Chinese firm Xiaomi's successful entry into the Indonesian market is leading the way for mainland firms. (EPA Photo/Wu Hong)

Chinese Tech Companies Want a Piece of Indonesia’s Tech Pie

AUGUST 11, 2015

Jakarta. Chinese mobile technology companies are on the race to capture Indonesia’s young and tech-savvy population, riding on the back of a wave started by smartphone manufacturer Xiaomi last year.

Internet companies in Asia’s largest economy — such as Xiaomi and mobile application company Cheetah Mobile – have been shifting their focus to Indonesia and its 250 million in population in the past year amid growing competition in the technology industry in China.

Xiaomi entered the Indonesian market last September and sold out its first batch of low-cost smartphone, the Redmi 1, in a matter of minutes. WeChat, a multi-platform messaging app from Internet giant Tencent, revealed in March its plans to foray into e-commerce here, hoping to increase its user base in Indonesia.

“I have a very, very positive attitude for the Indonesian market … Competition in the current Indonesian market is not as severe as China,” said Johnny Li, general manager of international business development at Cheetah Mobile, at the sidelines of the Global Mobile Internet Conference (GMIC) in Jakarta.

Beijing-based Cheetah Mobile develops utility applications such as Battery Doctor and Clean Master, garnering up to 443.6 million active cellular users as of March. The company raised $168 million in its initial public offering on the New York Stock Exchange last May.

More than 700 people — a mix of start-up companies and venture capital firms — were present at Southeast Asia’s first Global Mobile Internet Conference in Jakarta, an initiative of mobile industry organization Great Wall Club.

Aside from Cheetah Mobile, Chinese micro-blogging giant Sina Weibo and software company Kingsoft also attended the conference.

Headquartered in Mountain View, United States, the Great Wall Club is a global network of 700 internet technology companies, where 70 percent of the members originated from China, such as Xiaomi and micro-blogging site Sian Weibo and venture capital Sequoia Capital.

“Today, China also has a lot of mobile internet innovation so we want to take mobile innovation to Indonesia and hope that the innovation can help the Indonesian industry to be better,” said Wen Chu, founder and chief executive officer at the Great Wall Club, on Tuesday.

“We are aware that the mobile technology industry in Southeast Asia is expanding rapidly, especially in Indonesia which consist 60 percent of the Asean [Association of Southeast Asian Nations] market …We believe Southeast Asia has potential players in mobile technology industry, especially in Indonesia,” Li added.

With a burgeoning young middle class, Indonesia has long been an attractive market for technology companies such as Facebook, Google and Samsung. This year alone, the International Data Corporation forecast that smartphone shipments into Indonesia will grow by 20 percent to nearly 30 million units.

The development has also given way to a slew of financing sprees among local start-up companies, such as e-commerce Tokopedia’s $100 million investment from Japanese telecommunication firm SoftBank.

Seeing the opportunity, New York-listed Cheetah Mobile set up shop in Indonesia in May and initiated the search to acquire several start-up companies in the country, said Li.

“We are interested in working with local start-ups … Right now, we already have over 20 local partners, including Advant,” he said, referring to a Jakarta-based low-cost technology device manufacturer.

For Rama Mamuaya, founder and chief executive of homegrown online news start-up Daily Social, the arrival of Chinese technology companies in Indonesia is welcomed as a way to grow the country’s technology industry.

“Indonesia is one of the biggest markets for the mobile device industry. The conference can give an additional push to show the world of Indonesia’s role as the next big thing in the global internet economy,” he said.

“The spotlight now is in India and Indonesia, as long as the government can balance wisely between which sectors to open up and shut down [to foreign investors].”