• Asian businesses are at an advantage over tech giants.
• Local protectionism and unsuitable offerings from the West.
• Localised knowledge and specific offerings are key.

As technology companies expand globally, they are increasingly finding that homogeneous offerings are not as attractive to potential customers as their success in the past and elsewhere might have suggested.

Based largely in the West, entities like Apple, Google, Stripe, Mastercard and Visa struggle to achieve the market penetration that they have become accustomed to. This is particularly true in emerging markets in South America, the Indian subcontinent and some areas of the APAC region.

Although there are similarities between the burgeoning middle classes in countries as disparate as Brazil and Pakistan, for example, companies are learning that desired solutions for each geography turn out to be very different. In large countries like India, internal regional differences mean that vendors of technology and digital financial products have to tailor their offerings more than in the more homogeneous North America and Europe.

Asian businesses have opportunities in fintech

One might expect organisations with global reach from the finance sector would find the going easier, given that money and trade are ubiquitous. However, attitudes vary greatly among businesses and consumers on the ground, among what Google once termed the NBU – the next billion users. The day-to-day activities and cultures in emerging markets differ widely, with each area presenting unique challenges that simply can’t be solved without significant granularity. And the ensuing variation in product requirements removes the economies of scale on which the financial and technology sectors rely.

That opens the way for Asian businesses local to the area to adopt some of the more successful approaches of Western and Chinese companies, but address their relatively limited audience with offerings that fit local needs and problems. Smaller companies like KhataBook and OKCredit, Jio, and GoJek have succeeded where Mastercard and Deutsche Telekom have failed, for example.

The Chinese model of Asian businesses

The examples of success presented by Chinese global entities like Tencent and WeChat are more difficult to pin down due to the intermingling of the state and the private sector in that country – it’s an economic model that has no parallel anywhere else. But it is worth noting that 40% of China’s GDP is created without direct government involvement, giving rise to one of the most dynamic aspiring middle classes in the world. Big companies like Tencent succeed despite, not because of, government involvement.

Outside companies have not been given unfettered access to the Chinese market, and the intermingling of business, commerce, finance, and citizenship has found its home in centralised multi-purpose apps that remain unique to China. (Although Elon Musk’s X has aspirations to be the West’s de facto version.)

Companies entering emerging markets from outside will usually find resistance at the state level for their offerings because governments not only want to retain control of their financial systems but are also rightly unwilling to see valuable tax income lost to the bookkeeping genius of big multinational companies. One only has to look at the amounts of tax paid across Europe by American tech giants to realise that developing nations governments’ fears are well-founded. Better for local companies, subject to local laws and taxes, to digitise their compatriots than for another Starbucks to monetise and spirit its tax dollars overseas.

While big tech’s appetite for profits and shareholder dividends continues, companies based in the US’s West Coast and European capitals may have to settle for margins that are thinner than they might expect if they have set their sites on new markets. This is due to the need for a granularity of offerings as diverse as the territories they wish to operate in. With the implicit backing of state governments in developing territories, domestic companies and innovative startups are at an advantage on several levels.