April 21, 2017 12:00 pm JST

New Asian companies find success with a regional focus

From lighting to fashion, there is money to be made in catering to once-ignored customers

SHOTARO TANI and TSUBASA SURUGA, Nikkei staff writers

Salt co-founder Aisa Mijeno inspects her invention, which is bringing lighting to remote villages in the Philippines. (Photo by Jilson Tiu)

TOKYO/MANILA -- In Asia, entrepreneurs can "think about creating startups that are global from day one," said Ernestine Fu, venture partner at the Alsop Louie Partners. "[That] is not possible in Silicon Valley."

One reason for this is that some problems that startups aim to solve are common to the region. A business model or product that addresses such a challenge has a large, ready-made market at hand, potentially creating the next Asian unicorn.

Philippine startup Salt is a great example. Salt -- short for "sustainable alternative lighting" -- found itself in the spotlight when co-founder Aisa Mijeno shared the stage with former U.S. President Barack Obama and Alibaba Group Holding Chairman Jack Ma Yun at the 2015 Asia-Pacific Economic Cooperation meeting in Manila.

The company makes lamps that use saltwater as the catalyst for a fuel cell, instead of the kerosene that fuels lamps across Southeast Asia in areas without electricity. Mijeno came up with the idea for a saltwater lamp after living with a remote tribe in Kalinga, in the northern Philippines. During her monthlong stay with the Butbut, Mijeno learned that people had to walk at least six hours to the nearest town to buy kerosene.

Enter Salt's lamp, which, the company says, can last six months when used eight hours a day and maintained properly.

"We were trying to determine what the staple items in every household in the Philippines were, and we found out that there are actually three staple items: salt, water and rice. That's the main reason we used salt water as the catalyst ... to generate electricity," Mijeno told the Nikkei Asian Review in an interview last year.

The company was founded in 2014 when it joined Ideaspace Foundation, an incubator that helps fund and develop innovations with commercial potential. Salt was selected by Ideaspace as one of the year's top-10 projects and used its prize money to start working on a prototype. It has since delivered over a thousand lamps to remote communities in the Philippines, and partnered with a local manufacturer to begin mass production.

Fashion for the faithful

For Diajeng Lestari in Indonesia, the "problem" that needed addressing was helping Muslim women express their fashion sense while maintaining their modesty. This led her to create Hijup in 2011, a pioneering Islamic fashion website. The online shopping mall offers clothing and accessories aimed mainly at Muslim women.

Hijup is short for "hijab-up," as in make up or dress up. The hijab is the headscarf worn by some Muslim women.

"We believe that we can bring something up to all Muslim women around the world," the company's website says. Muslim women, it says, "are not limited to do anything worthwhile, create something wonderful, and earn a lot of respect from others. They deserve to be happy ... [in a] fashionable hijab."

According to local media reports, Hijup, which started out with capital of just 5 million rupiah ($375) at its launch in 2011, has grown. Turnover last year is estimated at 500 million to 2 billion rupiah a month. And the size of the market it is aiming for makes the startup attractive to investors. Purchases of modest clothing by Muslim women worldwide came to $44 billion in 2015, according to Thomson Reuters' State of the Global Islamic Economy Report. Overall, Muslim spending on clothing is predicted to reach $368 billion by 2021, up from $243 billion in 2015.

Hijup is one of the most popular e-commerce sites for Muslim apparel in Indonesia, but it faces stiff competition from businesses inspired by its success. A March survey by Malaysia's iPrice Group found that with 117,600 visits per month, Hijup ranked second among sites offering modest fashions, behind a newer company, Hijabenka.

Nevertheless, Lestari is optimistic. "[I hope] that Hijup can be a big player, a global brand that can empower a lot of Indonesians, so that it can contribute positively to Indonesia and the world," she said in an interview on local TV last year.

Eyes on the road

In neighboring Malaysia, one company is battling car theft and irresponsible drivers. Media reports say one car is stolen every 24 minutes in the country.

Katsana, a Kuala Lumpur-based startup, set out to do something about that in 2014. Its GPS tracking service allows owners to locate stolen cars instantly, increasing the odds that they will get them back. The platform gives the location of a vehicle on a single map to within 5 meters, updated every 10 seconds. Katsana also helps delivery companies, for example, by making sure drivers are where they say they are and operating their vehicles safely.

What sets Katsana apart from competitors is its analytics. In December 2016, the company received 4 million ringgit ($907,000) from Axiata Digital Innovation Fund, a technology venture fund that is part of Malaysian telecom Axiata Group. The money went to develop and commercialize Katsana's telematics business, specifically its driver behavior product.

Using a precise risk profile based on driving patterns, insurers can reward good drivers and adjust premiums accordingly, as well as identify reckless behavior -- a useful tool in a country with many traffic fatalities. The company says its service allows "motor insurance companies [to] drastically reduce claims loss[es], and gather much-needed data in preparation for [liberalization] of motor insurance [premiums] in the country."

"Since the inception of Katsana in 2014, we've realized that behavior insights have been our most valuable asset," said Syed Ahmad Fuqaha Syed Agil, managing director and co-founder of Katsana, in a statement. "Our real-life experience in dealing with major enterprise fleets has allowed us to develop precise algorithms to understand driver behavior, which is directly beneficial for motor insurers. This development is very much driven by our mission to become a catalyst for safer roads in Malaysia."

Nikkei staff writers Mikhail Flores in Manila and Erwida Maulia in Jakarta contributed to this report.

Asia300

Alibaba Group Holding Ltd.

China

Market(Ticker): NYS(BABA)
Sector:
Industry:
Retail Trade
Internet Retail
Market cap(USD): 384,185.12M
Shares: 2,529.36M
Asia300

Axiata Group Bhd.

Malaysia

Market(Ticker): KLS(6888)
Sector:
Industry:
Communications
Wireless Telecommunications
Market cap(USD): 9,915.05M
Shares: 8,998.12M

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