new opportunity

As populations all over the world buckle down into a new era of social distancing and community quarantine ushered in by the COVID-19 pandemic, a huge boost has been given to the development of digital landscapes and solutions as countries learn to adapt to the new normal.

While there are widespread uncertainty and anxiety over what the future will look like in a post-pandemic world, one thing is for sure – technology is as important as ever.

The need for widespread adoption of technologies is all the more pertinent in emerging regions such as Southeast Asia and Latin America, where significant population segments still struggle to gain access to basic digital resources.

However, this pandemic-fuelled push towards digital evolution has encouraged innovators and businesses across these regions to step up, paving the way for the development of more effective solutions and deeper cooperation across nations to combat the spread of COVID-19.

Southeast Asia: Staying ahead of the game

In a region that is embracing its digital transformation, Southeast Asia has made huge progress in terms of digitalising its societies even before the onset of the pandemic. The region saw a rapid growth in its internet penetration rate, from 25 per cent in 2014 to 63 per cent in 2019.

Part of this growth involved countries such as Indonesia, Thailand, and Singapore leading the way in terms of e-commerce, mobile banking, and ride-hailing.

Also Read: “Latin American startup ecosystem is 10-12 years behind India”

When news of the widespread contagion of a novel coronavirus originating in Wuhan, China, first broke out in Southeast Asia, the region was relatively quick to implement strict measures to curb the spread. Governments and businesses had to quickly find ways to cope with the new restrictions, and this often meant turning to technology.

Businesses, decision-makers, and innovators across the region positioned themselves at the forefront of developing tech solutions to help their societies cope with the shifting demands brought about by the pandemic.

From telemedicine to e-commerce, Southeast Asia has been strengthening its existing tech infrastructure while rapidly developing new solutions to stay ahead. In Singapore, telemedicine platforms have continually evolved to meet the spike in demand, having seen at least five times more sign-ups during the pandemic.

In Vietnam, the health ministry worked closely with tech companies to develop an online reporting system and database for suspected and confirmed cases of COVID-19 as well as people who were in close contact with such cases.

Banks and financial institutions across Malaysia, Thailand, Indonesia, and the Philippines have also been rapidly moving towards going fully digital.

Latin America: Embracing solutions

When the pandemic first hit the shores of Latin America, governments across the region were swift to implement some of the most stringent measures to minimise the spread.

However, with its high internet penetration rates and large mobile-minded middle class, the region is prime for embracing and adopting tech solutions to adapt to the new way of life.

Also Read: BlaBlaCar raises US$200M to expand in Asia, Latin America

With an internet penetration rate of close to 70 per cent, Latin America is positioned way ahead of the world’s total percentage that stands at 58.8 per cent. The region also forms some of the world’s largest markets for social media, and countries such as Mexico and Brazil have been dominating sectors such as e-commerce and ride-hailing.

While the statistics seem promising, Latin America continues to struggle with low levels of entrepreneurship that is largely necessity-based. The growing demand for digital solutions in light of the COVID-19 pandemic, combined with the lack of resources and innovation to meet it, creates a huge potential for solutions from without the region to play a part in enhancing the well-being of Latin American society.

Paving the way for a partnership

While Southeast Asia might be moving full steam ahead with its evolving digital landscape, it is not enough for its developments to be confined to the region alone. COVID-19 does not discriminate, and the only way to successfully combat the virus is for the world to do it together.

Knowledge-sharing is now more important than ever, and Latin America, in particular, has much to gain from the technological know-how of Southeast Asia.

While Latin America and Southeast Asia appear to be vastly different at first glance, being separated by geography, language, and culture, the two emerging economies have more similarities in common than meets the eye. The similar population sizes, economic realities, and rapid increase in internet penetration rates underscore the adaptability of digital solutions across both regions.

In addition, both economies have much to gain from deeper cooperation. Southeast Asia possesses the technological capabilities and know-how that Latin America is ready to embrace, while Latin America serves as a largely untapped market that can provide raw materials and human capital to fuel the growth of Southeast Asian businesses.

Also Read: BlaBlaCar raises US$200M to expand in Asia, Latin America

While the pandemic intensifies the already existing logistical and operational challenges to enhanced cooperation between the two regions, governments and businesses need to take a step back and assess the bigger picture. Without mutual cooperation and knowledge-sharing of critical information and digital solutions, it would be impossible to fight a virus that pays no respect to borders.

As the pandemic continues to push for a convergence of interests between the two regions, it is prime time for Southeast Asian tech companies to turn their heads towards Latin America and explore viable strategies to navigate the political, economic, and social elements of expanding to the market. One such viable strategy is a concept known as soft-landing.

Soft-landing as a strategy for business expansion

Expansion to distant and untapped markets is often accompanied by a host of risk factors and obstacles. Soft-landing is a concept that aims to minimise these risks by supporting a controlled launch with limited resources and connecting the company to a network of local stakeholders.

The soft-landing process is best led by soft-landing facilitators, whose role is to help companies scale in far-flung and foreign markets.

The main characteristic of soft-landing facilitators is that they understand how to scale in new markets given the information asymmetry. Soft-landing facilitators offer a broad knowledge of the socio-political, regulatory, and financial contexts of a market.

They provide key tools such as talent acquisition and network and business alliances to support processes such as customer acquisition and the tropicalisation of strategies.

Some significant benefits of business deployment through soft-landing include:

Cost reduction: Normally, costs of entry to other markets can be significant and exceed business budgets. Having reliable information and the support of locals can avoid cost overrun.

Time to market: The time it takes for each company to position itself within a new market will depend on the level of preparation it has and the knowledge of the entry barriers into the new market.

The soft-landing facilitator has local resources that accelerate the operational, commercial, and legal establishment, providing access to strategic information, decision-maker contact networks, and talent.

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Cultural adaptation: The cultural and business practices in each market determine the way of doing business. Language, communication peculiarities, and specific local knowledge within each country are keys for a successful landing into a new ecosystem.

Deployment and reputation: Having a well-reputed local facilitator vouching for the new entrant is crucial when it comes to accessing institutions, local businesses, and potential customers. This is why having local professional teams becomes critical for business development and facilitates integration from the beginning.

Prime time for soft-landing

As Latin America trails behind Southeast Asia both in terms of the arrival of the virus and reacting to it, there is a huge opportunity to learn from experience and embrace suitable solutions for its own societies.

It is also prime time for Southeast Asian tech companies to capitalise on the opportunities for expansion and knowledge sharing amidst this pandemic and contribute to the uplifting of communities and the global fight against COVID-19.

Several Asian startups have already taken the leap and are actively seeking to expand and share their solutions with the Latin American market. DiMuto, a Singapore-based agri-food trade tech solutions platform, has been making headway in the region’s strong agricultural sector by driving the digitalisation of supply chains.

Talkpush, a Hong Kong-based recruitment platform, has also been on the path of expansion in Latin America as the demand for digital recruitment solutions amidst COVID-19 continues to increase.

The concept of soft-landing provides a viable strategy that can help first-time business ventures navigate the complexities and intricacies of the Latin American market. Soft-landing facilitators are well-positioned at the forefront to promote deeper cooperation between these two emerging economies and take their growth to greater heights.

Internationalise your business and expand your network

Latin Leap is looking to partner with promising tech scale-ups that are ready to embrace the vibrant Latin American market, as well as fellow investors and venture capital studios that want to play a part in growing the economies of Southeast Asia and Latin America.

Whether you are a tech company seeking to internationalise in the Latin American region, or a venture capital firm looking to expand your network and portfolio of companies, we would love to hear from you. For more information on Latin Leap, visit our website at https://latinleap.vc/.

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