Taiwanese tech start-ups pile into Asean amid risks in China
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Technology start-ups in Taiwan, home to some of the world’s most dominant chipmakers, are sharpening their focus on Asean as the prospects of stability for doing business in China wane.
Young tech companies hoping to carve out a plan for regional growth are picking the 10-member Association of South-East Asian Nations amid Taiwanese tensions with the Chinese mainland that have dimmed the outlook for thriving in Asia’s largest economy.
The Taiwanese radar and anti-drone hardware start-up Tron Future, founded in 2018, is among those from the island actively scouting for deals to seal in south-east Asia. Given that its products have defence and military applications, the Chinese market has not held an appeal.
“Due to the nature of our company’s industry, China is not a market we anticipate entering,” Tron’s chief executive Yu-Jiu Wang told Nikkei Asia. “Asean countries such as Singapore and Vietnam have demands for drone detection. Therefore it will be a big reason for us to enter the market.”
Through local distribution partners, Tron said, the start-up has garnered sales in the two countries. It now plans to locate partners in Malaysia, Indonesia and the Philippines through which it can sell its wares and attain a stronger foothold in Asean.
Taiwan’s minister of Economic Affairs Wang Mei-hua told Nikkei in November that Taiwanese companies invested more in south-east and south Asia than in China for the first time in 2022. Taiwanese investments in those regions, including India, reached $5.2bn last year, surpassing the $5bn ploughed into China.
Communist China has never ruled Taiwan but sees the island of 23.5mn people as its territory and has not ruled out using military force to seize it.
Many Taiwanese see themselves as distinct from the Chinese mainland, and political tensions have time and again kept the relationship between the two sides frosty.
Tensions have been seen in the field of business as well. Beijing in October urged Taiwanese companies operating in China to show “responsibility” after a probe was started into tech giant Foxconn over tax irregularities.
Taiwan’s Foxconn is one of the largest contract producers of electronics globally and a key supplier for Apple’s iPhones.
Amid the tensions, some Taiwanese start-ups are wasting no time in looking away from China to Asean as a driver for their growth.
This article is from Nikkei Asia, a global publication with a uniquely Asian perspective on politics, the economy, business and international affairs. Our own correspondents and outside commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of 300 of the biggest and fastest-growing listed companies from 11 economies outside Japan.
Like Tron, the artificial intelligence-enabled software provider Gogolook, founded in 2012, has latched on to lucrative markets in south-east Asia, where the management consulting firm Bain & Co has projected the digital consumer population will grow from 370mn in 2022 to 402mn by 2027.
The Taiwanese start-up says it has established its first south-east Asian subsidiary in Thailand. Gogolook offers anti-fraud solutions that can be used by telecommunications companies and financial institutions.
“The south-east Asian region has been undergoing digital transformation and has experienced a significant rise in scam-related issues, but there has been a lack of anti-scam solutions and technology,” Gogolook’s chief operating officer Manwoo Joo told Nikkei. “With its large population base, south-east Asia offers immense potential.”
The software outfit was part of a delegation of close to 30 Taiwanese start-ups that were in Singapore in November seeking partnerships in the region, meeting with the likes of American tech giant Microsoft, venture capitalists and other start-ups in the city-state.
This delegation was led by Kao Shien-quey, the deputy minister of Taiwan’s National Development Council, an agency overseeing efforts to help the island’s start-ups access the global market. It was the first time that the council has led a business expedition to Singapore for Taiwanese start-ups.
Kao told Nikkei that the aim was to help young Taiwanese companies get into position to benefit from supply chains shifting towards Asean as talk continues about de-risking from China — reducing reliance on the mainland, which has long been a base of manufacturing and production for many companies.
“Taiwan is a rules-based economy, and as we know, mainland China is manipulated by . . . the leaders,” she said. “The uncertainty of the regulations [also] will be a risk for the company or staff to do business there.”
FunNow Group, which offers entertainment booking services and digital transformation solutions for merchants helped by AI, was another Taiwanese start-up that Kao led to Singapore.
Chief executive Ting-Kuan Chen told Nikkei that his outfit currently derives more than 40 per cent of its revenue from Asean markets, serving over 5,000 merchants.
The company sees opportunities for growth in Malaysia and Thailand, where digital payment and food delivery services have high penetration rates. Chen noted that in those markets, consumer consumption is growing and users are looking for better lifestyles.
“China . . . is super-mature and saturated,” he said. “We decided to go to Asean to be the leader instead of competing with those internet giants in China.”
A version of this article was first published by Nikkei Asia on December 12. ©2023 Nikkei Inc. All rights reserved.
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