CafeX made an announcement this week-end about their new Japanese partnership, allowing them to extend their sales reach to North and South-East Asia. Just as I had put the final touch on my “webRTC in Asia report“, with a special section on Japan with analysis of Dialogic and Twilio approach to doing WebRTC Business in Japan, another event that just stresses the importance of Asia for WebRTC vendors.
For everybody in the WebRTC ecosystem, CafeX is not an unknown player. Focussing early on on on-premises solutions, and communicating about how they fit in an omni-channel strategy, they have been recently pushing their call center and support solution “LiveAssist” front and central.
ASIA AS A GROWTH RELAY
Most vendors are still focussing on NA or EU. Both North-America and European Union have a GDP around 20M of billions (USD) for a population of 506 and 326 Millions, respectively. Vendors are fighting hard for a market that is very competitive, serviced by a lot of vendors. What you really want, as a WebRTC vendor, are countries with huge population, that enjoy a huge spending power, and great internet connectivity. So the question really is, where to turn to for growth. Northern Asia, and in some part, Australia / NZ, fit the bill, at first sight …
China is huge a market with 1.3 Billions inhabitant, and a GDP of 11M of Billions (USD), but it has is own regulations, and a very specific state of the internet which makes it a very special business and technical case that require specific investment to address. Not quite the organic growth you would be looking for.
India comes second in term of population, with 1.1 Billion, and big companies like Google have made no secret of their intend to tap on that to get a huge share of their next 1B users. However, the population statistics are masking the fact that India is not a fully homogeneous market, and that its infrastructures are not equally developed across the entire country. The best illustration of this is that Philippines, with 10 times less working age population, passed india as an outsourcing destination as soon as 2011, and has only comforted their advance ever since. Moreover the GDP per capita (the closest proxy to the average buying power of individual in a nation), is only 1.6k (USD) while the rest ouf south east asia (ASEAN) is at 4k in average, china at 8k, Malaysia at 10k, South Korea and Japan around 30k.
Japan has a much lower population than india or china, 126M, but a very strong economy (4M GDP). To compare with india, it has 10 times less population for an economy twice bigger! It is also a very western business friendly and homogenous country (no, kansai-ben is not a real language, unless you’re a hardcore fan of the kinki-kids) .Moreover, the proximity with S. Korea, and the ease to find speakers fluent in both languages, allow many to treat the two markets as one (for an extra 48M inhabitant, 1.4M billions of USD economy). It makes it a perfect first extension.
The following extension is usually more difficult though. The Association of South East Asian Nations (ASEAN), which kicked in only recently, weights 630 Millions inhabitants, more than EU or North-America, for admittedly a much smaller GDP of 2.5M (of billions of USD), but still more than India’s. It represents the Cumulated GDP of Mexico and canada put together.
One of the biggest problem of ASEAN is the huge disparities between each nation member. While Indonesia statistics place it close to Mexico’s with almost 1M GDP, it’s far ahead of the second group of countries (Thailand, Malaysia, Philippines and Singapore, in order) which each account for 0.3M. As I explain more in detail in my report, one can’t cover all those countries from a single office and with a single strategy. As Wavecell Job offers (see “sale”) or nexmo’s before them, illustrate, while you will likely have an HQ either in Hong-Kong or Singapore for linguistic, legal and tax reasons, you need to have local sales team in each country to be able to really handle business.
CAFEX ANNOUNCEMENT AND ASIAN STRATEGY
While the choice of Japan as a first big entry point in Asia makes a lot of sense, the announcement also states that “China, including Taiwan, Hong Kong and Macau, Singapore, Malaysia, Thailand and Australia” will be covered by the same agreement. It would be challenging, wasn’t it for the size and the footprint of ITOCHU. With more than 4 thousands employees and more than 10 offices worldwide, ITOCHU corporation has the shoulders to bring this deal to the next level. Its ICT and Financial Service division, specifically, has been providing RTC and VoiP solutions to many businesses, including call centers, and is the perfect vehicle for that business. After being a sales agent of CafeX solutions for Japan only, it made a strategic investment in CafeX in December last year, whose announcement contain an interesting analysis of webRTC business in japan and APAC. Last week-end announcement is just the continuation of that global deal.
It seems that it comes to complement previously announced Rakuten Communications collaboration deal, in an overall strategy where Rakuten would deal with the Japanese Market, and ITOCHU with the rest of APAC.
As expected, webrtc vendors are turning to Asia for growth. While the asian markets for webrtc are globally untapped, most vendors realize quickly that going in there alone is difficult, and require a real strategy. While some CPaaS like Nexmo, or Twilio had to do it anyway to some extend to have a good contact with the local Telecom Operators, setting up local partnerships and collaborations is one sensitive way of approaching the asian markets, especially for PaaS (that do not depend directly on telcos), and on-premises solutions, like CafeX.