Trade tensions and the current COVID-19 pandemic are disrupting lives and economies globally. In this new world, where adaptation and adoption are crucial to business sustainability, startups could be the catalysts to restart promising economies like Asia.
To better understand the current landscape and opportunities for startups in Asia, our Next Step participants heard from various sector leaders over a virtual fireside chat. Pang Mei Yee (DHL), Jonas Trindler (Zühlke), Tiago Coelho (Takenaka), and Agnes Foo (UOB) were joined by Sebastian Zeitler (Singapore German Chamber of Commerce) to comment on the global shifts, business impacts, digitalization, and opportunities for startups in Asia. Here are some key takeaways from the session:
Trade tensions and COVID-19 are pushing companies towards digitalization
Mei Yee: In the logistics industry, we’ve seen huge customer disruption due to the elimination of passenger flights. Supply chain flexibility has become essential to overcome this hurdle. Businesses with design flexibility have an advantage over those who restricted supply chains to drive down costs. Decisions based on data and knowledge rather than gut feel are now more crucial than ever. This global situation has also made us rethink immediate and long-term strategies to better serve customers during such uncertain scenarios.
Jonas: In the business innovation space, the current disruption has actually underlined our business model, which emphasizes on digitalization. We’ve often got pushbacks when pitching digital transformation to prospects. But in the current climate, companies now see an immediate need for incorporating digital transformation into their short- and long-term planning.
Tiago: In the construction industry, the pandemic situation in Singapore and the heavy reliance on foreign workers have resulted in critical project delays. Such delays combined with trade tensions have significantly increased overall construction costs, compelling us to find ways to increase productivity to sustain business operations. While general contractors themselves don’t have the resources to innovate in this space, digitalization and new technology adoption could help solve some of their challenges and improve productivity.
Asia stands to gain from the digitalization push
Jonas: With or without the pandemic, large sums of private and government investment and nationwide efforts have put digitalization at the forefront of many Asian countries. In contrast, Europe has an entirely different approach to digitalization due to its heavy regulations. Thus, Asia’s market- and consumer-driven approach is helping increase its digital importance in the upcoming years.
Tiago: In the construction industry, where projects are labor-intensive and decision-making processes are slow, the pandemic has accelerated the need for digital disruption. While ASEAN countries are at different stages of economic, development, and digital adoption, they are all looking at technology adoption to increase construction productivity. The region is doing well by rapidly developing societies with a high level of skills to create cutting-edge solutions that will slowly evolve our industry.
Agnes: Southeast Asia will always be an attractive region for tech investors, and these numbers are proof; Vertex Ventures raised $230 million, and Insignia raised $200 million for their region funds last year. Such venture funds are agnostic to economic downturns as they believe in the region’s potential as an emerging market. They will continue to focus on Asia in the long run due to the large-scale digitalization efforts.
Opening a world of opportunity for startups
Mei Yee: Currently, when procurement processes need overhauling, startups that can fine-tune business solutions and scale up fast regionally stand to gain. A startup’s agility and ability to co-create tailored solutions for clients makes it a great collaborator with corporates.
Tiago: Due to the large number of parties involved in a single construction project and varying levels of technology integration across companies, it takes a long time to implement and adopt technology. This laggard approach, combined with additional challenges brought about by trade tensions and the COVID-19 situation, provide tech startups an excellent opportunity to solve productivity problems across the industry.