SINGAPORE: eWTP Arabia Capital (eWTPA), a leading Saudi Arabia and China-based growth stage venture fund, shared their insights during the Singapore Investment Forum 2022, jointly organized by China Venture and DBS.
Themed “Dawn of a New Era”, the Singapore Investment Forum 2022 investigated extensively into the unique value proposition that Singapore and Southeast Asia offer. One of the crucial objectives of the event was to debunk the common belief of “the bigger, the better” and re-establish the fact that city-state has become a dominant driving force that cannot be ignored in the Asia-Pacific financial investment markets.
Mr. Jerry Li, Founding and Managing Partner of eWTPA, shared his experience on developing the MENA market over the past few years during a panel discussion with Mr. Calvin Cheng, Partner & Head of Greater China of EvolutionX Dept Capital, Mr. Yinglan Tan, Founding & Managing Partner of Insignia Ventures Partners, and Mr. Allen Zhu, Managing Partner of GSR Ventures.
The Pathway for Chinese Enterprises
The core value of eWTPA is to help Chinese entrepreneurs flourish under “the new normal world”, particularly in expanding their networks and business scope in emerging markets including the Southeast Asia and the MENA region. The investment strategy is mainly through private equities and M&A.
“Globalization has never been more important than today. To Chinese enterprises, globalization is an inevitable trend for their growth and development. However, most of them are not ready to embrace it,” said Mr. Li.
“For example, having been following the “Belt and Road” Initiatives for years, we found out that regions from Southeast Asia, South Asia to the Middle East all have different characteristics. Our strategy for business growth is often centered around exploring the way for economic growth and assisting the creation of new regional cooperation models.”
Following the “Belt and Road” path, eWTPA reached the Middle East. “I believe the Middle East has been underestimated. The characteristic of the Middle East is that the capital is relatively concentrated. We can rarely see start-ups that are able to solve sectoral issues of the Middle East, or meet investment targets. Thus, it is relatively suitable for sophisticated Chinese businesses to develop in the region. Therefore, we adopt a customized approach across the MENA region, through merger and acquisition, we help Chinese businesses integrate thoroughly with local resources,” commented Mr. Li.
Replicate the Successful Chinese Model
“We need a sense of time and space when it comes to “replications”. It can mean either replicating business models for a different region or utilizing the periodicity of development. When we try to replicate success in another region, we must think in terms of the local market. On localization, I would like to share two points – localizing your mode of thinking and the business scenarios,” Mr. Li continued.
“Localizing your vision requires profound understanding of the local market, including geopolitical relationships, economy, culture, etc. Businesses, especially internationalized ones, must take that into consideration, and stay away from simply replicating the same model.”
Sectors Suitable for MENA Expansion
Investors from the Middle East are interested in digital infrastructures amidst economic transformation, spanning enterprise services, cloud services, cyber security, fintech, cross-border supply chain, retail and consumer, e-commerce, logistics and digital entertainment.
Taking Saudi Arabia as an example, Saudi Arabia has a land area of 2.25 million km2 – almost one-fifth of China. The country has just begun their own version of “reform and opening-up” for less than five years, while its GDP has exceeded $100 billion. The GDP growth may exceed 10% very soon, whilst there had been no explosive growth from their own industries, and these additional money was related to petroleum. Therefore, Saudi Arabia has strong determination and will to transform their economic structure by importing related technologies.
In summary, eWTPA believes that Chinese companies, especially tech companies with high dependence on the Chinese market , are facing more uncertainty than ever. Thus, they need to diversify their market exposure to alleviate that risk. This could contribute as one of their internal motivations of going abroad.
“As China and the world stepping into “the new normal”, entrepreneurs must embrace globalization than otherwise. From the perspective of industrial structure, the development process will shift to exporting technologies and capitals. “Capital + Technology” is a “standard configuration” of developed countries,” Mr. Li concluded.
About eWTP Arabia Capital
eWTP Arabia Capital (“eWTPA”) is a growth stage venture fund based in Saudi Arabia and China backed by marquee investors – eWTP Capital and the sovereign wealth fund of Saudi Arabia, Public Investment Fund (PIF). eWTPA is focused on building a local digital ecosystem in MENA by partnering with market leading Chinese businesses and providing a gateway for these companies to establish a strong and sustainable presence in the region. eWTPA takes pride in its ability to offer comprehensive support to its portfolio companies, empowering them to explore and succeed in strategic markets across the MENA region.
Established in 2019, eWTPA is now the preferred partner for Chinese technology giants seeking to enter the MENA region. Through its US$400 million Fund I it has invested in 16 companies in the digital sector, 13 of which have already established themselves successfully in Saudi Arabia. Investments include the hugely successful Saudi Cloud Computing Company (“SCCC”) the kingdom’s leading provider of cloud Services and J&T Logistics, which is now the fastest growing logistics provider in the country.
The fund’s core investment strategy is to transfer the latest technology and proven business models from China and Asia more broadly in order to fill a clear gap in its target MENA market. eWTPA focuses on the sectors of digital infrastructure, core technology and platform, consumer and enterprise services which span enterprise services, cloud services, cyber security, fintech, cross-border supply chain, retail and consumer, e-commerce, logistics and digital entertainment. To eWTPA, success is the ability to drive capital appreciation and to help elevate the digital eco-system in the MENA region.