Meituan-Dianping, China’s largest provider of on-demand services, is the latest firm from the country to have its interest piqued by Indonesia’s growing e-commerce market.
The Chinese firm is learnt to be exploring all options, including picking up a stake in one of Indonesia’s leading e-commerce firms, according to two people aware of the development.
In response to an email query, Meituan-Dianping said it does not have any news to share regarding its Indonesia plans.
Meituan-Dianping, which was valued at $18 billion following its 2016 funding round in which Tencent was a returning investor, would be joining China’s largest e-commerce firm Alibaba and its arch rival JD.com by making a foray into the archipelago’s buzzing e-commerce market.
This portal reported last week that Alibaba Group is in talks to pick up a stake in one of Indonesia’s largest online retailers, PT Tokopedia. The Chinese firm is learnt to be in discussions to lead a funding round that could be worth up to $500 million.
Alibaba’s rival JD.com was earlier reported to be in talks to invest hundreds of millions of dollars in Tokopedia. The latest development indicates JD.com is now out of the equation.
Alibaba is already an investor in Singapore-based Lazada Group SA, which has operations in Indonesia, apart from Malaysia, Singapore, Thailand, the Philippines and Vietnam. Last month, the Chinese firm invested an additional $1 billion in the online retailer to increase its stake to 83 per cent.
JD.com is not far behind. It is investing in setting up warehouses and a delivery network to overcome the infrastructural challenges that Indonesia poses as a developing economy. It was also one of the investors who recently infused $500 million in Indonesia’s largest online e-commerce firm, Traveloka.
In June, Blibli.com, an Indonesian e-commerce site backed by GDP Venture, acquired 100 per cent stake in online travel agent Tiket.com.
The flurry of deal activity is reflective of the potential that Indonesia, with its population of 261 million and a rapidly growing middle class, presents. Outside of China and India, it is the hottest e-commerce market in Asia.
According to Macquarie Research, Indonesia’s e-commerce market is expected to grow to $65 billion by 2020 from just $8 billion now. It helps that the country’s investment service agency recently allowed 100 per cent foreign ownership in e-commerce companies for investments above 100 billion Indonesian rupiah ($7.53 million).
With more than 600 million consumers, an expanding middle class and rising mobile internet usage, Southeast Asia has emerged as a new e-commerce and consumer internet battleground for China’s corporate giants. In a bid to gain a significant head start over their rivals from the US and outperform each other, these companies have been leading mega funding rounds and forging new partnerships.
One of the reasons behind the growing consolidation in Southeast Asia’s e-commerce market is believed to be the anticipated entry of US e-commerce giant Amazon. The firm, which was reportedly going to make its foray earlier this year, seems to have delayed its plans for now.