SEOUL, TOKYO – South Korea and Japan are markets which can be notoriously powerful to crack as a consequence of limitations akin to language, forms and conventional insularism.
The Straits Occasions speaks to the Singapore start-ups that managed to make inroads there.
South Korea: Corporations leverage alternatives introduced by Covid-19
One agency helps folks attend occasions remotely through private guides. One other builds digital concierge platforms for resorts, whereas the third gives knowledge labelling companies to enhance machine studying.
These are three Singapore-based start-up corporations that managed to interrupt into the South Korean market final yr by leveraging alternatives arising from the Covid-19 pandemic.
Digital concierge supplier Vouch was capable of persuade resorts, which took an enormous hit as a consequence of lack of inbound tourism, to switch a few of their manpower price range to upgrading e-services as an alternative.
“The human contact remains to be necessary however with our platform we will present resorts with knowledge on how friends used it and the way resorts can higher anticipate buyer wants and streamline their operations,” Vouch’s Korea supervisor Daniel Lee instructed The Straits Occasions.
Vouch was one in all 11 Singapore start-ups that made it to the finals of final yr’s Ok-Startup Grand Problem (KSGC) programme, organised yearly since 2017 by the South Korean authorities to attract budding tech corporations from all around the world to arrange workplace within the nation.
South Korea is just not a simple market to crack as a consequence of limitations akin to language, deep-seated hierarchy and insularism. Nevertheless, the federal government is aggressively courting overseas start-ups – whereas additionally fostering native start-ups – in a bid to show the nation right into a vibrant world hub for innovation, with its personal model of Silicon Valley situated in Pangyo metropolis, south-east of Seoul.
The federal government’s price range for start-up corporations reached 849.2 billion received (S$1 billion) final yr – greater than double 2016’s 376.6 billion received.
The efforts have paid off. The variety of new start-ups right here grew to 123,305 final yr, up from 61,456 in 2000, whereas enterprise investments in start-ups doubled inside a decade to 4.3 trillion received final yr.
13 start-ups have turn into unicorns, which implies they’re price greater than US$1 billion (S$1.35 billion). They embody e-commerce platform Coupang and Woowa Brothers, which runs meals supply platform Baedal Minjok.
All three boomed final yr as a consequence of a surge in demand for dwelling supply companies throughout the coronavirus outbreak.
Covid-19 additionally allowed a small however rising variety of Singapore start-ups to interrupt into South Korea.
Journey with out flying
Distant journey service Port was working with the Korea Tourism Organisation to advertise South Korea as a journey vacation spot for Singaporeans when it seized the prospect to hitch the KSGC and arrange base in South Korea.
Every of the 60 groups that made it to the finals acquired perks akin to funding of US$10,000, free workplace house, assist from Korean interns and the prospect to hitch a three-month accelerator programme to assist them acclimatise to the nation.
Port’s co-founder and chief govt officer Philip Man instructed ST that the agency’s entry into South Korea was well timed because it might supply its distant journey companies to corporations eager to discover the exhibitions and commerce exhibits nonetheless being held within the nation regardless of Covid-19 with out really flying right here.
Customers simply e-book a bilingual information through Port and, by a video name, get the information to go to cubicles and speak to exhibitors on their behalf.
“There’s rising curiosity in expertise and innovation popping out of Korea,” stated Mr Man. “We see nice prospects for us to proceed doing this.”
Filmplace, a start-up that makes it simple to e-book properties, workplaces and cafes for filming, determined to focus on the South Korean market because the nation has a vibrant leisure scene.
The corporate has since inked an settlement with Doowon Technical College, situated in Gyeonggi province surrounding Seoul, to make use of the campus as a filming location.
“The college has an enormous and exquisite library,” Filmplace’s enterprise growth supervisor Kim Min-seo stated. “We hope extra folks can uncover the library when cross-border filming resumes after Covid-19.”
In the meantime, a Singapore-made robotic that may kind out library books is now deployed in a facility within the southern port metropolis of Yeosu.
Mr Peter Mao, CEO of Senserbot, the agency that made the robotic, stated it has “attracted fairly a good bit of consideration within the library market in South Korea” and the corporate has appointed a brand new Korean companion to market its merchandise.
“The Aurora robotic is setting a brand new degree of innovation in library automation utilizing robots,” Mr Mao instructed ST. “The demand for the Aurora robotic is there and we intend to grab it and take a big market share within the Korean market.”
South Korea is engaging to Singapore start-ups as a result of it’s a a lot greater market and so they can profit from robust authorities assist, akin to entry to funding, and accelerator programmes.
“South Korea is thought for its robust pool of tech start-ups that specialize in shared economic system, Web of Issues (IoT) in addition to deep tech (for instance, fintech, medtech and foodtech) – that are synergistic with Singapore’s drive to assist the rise of such rising applied sciences,” stated Mr Fabian Tan, regional group director of North-east Asia and Oceania at Enterprise Singapore.
Enterprise Singapore’s Korea workplace may also do its half to assist Singapore start-ups achieve a foothold within the nation, akin to by matching them with companions and traders.
“Singapore’s world connections, market familiarity and geography in Asia makes them nice companions to Korean start-ups,” stated Mr Tan.
Even so, Singapore start-ups that select to enterprise into South Korea might want to overcome challenges akin to language limitations and variations in enterprise tradition. There may be additionally an inclination for Korean corporations to favor working with extra established native companions.
Mr Man from Port stated that “if folks do not know you, they might not need to work with you, so it is advisable construct connections first”.
To counter this, many Singapore start-ups rent native workers to construct bridges with Korean companions. Ms Kim Se-eun, Korea supervisor for Tictag, which is concentrated on knowledge labelling, stated:
“Some Korean folks do not need to take dangers working with overseas corporations, however I am Korean so I can clarify all about my firm to them and they’ll belief me. As soon as the connection is constructed, issues will transfer very easily.”
Singapore primarily based agency with South Korean artisanal shoemakers
South Korean Yang So-mang had worn high-heels for a few years, however it was solely after an ankle surgical procedure 4 years in the past that she realised the significance of carrying well-fitted, comfy footwear.
She couldn’t discover ergonomic footwear on-line, and worse, realised that the return charge for online-bought footwear was as much as 40 per cent as a consequence of dimension and match points.
“Nobody was fixing this downside so I used to be going to take a shot at it,” she stated.
She created a picture evaluation expertise to permit customers to custom-make footwear utilizing their cell phones and requested a former colleague, Singaporean Joanna Lam, to assist market the footwear.
Their firm Effectively Heel’d is predicated in Singapore however their footwear are hand-stitched within the Seongsu-dong Handmade Shoe Avenue in Seoul, which has over 350 artisanal shoemakers.
One in every of them, Mr Yoo Hong-sik, is well-known for making the primary pair of footwear for President Moon Jae-in after he was sworn into workplace in 2017.
Mr Yoo stated Seongsu-dong has all the time been a mecca for footwear, however youthful shoemakers left as time glided by. He praised authorities efforts to inject extra life into the road by creating show areas for footwear.
Efforts by Ms Yang and Ms Lam additionally depend in the direction of digitalising an previous trade.
A buyer simply must reply a easy quiz and take photographs of her toes along with her telephone, and the corporate’s measurement expertise will do the remainder. This fashion, these with points akin to large toes, bunions and different- sized toes will be capable of get footwear customised for every foot.
The corporate’s first shoe model known as Kada:kudu, which implies footwear for going locations in Korean.
“We would like ladies who put on them to have the ability to run for the bus but additionally look skilled at conferences and get by your complete day,” stated Ms Yang.
The corporate has bought greater than 200 pairs of footwear since February to locations akin to the USA, United Kingdom, South Korea and Singapore.
Whereas Covid-19 is maintaining folks at dwelling and away from the necessity to put on footwear, Ms Lam believes there may be large potential for progress as soon as the pandemic is over. “Folks need to dress up, in any case these months of carrying slippers and sweatpants,” she stated.
The 2 companions have large plans for his or her measurement expertise.
“Ultimately, our algorithm must be adequate to have the ability to examine between totally different manufacturers and totally different kinds of footwear and be capable of counsel the proper match for any buyer, in order that while you’re looking for footwear on-line, you don’t have to wonder if they’ll match or not,” stated Ms Yang.
Japan: Cracking markets from craft beer to move companies
MetroResidences, a Singaporean start-up within the residential and serviced condo leasing enterprise, has weathered the Covid-19 storm in Japan regardless of its conventional reliance on overseas clientele.
Founder Lester Kang, 38, who now manages a staff of about 20 workers, attributes this to having a pulse on the bottom.
“To borrow a browsing analogy, I fairly like catching the wave,” he tells The Straits Occasions. “You want to pay attention to what is occurring, to have the ability to spot traits.”
The Rakuten-backed firm was based in Singapore in 2015 and entered Japan two years later. Its income for Japan has already exceeded that of Singapore.
Whereas Softbank-backed Oyo, its key competitor, has struggled and bought off its residential unit this yr, MetroResidences set a brand new month-to-month gross sales file in April final yr, simply as borders have been shut.
“We seen a spike in overseas visitorship to the agency’s Japanese portal, simply as site visitors to the English website plunged,” Mr Kang says. “This led us to understand that many abroad Japanese have been dashing again to Japan and wished to safe a short-term lease quick. Therefore, we switched our advertising technique to focus on these returnees.”
This yr, MetroResidences has scored a significant contract to host incoming media delegations for the Olympics, with greater than half of its rooms reserved since February.
It’s however one of many many Singaporean start-ups which can be making inroads in Japan, a market that’s notoriously powerful to crack as a consequence of language, forms and insularism.
But, the alternatives outweigh the challenges for some start-ups seeking to increase past tiny Singapore, because the limitations of entry are steadily being lowered with Japan making good on its ambitions to develop as a start-up hub.
Cities from Tokyo to Fukuoka are operating accelerator programmes, whereas world enterprise capital (VC) funds like Plug And Play and 500 Startups have arrange store in Japan.
Money-rich firms are prepared to take a position and tertiary establishments are operating incubators.
Enterprise Singapore (ESG) can be working with Japan’s deep expertise innovation platform Depart A Nest to assist Singapore start-ups develop in Japan, the world’s third-largest economic system and residential to many Fortune 500 corporations.
“We join Singaporean start-ups with Japanese intermediaries, accelerators or VCs, who can supply recommendation and assist them strategise in line with what ticks with native traders, patrons and companions,” says Mr Fabian Tan, ESG regional director for North-east Asia and Oceania.
“It may be difficult to navigate the market if you cannot communicate the language and lack an appreciation of Japanese cultural norms and enterprise etiquette,” he provides, noting that this might harm trust-building.
Covid-19 has disrupted Japanese society by catalysing demand for digital innovation.
AI agency Sentient.io has constructed a platform of greater than 60 AI capabilities that purchasers can “assemble like Lego blocks”, founder Christopher Yeo, 59, tells The Straits Occasions, although he notes the problem that AI is evolving a lot sooner than the gross sales cycle of consensus-based Japanese corporations.
“There may be quite a lot of resistance, however our worth proposition is that we offer a variety of APIs (utility programming interfaces) that they’ll mix and blend and match like Lego blocks to construct an utility of their very own,” he says.
However the indicators are optimistic, and the corporate, which began in Singapore in 2017 and branched into Japan in 2019 has purchasers together with a Nagoya-based producer and traders together with the VC arm of Japanese media firm Asahi Broadcasting Group.
Mr Yeo says he’s optimistic that Japan will account for half of the corporate’s income by subsequent yr.
In the meantime, sports-tech start-up ELXR, which has subsidies from the Kobe Metropolis authorities, goals to develop a sporting group like what it has achieved in Singapore. It began in Singapore in 2018 and arrange a agency in Japan final yr.
With extra instructors going freelance in Japan, ELXR is exploring methods to attach trainers with purchasers, and plans to carry extra group boot-camps and occasions, founder Steffan Fung, 41, says.
Singapore start-ups are additionally taking purpose on the perennial wants in Japan of mobility and sustainability.
Swat Mobility, a transport-on-demand service that began in Singapore in 2015, is backed by the College of Tokyo Edge Capital and has held a profitable trial in Niigata Metropolis with an area bus operator. Routes are optimised for passengers, who can “rent” a bus through a cellular app or a name centre to be picked up and dropped off at bus stops.
Japan head Masashi Suehiro, 37, notes that steep rural depopulation poses the challenges of “rare bus schedules and problem in getting round with no automobile”.
However on the similar time, seniors are being urged to keep away from driving and even give up their licences amid a wave of accidents. Swat Mobility’s service can thus make public transport extra environment friendly and enhance highway security, in a optimistic step for Japan’s drive to fulfill sustainable growth objectives (SDGs).
One other firm with a watch on the SDGs is Crust Group, a food-tech firm began in 2019 that upcycles edible bread leftovers into craft beer.
Founder Travin Singh, 30, tells The Straits Occasions that the start-up noticed the chance in Japan due to the nation’s push to cut back waste and pursuit of SDGs. The corporate additionally took half in two Japan accelerator programmes.
Crust’s native companion, Hakuba Brewing Firm, which the start-up discovered on Fb, manufactures and distributes Crust Lager for the Japanese market.
The beginning-up has pitched its enterprise thought to the Surroundings and Commerce Ministries in Japan and is now targeted on networking and rising relationships with supermarkets, comfort shops, resorts and eateries amid a increase in craft beer reputation in Japan.
Individually, it’s growing a non-alcoholic offshoot Crop, utilizing fruit and vegetable waste, in Singapore, with plans to provide in Japan too.
“There are options within the meat house with plant-based or cell-based variations, however hardly any within the beverage house,” Mr Singh says. “The problem is available in how I’ve no reference in what I am doing. However as a result of I’ve no reference, I can then be the reference and innovate in that house.”
Fintech hub race
Japan’s decades-old ambitions of turning into a fintech hub have been buoyed by Prime Minister Yoshihide Suga’s vow final yr to take away bottlenecks and limitations of entry for overseas companies.
“With the purpose of creating Tokyo a monetary hub for Asia and the world, we welcome monetary professionals from abroad,” he stated. “We are going to promptly assessment the related elements of the taxation system, present a wider vary of administrative companies in English, and chill out residency necessities.”
That is anticipated to be a fillip for Tokyo because it competes for enterprise, capital and expertise and follows the assertion of intent by Tokyo Governor Yuriko Koike when she launched the FinCity.Tokyo initiative in 2019 to advertise Tokyo as a top-class world monetary metropolis.
Japan has enacted reforms to cut back tax burdens on company, inheritance and revenue tax.
FinCity.Tokyo chairman Hiroshi Nakaso instructed a fintech occasion in February: “Historical past tells us that when there’s a sense of urgency and a shared single objective, Japan can act collectively and promptly.”
Ms Koike added that Covid-19 was a “wake-up name” for Japan. “It alerted us to imminent challenges we should resolve. We should speed up digital transformation and be forward of the curve in addressing local weather change,” she stated.
The Yano Analysis Institute forecast that Japan’s fintech market will greater than triple in worth from US$3.27 billion (S$4.4 billion) in 2019 to US$11 billion subsequent yr.
Among the many start-ups which can be poised to journey the fintech wave is RootAnt, based by Mr Lincoln Yin Likun, 29, who was named on Forbes Journal’s 30 Underneath 30 listing this yr.
RootAnt, based in Singapore in 2018, launched in Japan in 2019 with the backing of economic companies big SBI Holdings. The Tokyo Metropolitan Authorities supported by establishing conferences with banks and potential purchasers.
RootAnt facilitates open digital banking between companies and monetary establishments by digitising moveable belongings and enhancing danger administration in provide chain financing.
Mr Yin tells ST that there’s large demand for a financing mannequin that may scale back delays, get monetary savings and construct general effectivity by digital oversight of your complete net of provide chain transactions, which known as “deep-tier provide chain finance”.
RootAnt has inbuilt inexperienced financing into its product as properly.
“There are various massive corporations – even in Singapore – with out the digital options to handle their accounts payable, accounts receivables and orders,” he says.
RootAnt has raised US$1.11 million in seed funding and likewise has a department workplace in China.
Going ahead, RootAnt is trying into offering provide chain finance banking engines for monetary establishments, and already has tasks with a couple of main banks within the pipeline.