Digital economy spurs firms' growth

The global digital economy's rapid growth is providing new development space for Chinese companies to expand overseas, with emerging markets gaining momentum driven by their young population, according to a recent report.

Although the size of the digital economy in emerging markets such as Southeast Asia, Latin America and the Middle East currently is relatively smaller, these markets' demand for digital consumption is increasing quickly and their internet penetration rate has large room for growth.

These emerging markets offer vast development space and significant growth potential for Chinese enterprises, according to the report, jointly released by Tencent Cloud and ShineGlobal on the sidelines of the 2025 Tencent Global Digital Ecosystem Summit held in Shenzhen last week.

The younger generation in the emerging markets embraces new technologies and demonstrates a robust demand for digital consumption. This trend is particularly evident in Southeast Asia, Latin America and the Middle East, which serve as significant sources of user growth for digital entertainment and represent key incremental markets for cross-border e-commerce, the report found.

According to the report, the median age of the population in Southeast Asia is 30.1 years, while that in the Middle East is 28.9 years. By comparison, the figures for North America and Europe stand at 40.4 and 43.2, respectively.

The younger population have a higher preference for online shopping, which fuels e-commerce development in those regions. The retail e-commerce market in Latin America is expected to hit $228 billion yuan by 2028, representing a compound annual growth rate of 11 percent.

Meanwhile, the compound annual growth rate of social e-commerce in the Middle East is projected to reach 16 percent in the next five years.

To grasp the vast opportunities of emerging markets, Tencent Cloud is ramping up its digital infrastructure globally to help Chinese enterprises with their international expansion drive. It has announced plans to invest $150 million to build a data center in Saudi Arabia, the first of its kind in the Middle East region. It is also establishing its third data center and office in Osaka and setting up nine major technical support centers in cities including Jakarta, Singapore, Tokyo, Seoul and Frankfurt.

The primary challenge of building a data center in the Middle East lies in the complex compliance procedures associated with heavy-asset projects like data centers, said Xu Huabin, vice-president of Tencent Cloud.

"Unlike content-related or entertainment-related overseas expansion, which involves relatively simpler processes, data center construction requires strict adherence to local filing, registration and regulatory requirements," he noted.

"Critical to success is recognizing that domestic application procedures cannot be directly applied. Instead, a localized approach led by professionals familiar with regional regulations is essential."

Tencent Cloud's international business has maintained a high double-digit growth rate over the past three years, according to the company. This business has become its new growth engine, with overseas customers doubling year-on-year in the past year.

When Chinese enterprises make decisions on overseas investment, the key priority should be whether their core business can be replicated, rather than first considering the input-output ratio, said Zhang Zheng, vice-president of Chinese digital and creative software company Wondershare.

"Take Southeast Asia as an example. Despite the robust growth of many Chinese enterprises in the region, we did not invest heavily there in the early stage. The main reason is that the Southeast Asian market lacked a strong software payment habit — local users are more willing to accept ad-supported software. Therefore, we put our focus on mature markets such as North America and Europe," he said.

sally@chinadailyhk.com