Deal with Visa fortifies SEA Group’s position
Deal with Visa fortifies SEA Group’s position
Singapore-based SEA Group may keep expanding its legal entity base in its mission to dominate various Vietnamese markets, though the move is seen as a sign of getting around the rules.
SEA Group has entered into partnership with Visa to benefit customers, photo: Le Toan
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Similar to Grab, SEA Group has made a strong effort to conquer plenty of sectors like e-commerce, e-wallets, and online gaming in Vietnam. However, faced with strict regulations, the company has accelerated the purchase of shares at local legal entities.
Last week, SEA Group’s e-commerce platform Shopee entered into an official partnership with global payment company Visa. The two sides announced a five-year strategic partnership in which digital transformation is highlighted as a key target. As a result of the deal, Shopee users could benefit through certain promotions by making payments via Visa.
“Shopee is continually strengthening its ecosystems to be an enabler for micro, small, and medium-sized enterprises to leverage technology to grow their business. We are looking forward to working closely with Visa to leverage their extensive and secure network to make it easier for sellers to digitalise, particularly those in tier-two cities and rural areas,” said Terence Pang, COO at Shopee.
“Our shoppers will also benefit from a more convenient and rewarding experience that will encourage purchases and spur the growth of the economy. We’re committed to Southeast Asia unlocking the transformative power of technology,” Pang added.
In the next few months, both Shopee and Visa will launch co-branded credit cards across selected markets in partnership with local banks. They will offer shoppers integrated and seamless rewards and allow Visa to reach more local consumers.
Reaching an alliance with Visa is said to be the latest move from Shopee parent company SEA Group to dominate the payment sector. Indeed, the Singaporean group owns 18 per cent of shares at e-wallet platform AirPay. Along with payments, SEA Group is also setting great ambitions in other sectors such as food delivery and online gaming, reflected by the major ownership held in food delivery company Now and the 30-per-cent control of game publisher Garena Vietnam.
Now (formerly Deliverynow) was established by Foody.vn in 2015. SEA Group at the time poured $64 million to hold 82 per cent of shares in the social media site, which formerly focused on cuisine reviews.
Talking to VIR, Nguyen Xuan Truong, former CEO of goods delivery company Ahamove, said that to enhance their foothold in the market, tech giants have tended to diversify their types of business by acquiring startups that can help them reach specific areas.
Thus, SEA Group is said to be carrying out activities similar to Singaporean-based group Grab to gain the upper hand in Vietnam and Southeast Asia as a whole. The group has also asserted Vietnam as one of its seven key markets. As a result, the coverage of its brands here is forecast to keep growing.
SEA Group has the three main business pillars of gaming (Garena), e-commerce (Shopee), and digital payments (SEAMoney). However, the latter two segments are under the strict supervision of Vietnamese regulations.
According to the Law on Enterprises 2014, the ownership cap of foreign-invested companies specialised in online gaming cannot exceed 49 per cent. Additionally, companies have to get approval from the State Bank of Vietnam in order to run an e-payment business.
To avert the issue, SEA Group has entered into a partnership with shareholders of Vietnamese legal entities with tightened terms between the two sides.
The most important reason for this is to assure the entities get enough capital for their performance. According to a document sent to the US Securities and Exchange Commission, SEA Group will sign lending or guarantee contracts with each of its legal entities worldwide. The loans could then be used to implement the group’s target of acquiring other businesses. It also noted that SEA Group will take the obligation to supply the financial source as well as clear entire debts of the companies involved.
In Vietnam, Esport JSC and Hoa Binh Informatics JSC are its two entities, formed in 2009 and 2011. According to their published information, the companies have been responsible for monopoly distribution of the services, products, and technology platforms of Garena in the local market. Purchasing stakes in these entities have aided the Singaporean player in running e-wallet and game businesses legally.
SEA Group was unavailable for comment regarding the issue.
