In 2024, has the upper limit of going global to Southeast Asia not yet emerged?

Text | Liu Yujie

This year marks a year of widespread expansion for emerging markets in going global. Between the peaking bonus of the European and American markets and the infrastructure-building opportunities in Africa, venturing into Southeast Asia and Latin America has become a timely path for Chinese enterprises to discover new business opportunities.

Among them, the Southeast Asian market not only shows a growing trend in the e-commerce and new consumption sectors, but also a crucial factor: Amidst the fierce competition among various platforms, brands and sellers can more intuitively identify the market leaders who can provide them with long-term, stable, and sustainable value. As a result, Southeast Asia has become one of the most friendly markets for cross-border sellers in the current wave of globalization.

Just in the past two weeks, during the 11.11 shopping festival of the leading e-commerce platform Shopee in Southeast Asia, Chinese products have witnessed another wave of enthusiasm: According to relevant data from Shopee, in the year-end e-commerce event where 11 million items were sold within the first 2 minutes, the order volume of newly entered cross-border sellers increased tenfold compared to usual days.

"Going global has already become a mainstream trend among Chinese enterprises. Whether in production, manufacturing, or cultural branding, after the rapid consumption upgrade in the past two to three decades, they now must undergo another transformation to go global. And when enterprises choose to go global, Southeast Asian e-commerce often serves as an important springboard," Liu Jianghong, General Manager of Shopee's Cross-border Business, told 36Kr.

01. Is Southeast Asia Still the Starting Point for Going Global?

Undoubtedly, for Chinese enterprises, Southeast Asia remains a fertile land like a shining pearl. From geographical and cultural proximity to the increasingly mature supply chain system and cross-border services, the scattered yet closely connected Southeast Asia is like a "beginner's village" for Chinese enterprises going global, welcoming the Chinese influence with a stable, friendly, low-cost, and low-risk attitude.

Especially this year, going global has become an inevitable path for domestic enterprises. The increasingly "sinicized" cross-border e-commerce has occupied a unique position in the consumption revolution in Southeast Asia. Based on the advantages of the rapid rise of the supply chain, cross-border e-commerce has become the only choice for various industries to find a second growth curve.

Whether as a landing point or to pave the way for the next step of global layout, Southeast Asia is the starting point for most Chinese cross-border e-commerce sellers. Although going global to Southeast Asia is no longer a novelty, in the consumption data disclosed by Shopee, a large number of emerging cross-border sellers have still reaped sweet fruits.

Then, why is the demand of Chinese cross-border sellers for the Southeast Asian market still growing?

First, the traffic dividend in most platforms and retail categories in Southeast Asia has not yet peaked, and the customer acquisition cost is relatively low, leaving ample space for business opportunities. According to Shopee's disclosure, the content ecosystem such as live-streaming e-commerce and short videos has become a major driver of this year's shopping festival. Under this trend, the live-streaming traffic of cross-border brands such as INTO YOU has increased by 20 times.

Second, compared to other major markets, the e-commerce platforms in Southeast Asia are more competitive and better understand the changing needs of Chinese sellers. In the past few years, logistics companies and e-commerce platforms have been fiercely competing in logistics and services in Southeast Asia. With significant investments in logistics hubs and warehousing networks, they have provided sufficient ecological support such as service commitments, making sellers and consumers the direct beneficiaries. Moreover, the possibility of diversified going global supported by the logistics infrastructure capacity is urgently needed by Chinese enterprises nowadays.

"2024 can be said to be an explosive period for content e-commerce in Southeast Asia. After a long period of technical preparation and market education, we have witnessed the great acceptance of live-streaming e-commerce and short videos by consumers this year." Not only the geometrically increasing data on the platform, but also the changes on the streets and lanes indicate that new channels have been opened. The "e-commerce revolution" in the Southeast Asian market is particularly evident.

Liu Jianghong said that both cross-border sellers and the e-commerce platform itself are on an expanding path. Since joining Shopee, he has noticed a significant change: Chinese foreign trade and the supply chain are no longer simply "finding products suitable for Southeast Asia from within China", but have begun to actively embrace going global collectively.

However, while the demand is growing, the difficulty of meeting the demand is also increasing.

"Since this year, it has become difficult to establish a foothold in Southeast Asia by simply operating e-commerce from a single dimension," Liu Jianghong said frankly. Nowadays, the going global needs of Chinese enterprises are based on traffic, but not limited to the traffic of e-commerce platforms. Instead, they need to penetrate and influence consumer decisions through omni-channel and diversified services to gain a place for their brands.

This is why, although Shopee has accumulated a unique local advantage in traffic acquisition and operation in the past Internet business, it still needs to compete in the "sharp knife" of logistics services. It is understood that currently, Shopee's cross-border logistics has covered hundreds of airline routes and flights, more than 40 overseas airports, and is continuously optimizing the local infrastructure construction in Southeast Asia. It has established overseas warehouses in Thailand, the Philippines, Malaysia, and other places to deepen the local fulfillment capabilities. Data shows that Shopee added hundreds of first/last-mile hubs last year alone, and its local self-owned logistics SPX Express covers more than 90% of the area.

Whether it is cross-border sellers or consumers, the fundamental trust in the platform lies in the radiation range, speed, and stability of its services. According to the data from the "2024 Southeast Asian E-commerce Report" by Momentum Works, last year, Shopee ranked first among e-commerce platforms in Southeast Asia with a 48% market share. Undoubtedly, Shopee has become one of the important channel indicators for Chinese cross-border sellers to evaluate their going global results.

02. Focusing on Localization, What Else to Compete For?

Doing globalization is doing localization, which is one of the few "truths" in this era of going global.

Among the emerging cross-border brands that have shone on Shopee, POP MART, a brand that started as an e-commerce business, has a strong cultural IP attribute, and its products may not seem so "localized", but it has opened up a broader thinking for consumer goods to go global.

On the day of the 11.11 shopping festival, POP MART achieved a tens-fold increase in order volume through a combination of live-streaming marketing with Thai KOLs and precise advertising placement. In the third quarter of this year, POP MART's overseas market income growth exceeded 440%, and it was snapped up in Thailand, demonstrating the huge potential of high-cultural-added-value products to go global.

In addition to the explosive growth of e-commerce traffic through IP going global, Liu Jianghong also observed that more and more domestic consumer goods that were not previously involved in foreign trade are actively matching the market through the supply chain convenience provided by Shopee. And pure factory-type sellers are more skilled than before in collaborating with the platform to reduce operational links and leverage their strengths.

These three directions are also the three demands of Chinese enterprises going global to Southeast Asia at present. They all point to a trend: The connection between the production end and the consumption end is becoming more closely and directly.

Data from Bain & Company shows that the GMV of Southeast Asian e-commerce is expected to reach 211 billion by 2025, with a three-year compound growth rate of 17%, which is similar to the path of China's e-commerce rise. And the success of POP MART in going global without much product modification for localization also lies in grasping the essence of e-commerce marketing: It is not to blindly cater to the existing preferences in localization, but to demonstrate its own innovation and advantages through local understanding.

In fact, on the digital side and in the consumer mindset, many rules and logics of different markets are common. With the experience of Chinese e-commerce sellers, it is entirely possible to stand out. But the real value depression and differentiated advantages are more reflected in how to use the platform's layout to create an experience that reduces the decision-making cost for consumers in the long term.

Adhering to this principle, Shopee has also gradually enriched the shelf ecosystem, expanded flexible logistics services that can penetrate consumer needs from a detailed perspective, as well as localized payment, etc.

Liu Jianghong said that his past service belief was to put himself in the shoes of consumers and become a demanding user. But in practice, he found this not easy: There is a gap between himself, sellers, and consumers.

A most practical case comes from the mountainous areas in Vietnam and the islanders in the Philippines. These consumers face obvious difficulties in e-commerce consumption, as in these areas, they may only be able to receive express delivery once a week, and if they want to return goods, they can only wait for that one time. Shopee will not turn a blind eye to such consumers in these special areas, but choose to solve the problem by applying specific policies to specific scenarios.

Another example is during the epidemic, in some areas in Southeast Asia that rely heavily on cash payments, consumers encountered consumption problems because they could not withdraw money from the bank. Shopee also seized the opportunity to go door-to-door to help consumers open electronic payment accounts.

Most of these specific scenarios benefit from being closer to consumers in practice. The platform consciously eliminates the information gap with merchants and consumers, and this is also what Chinese sellers need to do. Understanding consumers is a solid step to help Chinese sellers expand their business overseas.

The long-term value of improving the logistics and payment system is to help sellers reduce the screening and construction costs and enhance the price competitiveness from the perspective of scale efficiency. Only when cross-border sellers do not need to build the logistics by themselves can they devote more energy to omni-channel marketing and content ecosystem gameplay that are familiar to domestic e-commerce.

In the next step, Shopee will continue to focus on the speed of logistics based on a diversified supply chain solution, making local fulfillment services such as "ultra-fast delivery" and "next-day delivery" more popular. At the same time, Shopee is also encouraging sellers to build more overseas warehouses, prepare goods in advance for overseas markets, and cooperate with festival promotions to improve the conversion rate.

Thus, in the future, the advantage of local experience will become the key to the growth of cross-border e-commerce for Chinese enterprises.

03. From Extensive Operation to High-Quality Going Global

Another core competitiveness of cross-border going global lies in people and teams.

Shopee's own growth model is to be founded in Singapore, and whenever it enters a new market, it will form a new local team and cultivate local talents to stabilize its leading position with a faster market understanding and marketing strategies.

It is worth learning that such a team strategy can lead to a considerable market expansion speed and local experience. Therefore, Shopee is always able to explore the ecological partners related to traffic, logistics, and channels one step ahead of Chinese sellers, laying the foundation for the diversified going global in the era of live-streaming e-commerce and interest-based e-commerce.

In fact, as the era of extensive operation officially ends, the needs of consumers and sellers are becoming more diverse, and e-commerce platforms have long taken on the responsibility of helping cross-border sellers reduce the learning threshold. If traditional e-commerce platforms are just channels and intermediaries that charge commissions, today's e-commerce platforms pay more attention to the quality and growth effect of ecological sellers themselves. Therefore, the ultimate goal of serving consumers well is also to solve the difficulties behind cross-border sellers and push going global enterprises forward.

Every year, Shopee will actively arrange for Chinese cross-border sellers and brands to go to overseas markets and communicate with consumers face-to-face, helping them gain key insights from local first-hand information and thereby polishing their marketing plans.

"In fact, many Chinese enterprises have also felt the efficiency of our cooperation in this process. Because we need to go to where consumers really gather and ask them questions, rather than communicating in a high-end office with barriers," Liu Jianghong said.

Local understanding is the core, and traffic is another "fuel". Shopee has formulated a rich and intensive annual shopping festival schedule in various markets according to local customs. During the 99 Shopping Festival this year, Shopee data showed that the local fulfillment order volume increased by 11 times within the first 2 hours, and the strong cross-border categories even rose to 15 times of the usual days. Just two months later, the 11.11 shopping festival saw an even more astonishing growth curve. At the end of the year, Shopee will also launch the 12.12 Birthday Shopping Festival.

Although a larger traffic pool and GMV scale inevitably mean that the era of fierce competition and product homogeneity in Southeast Asian cross-border e-commerce, like in China, will eventually come, competition itself is not a resistance to high-quality going global.

"For a business, whether it is regional or global, if after two or three years you find that there are no competitors, it is best to consider whether to continue. If you find the track too crowded, at least it proves one thing: You have not chosen the wrong path."

Liu Jianghong believes that fierce competition is rather a positive signal, and what needs to be done is to firmly avoid standing still.

Next, Shopee also plans to replicate the gameplay of local team building and the traffic strategy at the demand end to more scenarios and markets, leading cross-border sellers to go global from point to area.

"The anxiety of competition definitely exists, but anxiety should not be the end of the emotion, but the beginning."

No matter how the diversified consumption environment and e-commerce forms change, only by actively participating with a firm choice, a stable mindset, and a meticulous and efficient operational approach can Chinese sellers achieve high-quality going global and remain "invincible".