Tencent, China’s largest social media and gaming company, has picked Singapore as its beachhead for Asia, joining rivals Alibaba and ByteDance in setting up a Southeast Asia hub.
The decision has come after setbacks in the USA and India where products and companies from China are being banned from doing business.
According to people familiar with the matter, management at Tencent had reportedly been discussing Singapore as a potential regional hub and shifting business operations like international game publishing outside of China after geopolitical tensions accelerated their plans.
Tencent said in a statement that it will open a new Singapore office, in addition to their current ones in Malaysia, Indonesia and Thailand to support their growing business in Southeast Asia and beyond.
The tech giant is recruiting for various positions, including tech and business development, cross-border commerce, cloud computing and e-sports.
Political tensions causing technical difficulties
Tencent’s decision to expand in Southeast Asia comes in the face of US President Donald Trump imposing bans on American companies dealing with Tencent’s super-app WeChat from September 20, much like the ban on TikTok in the country.
Meanwhile, in India, Tencent’s hit games PUBG Mobile and Arena of Valor were banned in India, leading to PUBG Corporation cutting ties with Tencent in India.
But Tencent is not alone in this predicament.
Rising border tensions has prompted the Indian government to ban 118 Chinese apps, including top social media platforms and applications like Helo, Alipay, and Baidu due to security concerns. Many of these apps are operated by the largest Chinese internet companies like Tencent, ByteDance and Ant Financial.
Across the Pacific, the White House has led a campaign against Chinese technology giants from Huawei to ByteDance, alleging that these companies are collecting American user data for Beijing, a claim several firms have denied.
China’s tech behemoths are increasingly turning to Southeast Asia, with its 650 million increasingly smartphone-savvy population, in the face of growing hostility from the US and other major markets.
Singapore is particularly attractive as a regional base for tech companies across the world, with its advanced financial system, low tax, sophisticated digital infrastructure and highly educated workforce.
Amidst rising tensions between the economic powerhouses of the USA and China, Singapore has sought to remain neutral, with Prime Minister Lee Hsien Loong pledging last year to remain “good friends” with both countries.
For Tencent, this venture into Southeast Asia will be a slightly newer experience, as the dominant entertainment provider has largely run its operations out of Shenzhen, though it does store some user data in Singapore.
Tencent also announced a new digitalisation strategy to boost economic recovery in the post-pandemic era, which could be brought with it to Singapore.
“We will become a ‘digital assistant’ that facilitates a transformation and upgrade for all industries and walks of life. Together we can build an open, innovative and secure ecosystem,” said Pony Ma, the Chairman and CEO of Tencent.
Tencent will invest US$1.4 billion (RMB10 billion) to assist SMEs and provide them with 100 Software-as-a-Service solutions as well as 100 training courses by collaborating with 100 partners to tailor the solutions for each enterprise customer.
“Industries that embrace digitalisation will develop and evolve into mutually beneficial ecosystems,” said Dowson Tong, the Senior Executive Vice President of Tencent and President of the Cloud and Smart Industries Group.
As for Tencent’s competitors, ByteDance, the owner of TikTok, was said to be planning to invest billions of dollars and recruit hundreds in Singapore as part of its global expansion strategy. It has also applied for a digital banking license from the city-state’s central bank, alongside Alibaba-backed Ant Group and Tencent-backed Sea Ltd.
Chinese tech giant, Alibaba, has also made significant investments in Singapore by taking full control of local e-commerce platform Lazada for US$4 billion, buying half of Singapore’s AXA Tower for US$1.2 billion, and just this week, Bloomberg reported that the tech giant is looking to invest US$3 billion in Singapore’s ride-hailing giant, Grab.
With the city-state seeing an influx of foreign investments from tech companies in recent years, it appears that Singapore’s approach has served the nation’s interests well.
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