Tencent becomes latest Chinese firm to invest in Singapore with new Southeast Asia hub

Logo of Tencent is seen at its booth at the 2020 China International Fair for Trade in Services (CIFTIS) in Beijing
FILE PHOTO: A logo of Tencent is seen at its booth at the 2020 China International Fair for Trade in Services (CIFTIS) in Beijing, China September 4, 2020. REUTERS/Tingshu Wang

September 15, 2020

By Pei Li and Aradhana Aravindan

HONG KONG/SINGAPORE (Reuters) – Gaming giant Tencent Holdings Ltd <0700.HK> said on Tuesday it would develop a regional hub for Southeast Asia in Singapore, opening a new office and becoming the latest Chinese tech firm to invest in the city-state.

The new hub comes on the heels of a planned expansion by TikTok owner ByteDance and investment by Alibaba Group Holding Ltd <BABA.N> as firms look to deepen their exposure to fast-growing Southeast Asia – home to about 650 million people.

Singapore has also gained fresh appeal as a base for Chinese corporate operations, benefiting from the political tensions that have rocked rival hub Hong Kong and growing distrust of China in the United States and other parts of the world.

Tencent will develop a full-scale comprehensive hub in Singapore that will house its international game publishing business, said a source with knowledge of the matter, who was not authorised to speak to media and declined to be identified.

Tencent did not disclose further details of the office.

The plans highlight Tencent’s international ambitions despite setbacks in India where some of its apps have been banned and in the United States which has flagged an imminent ban on U.S. transactions relating to its WeChat messaging app.

“We view Tencent’s decision as a necessary step to extend its enterprise service offering (Tencent’s cloud computing business) to this new market,” said Alex Liu, an analyst with China Renaissance.

He also noted Tencent had several minority investments in Southeast Asia such as its stake in Singapore online gaming and e-commerce firm Sea Ltd <SE.N>, and has been making deeper forays into the region’s gaming market.

Offering lucrative grants and incentives, Singapore has been ramping up its efforts to lure tech firms and investors in recent years. Ethnic Chinese also make up a majority of Singapore’s population and Mandarin is widely spoken, making it one of the most popular locations for Chinese firms looking to expand overseas.

ByteDance, whose short-form video app TikTok has also been deemed a national security risk by the Trump administration, plans to invest billions of dollars and recruit hundreds of employees in Singapore after opting to base its Southeast Asia regional headquarters there, according to a source.

Alibaba, which owns Singapore-based e-commerce firm Lazada, this year bought a 50% stake in a Singapore office tower. It is in talks to invest $3 billion in Grab Holdings Inc, Southeast Asia’s biggest ride-hailing firm and Singapore’s most-prized tech firm, Bloomberg news agency has reported.

In addition to the Chinese investments, America’s Zoom Video Communications has recently opened a new data centre in Singapore.

(Reporting by Pei Li in Hong Kong and Aradhana Aravindan in Singapore; Additional reporting by John Geddie; Editing by Kenneth Maxwell and Edwina Gibbs)