast Asia.

So let’s shed some light on why now is the time to establish presence in the region.

550px-Southeast_Asia_(orthographic_projection).svg

Market size

Southeast Asia consists of 11 countries of a total of 610M inhabitants, most of them being colonized by Europeans starting with the 16th century:

Singapore (population: 5M), Malaysia (population: 29M), Indonesia (population: 224M), Thailand (population: 64M), Philippines (population: 97M), Vietnam (population: 90M), Cambodia (population: 15M), Laos (population: 6M), Burma (population: 63M), Brunei (population: 434K), East Timor (population: 1M).

The combined GDP in 2011 was $2.158 trillion and the GDP per capita was $3,538 (as opposed to the European Union’s GDP of $17.589 trillion and GDP per capita of $32,021, so roughly 10x lower). Not one of the richest regions, but a rapidly emerging one.

However, Singapore and Brunei are affluent markets, being number 5th and 7th in the world ranking of GDP per capita PPP (2011: Singapore – $61,070 and Brunei – $61,070), according to the World Bank.

Malaysia follows on the 55th place, with a GDP per capita of $16,122 in 2011 (higher than those of Mexico, Romania, Bulgaria, Brazil, or South Africa just to name a few).

Language

Although they have their own languages, most of these countries have English as a second language and many of the businesses operating locally in English: Indonesia, Malaysia, Philippines, Brunei, Thailand, Cambodia, Laos, East Timor and Singapore.

That is a population of 442M English-speaking people (higher than the 420M combined English-speaking population of the US with its 313M, the UK with its 63M, Australia with its 23M, and South Africa with its 51M).

Technology

In 2012, aprox. 4% of the worldwide internet surfers came from Southeast Asia. This means a total of 62M people with access to internet are from this region, and the number grew at 9% from 2012 to 2013.

southeast asia internet

southeast asia internet by age

Smartphones are getting mainstream here. Smartphones sales volume increased by 61% in Jan-Sept 2013 compared to the same 3 quarters in 2012. Indonesia counts 14.8M smartphones, Thailand 7.2M, Malaysia 6.4M. In total, Singapore, Malaysia, Thailand, Indonesia, Philippines, Cambodia and Vietnam count 41.5M smartphones in use by their inhabitants.

southeast asia internet by device

Marketing for expanding businesses in the region can be easily done online. Southeast Asians are really into social networks and blogs.

southeast asia internet facebook

southeast asia internet blogs

But what exactly are the online businesses that can tap into an opportunity by entering Southeast Asia? The statistics show a big and rapidly growing acceptance of: photo sharing, ecommerce, online entertainment, online travel and gaming.

And if you are into the app business, drop the iphone and consider coming to Southeast Asia only with an android app. Android has 72% market share in Singapore, Malaysia, Thailand, Indonesia, Philippines, Cambodia and Vietnam (and more specifically, in Philippines 91%, Malaysia 83% and Singapore 81%).

Rocket Internet started tapping into the ecommerce opportunity in March  2012 and opened the online retail Lazada in Indonesia, Malaysia, Philippines, Thailand and Vietnam, a venture that pumps an investment of  $186M into its regional conquering.

southeast asia internet ecommerce

Welcome

Decided to consider this market ahead of your competitors?

Keep an eye on what is happening in the region by following the articles on e27 and TechinAsia.

If you are interested in expanding in Southeast Asia, drop me an email at adelina.peltea [at] gmail [dot] com

Sources: Wikipedia, World Bank, Comscore, e27.