ASEAN Property Giants Buy Insurance Against Digital Disruption
The hard part is to create your product that would attract the critical mass of users to make it a success
Guest Post - 11 June 2016
We live in a digitally disrupted world where the best business ideas coupled with great execution can reorder the existing world order. If you need some convincing, think of what is happening to the hotel industry. It used to have that you have to develop a piece of land before you can rent out your rooms on a daily and large scale basis.
Today, anyone that has a spare room can form their own boutique hotel with AirBnB. AirBnB disrupted the traditional hotel industry and forced them to lower their rents and improve their services to compete with the sudden supply of short stay hotel rooms.
For the past decade, established companies had been ambushed by technology startups that dared to be different. At the mid point of this decade, we are seeing a reversal of trends. There is a saying, ‘If you can’t beat them, join them.’
The success AirBnBs, Ubers and Lazadas of the world had proven that technology startups provide a strong formula for success. This is provided that you can find the right startup. In Singapore, Temasek linked companies are partnering with Microsoft to find the next startup that would shine in this disruptive environment.
If these technology start-ups can prove themselves to be worthy of creating the next disruption, established companies such as Ascendas and Capitaland would invest in them. So instead of having to raise funds with business loans, these startups can give out equity instead.
Capitaland is the largest listed developer in Southeast Asia with properties in Indonesia, Singapore, Vietnam and Malaysia. It had also developed a significant presence in China. While Capitaland is more focused on malls and residential areas, Ascendas is in the business of developing entire townships, industrial parks and mixed used developments with its Singbridge partnership. It has a presence in 29 Asian cities with private funds focused on ASEAN, Korea, China, and India.
Beside the financing advantage, startups can also access the network and mentorship of these successful competitors. They wouldn’t have to employ SEO consultants to rank them highly on Google to be noticed by their clients or future investors. These companies can be their clients and investors. In addition, they can vouch for the successful startups, which can lend them more clients and investors.
If you think of it, this is a win-win situation where both the startups and established companies. If these startups were to disrupt their industry, they know who to buy over wholesale.
After all, it is relatively easy to engage a web developer to create your web presence. The hard part is to create your product that would attract the critical mass of users to make it a success. The startup would do the heavy lifting and the established companies reap the benefits and insure themselves against digital disruption.
- Disclosure: This article is contributed by Ong Kai Kiat. He is a professional freelance writer who enjoys the process of discovering and collating new trends and insights for an article. He adds value to society through his articles especially those related to finance and technology. He is reachable at email@example.com