ATM Capital founder: Chinese entrepreneurs to reshape Southeast Asia’s consumer market

Several updates have emerged regarding Chinese consumer brands in the Southeast Asian market. Xiaomi, after securing its position in the smartphone industry, is set to expand into Southeast Asia’s home appliance market—marking the first overseas venture for Xiaomi’s home appliance division. Following its entry into Singapore, Luckin Coffee is preparing to launch in Malaysia.

Meanwhile, an even more intriguing trend is unfolding: an increasing number of Chinese entrepreneurs are choosing to establish roots and grow in Southeast Asia. For example, cosmetics brand YOU Beauty, founded in 2021, has become one of the top three players in the Indonesian market. Makuku, focusing on maternity and infant products, has risen to become Indonesia’s third largest diaper brand in less than two years. Other Chinese brands in fields such as food and beverage, home furnishing, and general merchandise are steadily gaining a foothold in the market.

Southeast Asia, the world’s third largest consumer market, boasts a population of over 670 million, with nearly 40% under the age of 30. According to market research firm eMarketer, the region’s total retail sales are expected to reach USD 1.8 trillion by 2025. However, unlike China, the competitive landscape among brands in this region remains largely undeveloped.

Data from Indonesia’s Ministry of Industry indicates that approximately 70% of the country’s fast-moving consumer goods (FMCG) market is currently dominated by brands from Europe, the US, Japan, and South Korea. However, in third- and fourth-tier cities, international brands often fail to reach consumers due to high prices, leaving local consumers to choose between inconsistent domestic brands or unbranded products.

In 2017, while investors remained hesitant about the Southeast Asian market, the ATM Capital team decided to establish themselves in Indonesia after observing an interesting phenomenon: a vibrant community of Chinese entrepreneurs was forming in Southeast Asia, sensing opportunities in the supply-demand gaps.

In a recent conversation with Tony Qu, founder of ATM Capital, Qu shared insights with 36Kr about the structural opportunities in Southeast Asia’s consumer market and how a group of Chinese entrepreneurs is creating their own success stories in the region. He predicts that, in the next decade, 20–30 consumer brands with Chinese roots will emerge, with a portion of them starting in Southeast Asia.

The following interview has been edited and consolidated for brevity and clarity.

36Kr: Let’s begin by discussing the overall trends in Southeast Asia over the past two years. In 2020 and 2021, the Southeast Asian venture capital market was exceptionally vibrant, but the atmosphere seems to have shifted recently. From your perspective, what notable changes have occurred in the market?

Qu Tian (QT): Over the past few years, the Southeast Asian venture capital market has indeed undergone some changes.

First, at the fund level, 2020 and 2021 witnessed massive global monetary expansion, leading to a peak in private equity markets worldwide. In the past two years, however, with the US entering a rate-hiking cycle, capital inflows into Southeast Asia have significantly declined, resulting in a marked drop in new investment activities. This is an undeniable reality.

36Kr: How has the startup ecosystem changed in response to this funding pullback?

QT: Before the pandemic, Southeast Asia’s entrepreneurial ecosystem was predominantly local. In 2020 and 2021, many local internet companies received funding, giving rise to dozens of unicorns. However, due to constraints in e-commerce, purchasing power, and online payment adoption, the profitability of these companies was never validated, leading to valuation and fundraising challenges later on.

Another group worth noting is Chinese startups. Before and during the pandemic, their presence was relatively sparse. However, these companies managed to avoid the valuation bubble of 2021 and have generally developed healthily, especially in areas like e-commerce logistics and consumer retail. As the US Federal Reserve pivots toward rate cuts, we expect more investors to refocus on this market. Strong and unique enterprises are likely to see a turning point in the next year or two.

36Kr: ATM Capital has long focused on consumer retail. Why do you have such confidence in Southeast Asia’s consumer retail market?

QT: The primary reason lies in the population structure. The local population is young, has strong purchasing power, and exhibits high consumption willingness. Residents prioritize consumption over savings, with most of their income spent on goods and services. This creates robust market demand, yet supply is relatively insufficient. As long as businesses can identify supply-demand gaps, market opportunities are abundant.

36Kr: Where do you see these “gaps” in the market?

QT: Many of the brands we invest in are in categories where Southeast Asia is dominated by Western brands—some controlling 30–40% of market share. A deeper analysis reveals that the needs of consumers in third- and fourth-tier cities remain unmet.

The main issue lies in product structures. Western brands typically focus on high-price, high-margin products, making quality items unaffordable for the general population. While they may introduce affordable lines, these often compromise on quality.

Moreover, these international brands concentrate their offline channels in national chains, with little attention to lower-tier markets, making their products inconvenient to purchase. Their e-commerce strategies are also underdeveloped, offering poor value or forcing users to endure price-related inconveniences.

Our invested brands address this market gap by offering high-quality yet affordable products and prioritizing e-commerce alongside robust offline distribution channels.

36Kr: You’ve mentioned before that affordable, high-value brands have a better market in Southeast Asia. What is the current entrepreneurial ecosystem for this segment?

QT: Among local entrepreneurs, it is relatively rare to find individuals willing to focus on affordable brands. Many industries in the region are dominated by professional managers who are accustomed to working in large corporations. Even when some choose to venture out and start businesses, they are often returnees from overseas education who prefer to work on internet tech projects, perceiving them as cooler and trendier.

In contrast, many Chinese entrepreneurs are willing to work on affordable consumer goods. However, in China, the era for creating such mass market brands has passed. For instance, competing in the bottled water industry means going up against giants like Wahaha Group, Nongfu Spring, and C’estbon—making opportunities scarce. Southeast Asia, on the other hand, still offers a window of opportunity, which explains why more Chinese entrepreneurs are moving here.

36Kr: What about brands targeting middle- to high-income consumers? Do they have a market in Southeast Asia?

QT: There is a certain market for mid- and high-end brands, but success depends on execution. For example, opening a few stores in key cities like Singapore, Jakarta, or Bangkok can yield good results. However, scaling such a business in a single country is challenging. Expansion would require covering more countries or focusing on multiple top-tier cities to broaden the customer base.

36Kr: From your perspective, are there universal strategies for Chinese brands to successfully enter the Southeast Asian market?

QT: We’ve observed two main approaches.

The first is to adopt a cross-border e-commerce model or work with local distributors in various countries, enabling simultaneous market expansion. However, this approach often encounters scalability limits in each country. A business might achieve revenue in the hundreds of millions but struggle to break through further due to the limited role of cross-border supply chains in Southeast Asia.

The second strategy involves focusing on one or two countries for intensive development before gradually entering new markets. This requires providing customized products for each target market rather than directly replicating a Chinese product line. It also means building local teams and initially leveraging e-commerce channels, such as TikTok Shop and other online platforms, before quickly expanding into offline channels.

If a product has a clear advantage in quality and value, and the local team is strong, the second model has greater growth potential. Once operations are successfully established in one or two countries, the model can be replicated across the region. This is what we call the “deep localization” model.

36Kr: What are the challenges when transitioning from one market to another?

QT: The key challenge is assembling an excellent team.

Many Western brands already operate in Southeast Asian countries, but their local teams are often not high-performing. This is because Western brands tend to hire professional managers, but each country in Southeast Asia has unique characteristics that require tailored strategies. Multinational companies often fail to provide their managers with enough authority and support.

We believe entrepreneurs are better suited for brand expansion because they are more motivated to adapt to the market. Market adaptation involves two aspects. First, deeply understanding the market, including consumers, channels, competitors, and national policies. And second, cultivating local teams and fostering integration between local and overseas staff.

36Kr: Cultural differences often exist between local and Chinese teams. What’s the key to building successful teams?

QT: First, founders or overseas leaders should reside locally and possess strong leadership and the ability to shape company culture. Second, the company must identify local employees who align with its values, have ambition, and are capable of growing with the company, providing them with proper incentives.

Interestingly, many Southeast Asian countries have successful Chinese business communities. These nations’ corporate cultures incorporate many Chinese values, making them more receptive to Chinese ways of thinking.

36Kr: When discussing Chinese companies going global, there are two main paths: companies like Xiaomi proactively venturing abroad, and companies like J&T Express, which are “born global.” What challenges do these two types face during expansion?

QT: Achieving genuine globalization and localization is a massive challenge.

For Chinese companies expanding abroad, the biggest challenge is finding the right entrepreneurs or professional managers. Many Chinese companies are effectively run remotely by their founders, which limits their potential. Even for successful large companies, assigning a strong talent base overseas remains a major hurdle.

In contrast, teams “born global” have a distinct advantage because their founders and core teams are rooted overseas from the start, inherently possessing international and localized capabilities. Chinese individuals can be highly adaptable. For example, a Chinese entrepreneur who spends 2–3 years in Indonesia can naturally acclimate to local society. This process completes the internationalization phase. They can then lead a core team to adapt to the local market and build a local workforce, achieving localization organically.

36Kr: Over the next five years, which types of brands are more likely to establish a lasting presence in Southeast Asia?

QT: Primarily brands that align with e-commerce channels, such as cosmetics, apparel, home appliances, general merchandise, and F&B. However, relying solely on e-commerce advantages is not enough. E-commerce platforms inherently intensify brand competition.

For sustainable growth, brands need other pillars of support. For Chinese-backed brands, whether startups or overseas subsidiaries, e-commerce is essential during the initial stage. Yet, establishing offline channels will determine long-term success. Offline channel penetration, shelf presence, and brand perception among consumers form the foundation for brand recognition. Depending solely on e-commerce, price wars, and promotions will make it difficult to build meaningful brand awareness.

Additionally, establishing localized supply chains is critical when working with consumer goods, especially in large markets like Indonesia. Market demands can’t be met by relying solely on imports. Companies must build local factories or partner with local suppliers to create a localized supply chain. The fundamentals of building a brand remain the same as in the Chinese market.

For smaller or resource-constrained brands, this can be a significant challenge. Partnerships might be necessary in the early stages, but as the business scales, addressing these challenges becomes inevitable.

36Kr: ATM Capital has invested in several strong brands in Southeast Asia. How did you initially discover these teams?

QT: When we arrived in Indonesia in 2017, we discovered an already active community of Chinese entrepreneurs. Many had operated in Southeast Asia for some time, understood the local market, and were seeking new opportunities.

For instance, the founder of YOU Beauty observed that Indonesian women loved cosmetics, but international brands were too expensive, while local brands, though cheap, lacked quality. This presented an opportunity for a mass market brand, leading to the creation of YOU Beauty.

The success of YOU Beauty inspired us to explore investment and incubation opportunities in other consumer categories. We identified significant potential in Indonesia’s maternity and infant market. The combined birthrate of Indonesia and the Philippines is comparable to China’s, so we decided to incubate a maternity brand. After systematic research and talent scouting, Makuku was born.

In essence, we prefer to co-create opportunities rather than merely discover them.

36Kr: Recently, ATM Capital seems to have made fewer public announcements about new projects. Why?

QT: We are relatively low-key and usually wait until a company reaches a certain scale before making public announcements. For early-stage projects, even with strong teams and promising directions, discussing achievements too soon can create unnecessary distractions for the team.

In reality, we are continuously investing in consumer brands, chain services, and cultural education, adding to our portfolio every year.

36Kr: Are you concerned about not finding the next J&T Express in Southeast Asia?

QT: It depends on how you define “the next J&T Express.” Our goal is to support companies that can achieve true globalization, ranking either first or in the top three in major categories across multiple countries.

The key lies in finding the right team—a team capable of evolving with the company, keeping pace with the market, and staying resilient. With sustainable growth, we believe there will be several Chinese-backed top brands emerging from Southeast Asia.

If we follow my definition, it won’t just be one “next J&T Express.” I estimate that 5–10 Chinese-backed companies will grow into global enterprises starting from Southeast Asia. So, the real question is whether we can be early investors in these companies—that’s what matters most to me.

36Kr: Why do you believe Chinese-backed teams can nurture top enterprises in Southeast Asia?

QT: This belief is based on several factors.

First, in terms of talent, China has proven its global leadership in areas like product value and channel capability, although it still lacks full internationalization.

Second, emerging markets worldwide, such as those in Latin America, the Middle East, and Africa, face similar gaps in consumer goods supply.

Southeast Asia is just the beginning. If Chinese-backed companies succeed in internationalization, they could dominate these markets.

36Kr: Fintech companies in Southeast Asia often tell stories similar to those in consumer retail, yet ATM Capital seems to invest little in this sector. Why?

QT: The scale of the fintech market is closely tied to local consumption capacity. Southeast Asia’s relatively low income levels limit the growth of fintech companies. Many firms in this space have low credit limits for individual users, as most users lack the capacity to borrow or repay larger amounts. Perhaps, five years from now, when consumer spending power improves and users can handle more credit, this sector will become more attractive.

36Kr: As we approach the end of the year, which investment directions will you focus on next year?

QT: We will continue to develop along two main lines: consumer retail and chain services.

On one hand, we’ll look for outstanding teams and categories to incubate new companies. On the other, some of the companies we’ve invested in over the past two years are beginning to adapt to local environments and may enter a phase of rapid growth next year. Some companies that are performing well in Indonesia are also considering entering additional markets.

So, the priority is twofold: supporting the sustained growth of our portfolio companies , meanwhile continuing to seek excellent teams that can establish a presence in Southeast Asia to create new opportunities.

KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Chang Weiqian for 36Kr.