China is the fastest growing smart speaker market

No surprise that smart speaker sales are on the rise. That certainly comports with recent numbers from NPD. The latest report from Canalys, however, pulls the camera back a bit to give a better picture of the global market. Seems that while smart speaker sales continue to be hot here in the States, they’re positively […]

No surprise that smart speaker sales are on the rise. That certainly comports with recent numbers from NPD. The latest report from Canalys, however, pulls the camera back a bit to give a better picture of the global market. Seems that while smart speaker sales continue to be hot here in the States, they’re positively on fire in China.

Global shipments increased by 187 percent year-over-year for a total of 16.8 million units. China accounted for 52-percent of the total growth worldwide, with Alibaba and Xiaomi accounting for 17.7 and 12.2 percent, respectively. The growth is large, in part, due to the fact that the category effectively didn’t exists a year ago.

Canalys’ Hattie He notes that a confluence of different elements have potentially put the country on track overtake the U.S.

“Alibaba and Xiaomi have both relied on aggressive price cuts to create demand,” He adds. “Both companies have the financial backing to spend on marketing and hardware subsidies in a bid to quickly build their user bases. Although the real level of user demand for speaker products is currently unproven, China is on its way to overtake the US in the near term. The challenge remains for local vendors to increase user stickiness and generate revenue from the growing installed base of smart speaker users.”

Also interesting is the fact that Google has maintained its top spot ahead of Amazon, with explosive growth year over year. Google’s up 449 percent to Amazon’s -14 — putting the two companies in first and second place, respectively. Of course, Amazon got a significant headset in the market, so Google has some ground to make up. Apple, meanwhile, failed to crack the top four.

Walmart co-leads $500M investment in Chinese online grocery service Dada-JD Daojia

Walmart sold its China-based e-commerce business in 2016, but the U.S. retail giant is very much involved in the Chinese internet market through a partnership with e-commerce firm JD.com. Alibaba’s most serious rival, JD scooped up Walmart’s Yihaodian business and offered its own online retail platform to help enable Walmart to products in China, both on […]

Walmart sold its China-based e-commerce business in 2016, but the U.S. retail giant is very much involved in the Chinese internet market through a partnership with e-commerce firm JD.com. Alibaba’s most serious rival, JD scooped up Walmart’s Yihaodian business and offered its own online retail platform to help enable Walmart to products in China, both on and offline.

Now that relationship is developing further after Walmart and JD jointly invested $500 million into Dada-JD Daojia, an online-to-offline grocery business which is part owned by JD, according to a CNBC report.

Unlike most grocery delivery services, though, Dada-JD Daojia stands apart because it includes a crowdsourced element.

The business was formed following a merger between JD Daojia, JD’s platform for order from supermarkets online which has 20 million monthly users, and Daojia, which uses crowdsourcing to fulfill deliveries and counts 10 million daily deliveries. JD Daojia claims over 100,000 retail stores and its signature is one-hour deliveries for a range of products, which include fruit, vegetables and groceries.

Walmart is already part of the service — it has 200 stores across 30 Chinese cities on the Dada-JD Daojia service; as well as five online stores on the core JD.com platform — and now it is getting into the business itself via this investment.

JD.com said the deal is part of its ‘Borderless Retail’ strategy, which includes staff-less stores and retail outlets that mix e-commerce with physical sales.

“The future of global retail is boundaryless. There will be no separation between online and offline shopping, only greater convenience, quality and selection to consumers. JD was an early investor in Dada-JD Daojia, and continues its support, because we believe that its innovations will be an important part of realizing that vision,” said Jianwen Liao, Chief Strategy Officer of JD.com, in a statement.

Alibaba, of course, has a similar hybrid strategy with its Hema stores and food delivery service Ele.me, all of which links up with its Taobao and T-Mall online shopping platforms. The company recently scored a major coup when it landed a tie-in with Starbucks, which is looking to rediscover growth in China through an alliance that will see Ele.me deliver coffee to customers and make use of Hema stores.

Away from the new retail experience, JD.com has been doing more to expand its overseas presence lately.

The company landed a $550 million investment from Google this summer which will see the duo team up to offer JD.com products for sale on the Google Shopping platform across the world. Separately, JD.com has voiced intention to expand into Europe, starting in Germany, and that’s where the Google deal and a relationship with Walmart could be hugely helpful.

Another strategic JD investor is Tencent, and that relationship has helped the e-commerce firm sell direct to customers through Tencent’s WeChat app, which is China’s most popular messaging service. Tencent and JD have co-invested in a range of companies in China, such as discount marketplace Vipshop and retail group Better Life. Their collaboration has also extended to Southeast Asia, where they are both investors in ride-hailing unicorn Go-Jek, which is aiming to rival Grab, the startup that bought out Uber’s local business.

Fast-growing Chinese media startup ByteDance is raising $2.5B-$3B more

Fast-growing Chinese media startup ByteDance is looking to raise as much as $3 billion to continue growth for its empire of mobile-based entertainment apps, which include news aggregator Toutiao and video platform Tiktok. The Beijing-based startup is in early-stage talks with investors to raise $2.5 billion to $3 billion, according to a source with knowledge […]

Fast-growing Chinese media startup ByteDance is looking to raise as much as $3 billion to continue growth for its empire of mobile-based entertainment apps, which include news aggregator Toutiao and video platform Tiktok.

The Beijing-based startup is in early-stage talks with investors to raise $2.5 billion to $3 billion, according to a source with knowledge of the plans. That investment round could value ByteDance as high as $75 billion, although the source stressed that the valuation is a target and it might not be reached.

It’s audacious, but if that lofty goal is reached then ByteDance would become the world’s highest-valued startup ahead of the likes of Didi Chuxing ($56 billion) and Uber ($62 billion). Only Ant Financial has raised at a higher valuation, but the company is an affiliate of Alibaba and therefore not your average ‘startup.’

The Wall Street Journal first broke news of the ByteDance investment plan.

But there’s more: Earlier this week, the Financial Times cited sources who indicate that ByteDance is keen to go public in Hong Kong with an IPO slated to happen next year.

ByteDance is best-known for Toutiao, its news aggregator app that claims 120 million daily users, while it also operates a short-video platform called Douyin. The latter is known as TikTok overseas and it counts 500 million active users. TikTok recently merged with Musical.ly, the app that’s popular in the U.S. and was acquired by ByteDance for $1 billion, in an effort aimed at combining both userbases to create an app with global popularity.

The firm also operates international versions of Toutiao, including TopBuzz and NewsRepublic while it is an investor in streaming app Live.me.

The company’s growth has been mercurial but it has also come with problems as the company entered China’s tech spotlight and became a truly mainstream service in China.

ByteDance had its knuckles wrapped by authorities at the beginning of the year after it was deemed to have inadequately policed content on its platform. Then in April, its ‘Neihan Duanzi’ joke app was shuttered following a government order while Toutiao was temporarily removed from app stores. It returns days later after the company had grown its content team to 10,000 staff and admitted that some content it had hosted “did not accord with core socialist values and was not a good guide for public opinion.”

LemonBox brings US vitamins and health products to consumers in China

China is rising in many ways — the economy, consumer spending and technology — but still many of its population looks overseas, and particularly to the West, for cues on lifestyle and health. That’s a theme that’s being seized by LemonBox, a China-U.S. startup that lets Chinese consumers buy U.S. health products at affordable prices. […]

China is rising in many ways — the economy, consumer spending and technology — but still many of its population looks overseas, and particularly to the West, for cues on lifestyle and health. That’s a theme that’s being seized by LemonBox, a China-U.S. startup that lets Chinese consumers buy U.S. health products at affordable prices.

Indeed, the recent scare around Chinese vaccinations, which saw faulty inoculations given to babies and toddlers in a number of provinces, has only fueled demand for overseas health products which LemonBox founder Derek Weng discovered himself when his father was diagnosed as having high blood sugar levels. Weng, then working in the U.S. for Walmart, was able to look up and buy the right medicine pills for his father and bring them back to China himself. He realized, however, that others are not so fortunate.

After polling friends and family, he set up an experimental WeChat app in 2016 that dispensed health information such as articles and information. Within a year, it had racked up 30,000 subscribers and given him the confidence to jump into the business fully.

Today, LemonBox allows Chinese consumers to buy its own-branded daily vitamin packs from the U.S.. Further down the line, the goal is to expand into more specific verticals, including mother and baby, beauty and daily supplements, according to Weng, who believes that the timing is good.

“For the first time in China, people are taking a major interest in health and are working out, while society is becoming more developed,” he told TechCrunch in an interview. “We estimate that Chinese consumers are investing 30 percent of their income in health.”

The LemonBox daily pack of vitamins.

Since its full launch three weeks ago, LemonBox has pulled in 700 customers with 40 percent purchasing a three-month bundle package and the remainder a monthly order, Weng said. Typical basket size is around 300 RMB, or nearly $45.

To get the business off the ground, Weng needed expert support and his co-founder Hang Xu — who is also LemonBox’s “Chief Nutrition Scientist” — has spent 10 years in the field of nutrition science. Xu holds a Ph.D. from Texas A&M University, is a U.S.-registered dietitian and has published over 10 research papers. The startup’s third co-founder, Eddy Meng (CMO), is a graduate of Chinese app store startup Wandoujia which sold to Alibaba two years ago.

Right now, LemonBox has offices in the U.S. and China and it is squarely focused on e-commerce but Weng said the company is looking to introduce other kinds of health services. That could include consultations with dietary experts and specific offerings for patients leaving a hospital or in other long-term care situations, as well as potentially own-label products.

“We look at Stitch Fix for inspiration,” Weng said. “Right now, it leverages data to develop its own in-house private label products that improve on margin and the accuracy of recommendations. This kind of data and further services will be the next stage for us.”

LemonBox raised a seed round in March, which included participation from Y Combinator, and as part of Y Combinator’s current program, it’ll present to prospective investors at the program’s demo day. Already, though, Weng said there’s been interest from investors which the company is thinking over.

Interestingly, it was forth time lucky entering YC for Weng, who had before applied with previous startups unsuccessfully. This time it was entirely circumstantial. He applied to be in the audience for Y Combinator’s ‘Startup School’ event that took place in Beijing in May.

Unbeknownst to him, YC picked out a handful of attendees whose companies were of interest, and, after an interview that Weng didn’t realize was an audition, LemonBox was selected and fast-tracked into the organization’s latest program. In addition, YC joined the startup’s seed funding round which had initially closed in March.

That anecdotal evidence says much of YC’s effort to grab a larger slice of China’s startup ecosystem.

The organization has aggressively recruited companies from under-represented regions such as India, Southeast Asia and Africa, but China remains a tough spot. According to YC’s own data, fewer than 10 Chinese companies have passed through its corridors. That’s low considering that the organization counts over 1,400 graduates.

With events like the one in May, which helped snare LemonBox, and a new China-centric role for partner Eric Migicovsky, who founded Pebble, YC is trying harder than ever.

India may become next restricted market for U.S. cloud providers

Data sovereignty is on the rise across the world. Laws and regulations increasingly require that citizen data be stored in local data centers, and often restricts movement of that data outside of a country’s borders. The European Union’s GDPR policy is one example, although it’s relatively porous. China’s relatively new cloud computing law is much […]

Data sovereignty is on the rise across the world. Laws and regulations increasingly require that citizen data be stored in local data centers, and often restricts movement of that data outside of a country’s borders. The European Union’s GDPR policy is one example, although it’s relatively porous. China’s relatively new cloud computing law is much more strict, and forced Apple to turn over its Chinese-citizen iCloud data to local providers and Amazon to sell off data center assets in the country.

Now, it appears that India will join this policy movement. According to Aditya Kalra in Reuters, an influential cloud policy panel has recommended that India mandate data localization in the country, for investigative and national security reasons, in a draft report set to be released later this year. That panel is headed by well-known local entrepreneur Kris Gopalakrishnan, who founded Infosys, the IT giant.

That report would match other policy statements from the Indian political establishment in recent months. The government’s draft National Digital Communications Policy this year said that data sovereignty is a top mission for the country. The report called for the government by 2022 to “Establish a comprehensive data protection regime for digital communications that safeguards the privacy, autonomy and choice of individuals and facilitates India’s effective participation in the global digital economy.”

It’s that last line that is increasingly the objective of governments around the world. While privacy and security are certainly top priorities, governments now recognize that the economics of data are going to be crucial for future innovation and growth. Maintaining local control of data — through whatever means necessary — ensures that cloud providers and other services have to spend locally, even in a global digital economy.

India is both a crucial and an ironic manifestation of this pattern. It is crucial because of the size of its economy: public cloud revenues in the country are expected to hit $2.5 billion this year, according to Gartner’s estimates, an annual growth rate of 37.5%. It is ironic because much of the historical success of India’s IT industry has been its ability to offer offshoring and data IT services across borders.

Indian Prime Minister Narendra Modi has made development and rapid economic growth a top priority of his government. (Krisztian Bocsi/Bloomberg via Getty Images)

India is certainly no stranger to localization demands. In areas as diverse as education and ecommerce, the country maintains strict rules around local ownership and investment. While those rules have been opening up slowly since the 1990s, the explosion of interest in cloud computing has made the gap in regulations around cloud much more apparent.

If the draft report and its various recommendations become law in India, it would have significant effects on public cloud providers like Microsoft, Google, Amazon, and Alibaba, all of whom have cloud operations in the country. In order to comply with the regulations, they would almost certainly have to expend significant resources to build additional data centers locally, and also enforce data governance mechanisms to ensure that data didn’t flow from a domestic to a foreign data center accidentally or programmatically.

I’ve written before that these data sovereignty regulations ultimately benefit the largest service providers, since they’re the only ones with the scale to be able to competently handle the thicket of constantly changing regulations that govern this space.

In the India case though, the expense may well be warranted. Given the phenomenal growth of the Indian cloud IT sector, it’s highly likely that the major cloud providers are already planning a massive expansion to handle the increasing storage and computing loads required by local customers. Depending on how simple the regulations are written, there may well be limited cost to the rules.

One question will involve what level of foreign ownership will be allowed for public cloud providers. Given that several foreign companies already exist in the marketplace, it might be hard to completely eliminate them entirely in favor of local competitors. Yet, the large providers will have their work cut out for them to ensure the market stays open to all.

The real costs though would be borne by other companies, such as startups who rely on customer datasets to power artificial intelligence. Can Indian datasets be used to train an AI model that is used globally? Will the economics be required to stay local, or will the regulations be robust enough to handle global startup innovation? It would be a shame if the very law designed to encourage growth in the IT sector was the one that put a dampener on it.

India’s chief objective is to ensure that Indian data benefits Indian citizens. That’s a laudable goal on the surface, but deeply complicated when it comes time to write these sorts of regulations. Ultimately, consumers should have the right to park their data wherever they want — with a local provider or a foreign one. Data portability should be key to data sovereignty, since it is consumers who will drive innovation through their demand for best-in-class services.

Starbucks partners with Alibaba on coffee delivery to boost China business

Starbucks is palling up with Alibaba as it seeks to rediscover growth for its business in China. China has been a bright spot for some time for the U.S. coffee giant, but lately it has struggled to maintain growth — its China business dragged on its Q3 financials — and it is up against some […]

Starbucks is palling up with Alibaba as it seeks to rediscover growth for its business in China.

China has been a bright spot for some time for the U.S. coffee giant, but lately it has struggled to maintain growth — its China business dragged on its Q3 financials — and it is up against some ambitious new rivals, including billion-dollar startup Luckin Coffee.

One-year-old Luckin recently raised $200 million from investors and it has already built quite a presence. It claims over 500 outlets across China and it taps into the country’s mobile trends, with mobile payments and orders and delivery, too. Then there are some deep discounts aimed at getting new users, as is common with food, cars and other on-demand services.

In response, Starbucks is injecting some of that ‘New Retail’ strategy into its own China presence — and it is doing so with none other than Alibaba, the company that coined the phrase, which signifies a marriage between online and offline commerce.

The partnership between Alibaba and Starbucks is wide-ranging and it will cover delivery, a virtual store and collaboration on Alibaba’s “new retail” Hema stores.

The delivery piece is perhaps most obvious, and it’ll see Starbucks work with Ele.me, the $9.5 billion food delivery platform owned by Alibaba, to allow customers to order and receive coffee without visiting a store. The service will start in September in Beijing and Shanghai, with plans to expand to 30 cities and over 2,000 stores by the end of this year.

Starbucks is also building its app into Alibaba’s array of e-commerce sites, including its Tmall brand e-mall and Taobao marketplace. That’s a move that Starbucks President and CEO Kevin Johnson told CNBC would operate “similar to the mobile app embedded right into that experience” and open Starbucks up to Alibaba’s 500 million-plus users.

Finally, Starbucks is bringing its own “Starbucks Delivery Kitchens” to Alibaba’s Hema stores, which feature robots and mobile-based orders, that will combine Starbucks stores to boost its delivery capacity and speed.

Starbucks, as mentioned, needed a boost in China but the deal is also a major coup for Alibaba, which is battling JD.com on the new retail front as well as ambitious on-demand service Meituan. The latter is reported to have recently filed for an IPO in Hong Kong that could raise it $4 billion.

Grab picks up $2 billion more to fuel growth in post-Uber Southeast Asia

Grab, the ride-hailing service that struck a deal to take Uber out of Southeast Asia, has announced that it has pulled in $2 billion in new capital as it seeks to go beyond ride-hailing to offer more on-demand services. The $2 billion figure includes a $1 billion investment from Toyota which was announced in June, […]

Grab, the ride-hailing service that struck a deal to take Uber out of Southeast Asia, has announced that it has pulled in $2 billion in new capital as it seeks to go beyond ride-hailing to offer more on-demand services.

The $2 billion figure includes a $1 billion investment from Toyota which was announced in June, and it sees a whole host of institutional investors join the Grab party. Some of those names include OppenheimerFunds, Ping An Capital, Mirae Asset — Naver Asia Growth Fund, Cinda Sino-Rock Investment Management Company, All-Stars Investment, Vulcan Capital, Lightspeed Venture Partners and Macquarie Capital.

Grab confirmed that the round is still open, so we can expect that it’ll add more investors and figures to this deal.

The deal values Grab at $11 billion post-money, which is the same as the $10 billion valuation it earned following the Toyota deal. The caliber of investors certainly suggests an IPO is on the cards soon — not that it ever hasn’t been — although the company didn’t comment directly on that when we asked.

This new financing takes Grab to $6 billion from investors. Some of its other notable backers include SoftBank and China’s Didi Chuxing, which both led a $2 billion round last year which gave Grab the gas to negotiate a deal with Uber that saw the U.S. ride-hailing giant exit Southeast Asia in exchange for a 27.5 percent stake in Grab. From that perspective, the deal was a win-win for both sides.

In this post-Uber world, Grab is transitioning to offer more services beyond just rides. It has long done so, with its own payment service and food deliveries, but it is rolling out a revamped “super app” design that no longer opens to a ride request page and that reflects the changing strategy of the Singapore-based company.

10 July 2018; Tan Hooi Ling, co-Founder, Grab, at a press conference during day one of RISE 2018 at the Hong Kong Convention and Exhibition Centre in Hong Kong. Photo by Stephen McCarthy / RISE via Sportsfile

Grab said in a statement today that this new money will go towards that “O2O” [offline-to-online] strategy that turns Grab’s app into a platform that allows traditional, offline services to tap the internet to reach new customers. The trend started out in China, with Alibaba and Tencent among those pushing O2O services, and Grab is determined to be that solution for Southeast Asia’s 650 million consumers.

Indonesia, Southeast Asia’s largest economy with a population of over 260 million, is a key focus for Grab, the company said. The company has been pushed out new financial services in the country, fueled by an acquisition last year, and it claims it is winning “significant market share” with GMV quadrupled in the first half of this year.

With Uber out of the picture, the company’s main rival for the ‘Southeast Asia Super App Crown’ is Go-Jek, the Indonesian on-demand service valued at $5 billion.

Go-Jek has long focused on its home market but this year it unveiled an ambitious plan to expand to three new markets. That kicked off yesterday with a launch in Vietnam, and the company has plans to arrive in Thailand and the Philippines before the end of the year.

Go-Jek has raised over $2 billion and it counts KKR, Warburg Pincus, Google and Chinese duo Tencent and Meituan among its backers.

Grab picks up $2 billion more to fuel growth in post-Uber Southeast Asia

Grab, the ride-hailing service that struck a deal to take Uber out of Southeast Asia, has announced that it has pulled in $2 billion in new capital as it seeks to go beyond ride-hailing to offer more on-demand services. The $2 billion figure includes a $1 billion investment from Toyota which was announced in June, […]

Grab, the ride-hailing service that struck a deal to take Uber out of Southeast Asia, has announced that it has pulled in $2 billion in new capital as it seeks to go beyond ride-hailing to offer more on-demand services.

The $2 billion figure includes a $1 billion investment from Toyota which was announced in June, and it sees a whole host of institutional investors join the Grab party. Some of those names include OppenheimerFunds, Ping An Capital, Mirae Asset — Naver Asia Growth Fund, Cinda Sino-Rock Investment Management Company, All-Stars Investment, Vulcan Capital, Lightspeed Venture Partners and Macquarie Capital.

Grab confirmed that the round is still open, so we can expect that it’ll add more investors and figures to this deal.

The deal values Grab at $11 billion post-money, which is the same as the $10 billion valuation it earned following the Toyota deal. The caliber of investors certainly suggests an IPO is on the cards soon — not that it ever hasn’t been — although the company didn’t comment directly on that when we asked.

This new financing takes Grab to $6 billion from investors. Some of its other notable backers include SoftBank and China’s Didi Chuxing, which both led a $2 billion round last year which gave Grab the gas to negotiate a deal with Uber that saw the U.S. ride-hailing giant exit Southeast Asia in exchange for a 27.5 percent stake in Grab. From that perspective, the deal was a win-win for both sides.

In this post-Uber world, Grab is transitioning to offer more services beyond just rides. It has long done so, with its own payment service and food deliveries, but it is rolling out a revamped “super app” design that no longer opens to a ride request page and that reflects the changing strategy of the Singapore-based company.

10 July 2018; Tan Hooi Ling, co-Founder, Grab, at a press conference during day one of RISE 2018 at the Hong Kong Convention and Exhibition Centre in Hong Kong. Photo by Stephen McCarthy / RISE via Sportsfile

Grab said in a statement today that this new money will go towards that “O2O” [offline-to-online] strategy that turns Grab’s app into a platform that allows traditional, offline services to tap the internet to reach new customers. The trend started out in China, with Alibaba and Tencent among those pushing O2O services, and Grab is determined to be that solution for Southeast Asia’s 650 million consumers.

Indonesia, Southeast Asia’s largest economy with a population of over 260 million, is a key focus for Grab, the company said. The company has been pushed out new financial services in the country, fueled by an acquisition last year, and it claims it is winning “significant market share” with GMV quadrupled in the first half of this year.

With Uber out of the picture, the company’s main rival for the ‘Southeast Asia Super App Crown’ is Go-Jek, the Indonesian on-demand service valued at $5 billion.

Go-Jek has long focused on its home market but this year it unveiled an ambitious plan to expand to three new markets. That kicked off yesterday with a launch in Vietnam, and the company has plans to arrive in Thailand and the Philippines before the end of the year.

Go-Jek has raised over $2 billion and it counts KKR, Warburg Pincus, Google and Chinese duo Tencent and Meituan among its backers.

Experian leads $28M investment in Southeast Asia fintech startup C88

Experian is making its first major bet on Southeast Asia and its population of over 650 million consumers after the financial credit giant backed Singapore-based C88 Financial Technologies, which operates financial marketplaces that help lenders reach new audiences. C88 today announced a $28 million Series C investment round that’s led by Experian with participation from a host […]

Experian is making its first major bet on Southeast Asia and its population of over 650 million consumers after the financial credit giant backed Singapore-based C88 Financial Technologies, which operates financial marketplaces that help lenders reach new audiences.

C88 today announced a $28 million Series C investment round that’s led by Experian with participation from a host of other backers that include Europe-based duo ResponsAbility Investments (Switzerland), DEG in Germany plus Korea’s InterVest, FengHe Fund Management, Pelago Capital and Fuchsia Venture Capital, the VC arm of Thai lender Muang Thai Life Assurance.

Early investors Monk’s Hill Ventures, Telstra Ventures, Kickstart Ventures and Kejora Ventures also took part in the round, which takes C88 to just over $45 million in capital raised.

The startup was founded in 2013 and it operates services in Indonesia and the Philippines — CekAja.com and eCompareMo.com, respectively — which have collectively served over 50 million customers through a mixture of smaller loans paid back over 6-18 months and longer installment-based plans that run from 18-32 months.

Following this investment, it plans to also open a business in Thailand — the support of Muang Thai is sure to help there — as part of its mission of opening consumer financing products up to consumers in Southeast Asia. More generally, the capital will go towards expansion, particularly around consumer marketing.

Working with, not disrupting, banks

Unlike some parts of the world, fintech challengers in Southeast Asia are working with the existing financial institutions to help them reach segments of the population that are not addressed today. Data is a huge part of that. In most parts of the region — excluding Singapore and perhaps Malaysia — few consumers are credit profiled. That makes a bank or lender’s job of assessing their suitability for a loan extremely challenging. Throw in that they are often seeking small- to mid-sized loans, and the potential value of the customer is likely lower than the resources that would be spent evaluating them.

The system is broken but the good news is that the advent of smartphones is bringing usable data to the fore. Southeast Asia counts over 300 million internet users and that’s growing at a rapid rate.

In just the past month, Indonesia-based Kredivo — which operates digital credit — and SME-focused Aspire Capital have raised significant capital using a data-driven similar thesis.

Instead of disruption, those companies, and C88, are guiding the banking industry into the previously unaddressable long-tail of customers by actively pre-verifying them and ascertaining not just whether they are eligible for financial products, but what kind and at what rate. Indeed, very often it isn’t that a person is a so-called ‘bad actor,’ it’s more the case that there isn’t sufficient data to prove that they are eligible for credit.

“Many times [banks and lenders] just can’t lend the cash out efficiently,” CEO JP Ellis told TechCrunch in an interview. “But that can change with the advent of digital-enabled societies, data and mechanisms to price on an individual basis. It’s all about partnering with [financial institutions] because they have so much capital on their balance sheet.”

C88 claims to work with over 90 banks, financial institutions and lenders. It effectively acts as the data pipeline, sorting through would-be credit applicants to assess their level of eligibility and the types of products best suited to them. That involves a mix of data, some structured some unstructured, and work with established firms like Experian, but it remains a challenge given the aforementioned lack of credit scoring. Indeed, Ellis estimates reach is as low as 20-30 percent of the population in Indonesia, for example — which is a big deal since it is the world’s four-largest country with a population of over 260 million.

With around 10 percent of applicants successful for credit products using traditional methods, Ellis said he wants to broaden access to capital which he believes can help build up Southeast Asia’s already-growing economies.

“We think of ourselves not as a comparison of products, but as a comparison of eligibility,” he added.

Cekaja.com is C88’s portal in Indonesia

New methods of scoring

That hits on a chord that’s noticeable across Southeast Asia: unlike other regions where credit and financial products seem rigid and almost unfriendly to consumers, the industry in Southeast Asia is working to be more relatable to consumers. At least in terms of the rhetoric, which includes smaller loans, flexible payment schedules and newer kinds of credit scoring.

Ellis said some of the methodologies come from China — where internet titans Alibaba and Tencent offer financial services that are based on factors like mobile payments and utility bill history — but he said that the region’s fintech movement in Southeast Asia is very much marching to its own beat.

In Indonesia, for example, one product C88 offers is with DBS, the region’s largest bank, and some of the eligibility data is related to operator Telkomsel, which has over 190 million customers.

C88 is also offering its own-branded policies in some cases, such as dengue fever insurance in the Philippines. That’s in partnership with an insurer on the backend. Ellis said the company only offers new products when it sees an unmet need in the market, it doesn’t intend to compete with what’s already on offer from the industry, which remains its key partner.

Beyond unsecured loans and insurance, the company is also dipping its toes into asset management, although the C88 CEO concedes that this market is smaller — in terms of sheer numbers, at least.

Experian eyes Asia deals

The deal marks the first major investment in Southeast Asia for Experian, the Dublin-headquartered firm valued at around £17.5 billion, or $23 billion, and listed in London. It signals a new role helping to develop startups in Asia coming as it does just under a year after Experian backed Bankbazaar with its maiden investment in India.

“Five or six years ago, we started to think about how we solve some bigger problems rather than just being a stoic software company,” Ben Elliott, who is managing director of Experian’s Asia Pacific business, told TechCrunch in an interview. “We’re looking at organizations that we think are either disruptive in the market where we have a role to play, or those that are building into something we think we can grow with.”

Singapore-based Elliott pointed that nearly one-quarter of Southeast Asians have access to a bank account, so new methods of reach are essential. He said that the C88 deal isn’t necessarily a path to acquisition for Experian. While he didn’t rule out the possibility in the future, he said that “the initial focus is to be a valuable investor and a good partner in the business.”

Ellis, the C88 CEO, believes there’s an opportunity to work very closely with the new investor beyond new credit scoring systems they are jointly cooking up.

“Many of our financial institutions already use Experian products, so we have the opportunity to really combine forces,” he said.

The cloud continues to grow in leaps and bounds, but it’s still AWS’s world

With the big cloud companies reporting recently, we can be sure of a couple of things: the market continues to expand rapidly and AWS is going to be hard to catch. Depending on whose numbers you look at, the market grew around 50 percent as it continues its unprecedented expansion. Let’s start with market leader, […]

With the big cloud companies reporting recently, we can be sure of a couple of things: the market continues to expand rapidly and AWS is going to be hard to catch. Depending on whose numbers you look at, the market grew around 50 percent as it continues its unprecedented expansion.

Let’s start with market leader, Amazon Web Services. Canalys has them with 31 percent of the market while Synergy Research puts them at 34 percent. That’s close enough to be considered a dead heat. As Synergy’s John Dinsdale points out, AWS is so dominant that in spite of mega growth numbers from other vendors, it is still bigger than the next four competitors combined, even after all these years.

Those competitors, by the way, are no slouches by any means. They include Microsoft, Google, IBM and Alibaba, so some pretty elite enterprise players. As we’ve noted in past analyses, one of the primary issues for all the competitors is how late they were to the market. They gave Amazon a massive head start, and they show no signs of ceding that lead any time soon.

 

Of course, AWS isn’t standing still either, it grew 48 percent last quarter by Canalys’ estimate, while Synergy has AWS marketshare up a tick to 34 percent.

Interestingly, Synergy finds this overall competitor growth did not cut into Amazon’s marketshare at all, but was the result of continued growth in the marketplace, as companies continue to shift workloads to the cloud. “The rapid growth of Microsoft, Google and Alibaba sees them all increase their market shares too, but it is not at the expense of AWS,” Synergy’s John Dinsdale pointed out in a statement.

Microsoft and Google still growing fast

That is not to say that Microsoft and Google are not growing too. In fact, Canalys had Microsoft growing at an 89 percent clip last quarter while Google grew an amazing 108 percent. It’s always important to point out that it’s easier to grow from a small number to a bigger number than it is to grow from a big number to a bigger number. Yet AWS continues to defy that idea and grow anyway, although not quite at the rate of its competitors.

Synergy reports these marketshare percentages for the competitors: Microsoft 14 percent, IBM 8 percent, Google 6 percent and Alibaba 4 percent, while Canalys shows Microsoft with 18 percent and Google with 8 percent. It did not report on IBM or Alibaba.

 

While these growth numbers have to drop at some point, they could continue to grow for the next several years as large companies get more comfortable with the cloud and move increasing percentages of their workloads.

Of course, even then it’s not a zero sum game. As we see increasing use of data-intensive workloads involving internet of things, blockchain and artificial intelligence, it’s entirely possible that the market will continue to grow even with fewer workloads moving from private data centers.

For now, even with their eye-popping growth numbers, the competition continues to chase AWS. Even as these companies find ways to differentiate themselves with different approaches, offerings and services, the market dynamics are hardening and catching AWS seems less and less likely.

It also seems increasingly less likely that some small upstart can come in and undermine the top players, as it just takes too much investment to keep up with them and their scale. “In a large and strategically vital market that is growing at exceptional rates, [the market leaders] are throwing the gauntlet down to their smaller competitors by continuing to invest enormous amounts in their data center infrastructure and operations. Their increased market share is clear evidence that their strategies are working,” Synergy’s Dinsdale said a statement.

What the competitors need to do now is continue to focus on customer requirements and what they can offer in terms of price and service to continue to take advantage of their own unique strengths. There’s plenty of room in this space for everyone to thrive, but some will thrive more than others. That’s just the nature of the market.