FIRM FOCUS - Highlights from Four Asian Companies - July 2024

Each edition of Firm Focus highlights developments of four different companies from leading industries across Asia.

BYJU'S - India's Growing Edtech Goliath

Economist Paul Romer describes the New Growth Theory in relation to human capital as an economic growth concept that focuses on the measured value of people. Knowledge and learning or the acquisition of new knowledge is a major part of the spectrum of factors for economic growth. Education can uplift entire nation states.

With mounting pressure for accelerated market performance, economic powerhouses in the Global South such as India, rely greatly on the accessibility, innovation, and progress of its education space to empower its massive population. This is where developments for global expansion and key acquisitions for Edtech giants like Byju's, play a role in pushing forward the narrative of education as a national priority.

Byju's, a prominent learning app hailing from India has recently acquired several other Edtech firms including Aakash Educational Services, Epic (a US-based reading platform), and Great Learning. This strategic acquisition phase is set to help Byju secure its expansionary vision across various platforms to cast a wider net on the range of learning solutions offered. Growth for growth's sake may not always be justified, but given the sheer market size that India represents, this Edtech giant may need all the help it can get to reach its milestones.

ZUS - A Testament to Domestic Market Prowess

Over the last few decades, globalisation set the pace as an entrenching force that infiltrated developing economies around the world and homogenised various sectors with the mark of international finance for better or worse. Competitors in domestic markets were forced to swim in bigger waters, and struggling small fishes often got rolled over by stronger foreign entities.?

Now, success stories like Malaysian-based ZUS Coffee, depict a narrative where local enterprises rise up and fight back against the overbearing international powers to restore domestic dominance. The brand transitioned rapidly over 4 years from being a relatively unknown coffee kiosk to a nationwide phenomenon with over 300 outlets and a viciously loyal fanbase.

Of course, we cannot overlook certain political developments such as the recent boycott of various global brands that inadvertently contributed to the sudden boost of revenue earnings for not just ZUS, but a multitude of local SMEs. ZUS now faces a fresh stream of backlash for some recent controversy involving Adidas, but the fact still stands that their position of strength is a testament to being at the right place at the right time.

KOPI KENANGAN - Building a Powerful Middle Class Narrative

Economist and author Tim Harford described the fallacies of certain industries in his seminal book Undercover Economist. He stated that agriculture-driven business models like coffee and cocoa are tumultuous due to low barriers to entry and the lack of production scarcity leading to reduction in competitive advantages.?

If we take the power of branding and building a solid narrative into consideration, these rules seem to lose their potency. Enter Kopi Kenangan, an Indonesian based F&B unicorn taking Southeast Asia's coffee scene by storm right now, bringing in approximately $106 million of revenue in 2023 after an initial investment of $15,000 to start up, and an additional $8 million dollar investment boost from Alpha JWC Ventures.?

Founders of Kenangan set the brand up for success when they realised that global competitors like Starbucks were too expensive in the long run for most middle class citizens in Indonesia. The solution entailed adjusting costs for coffee affordability and nestling their way into the hearts of the middle class with personalised attention to the quality and care of their products. They now have over 800 outlets across the region and lead one of the most rapid expansion runs seen in the coffee industry at the moment.

LS ELECTRIC - A Glimpse Into South Korea's Dynamic Power and Technology Infrastructure

Between the 70s and the 90s, Asia's spirit of the tiger economies was in full swing, with nations throughout the region building up their domestic markets in retaliation of the tumultuous economic crisis rippling from the West. Among the contenders, South Korea's corporate uprising was a feat to behold, particularly in the advents of electronic manufacturing and industrial sectors.

One of many such companies to stem from this past era is LS ELECTRIC,?a power and automation industry firm which was founded in 1974 as Luck Packing, an appendage of the wider LG Group of companies during the time. Eventually, the firm separated from LG to form part of the LS Group in 2003 which changed its name to LSIS.

However, in 2020, the group changed its name from LSIS to LS ELECTRIC. The firm is still owned by the prolific Koo Family, the founding family of LG Group. LS ELECTRIC has been seen making moves lately, building ties with Thailand as the nation's State Railway of Thailand Awarded LS ELECTRIC a 32.7bn won contract of supply signalling for the 177 km railway that's under construction between Ban Phai and Nong Pok. This is part of a big project to build a double-line track line. Earlier this year, LS ELECTRIC also signed an MOU with GE Vernova as they plan to collaborate for the global demand for HVDC by utilising the Korean firm's HVDC production infrastructure.

Khalid Fadzillah is a Finance Writer, former Business & PR Journalist, Co-Founder and Head of Research at Palindrome Communications.

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