Adopt or die? Southeast Asian small business are using AI to stay competitive

In the global arena of artificial intelligence (AI), the spotlight often shines on the U.S. and China. However, experts assert that Southeast Asian small businesses have significant potential that demands attention. Jochen Wirtz, a marketing professor at the National University of Singapore Business School, emphasizes the urgency of AI adoption, stating that businesses that lag behind risk being relegated to franchise operations or pushed out by larger competitors. "Either you grow and adopt, or you die," he warns. According to a Boston Consulting Group report from April, AI and generative AI (genAI) are projected to contribute around $120 billion to Southeast Asia's GDP by 2027. This growth underscores the technology's capacity to revolutionize business processes and open new revenue streams. Furthermore, Google's e-Conomy SEA 2024 report indicates that countries like Singapore, the Philippines, and Malaysia rank among the top globally for AI-related searches, reflecting a burgeoning curiosity and enthusiasm for AI in the region. Youthful demographics play a crucial role in this technological shift. A 2024-25 survey by CPA Australia reveals that Vietnam, Malaysia, and the Philippines boast the highest percentages of business leaders under 40 in the Asia-Pacific. Soumik Parida, an associate program manager at RMIT University Vietnam, notes that Vietnam's young and internet-savvy population positions it well for future growth. "They are starting to have a global voice and are exceptionally adaptable to new technologies," he says. As Southeast Asian businesses navigate the competitive landscape, customer service emerges as the primary application of AI in e-commerce, followed closely by marketing and advertising. A joint report from Lazada and Kantar highlights these trends across the ASEAN-6 economies, which include Singapore, Malaysia, Vietnam, Indonesia, the Philippines, and Thailand. A McKinsey survey from March corroborates these findings, noting that many companies are leveraging genAI for marketing and sales, with tech firms leading the way. The linguistic diversity of Southeast Asia offers unique advantages for genAI. Beyond crafting personalized marketing messages, the technology can also translate content into multiple languages. For instance, Lita Global, an Indonesian social media platform catering to gamers, has significantly increased its efficiency since integrating OpenAI's models last year. The company reports hosting nearly twice as many online gaming events monthly, translating to average weekly revenue boosts of 20%. "With genAI, we can easily translate announcements into various Southeast Asian languages, allowing us to reach a broader audience," explains Lita Global's CEO, Yihao Zhang. Moreover, the platform employs AI to enhance its chat functions, recommending responses to users seeking gaming partners. This feature has resulted in a noticeable increase in orders for gamers, with reports of a 10% to 20% rise in bookings due to AI-assisted interactions. AI-driven livestreaming is another burgeoning trend among Southeast Asian micro, small, and medium enterprises (MSMEs). Google's SEA e-Conomy report points to the rising popularity of live shopping, where hosts showcase products in real-time and engage with viewers through live chats. However, many MSMEs struggle to afford regular livestreams. Jensen Wu, CEO of TopviewAI, suggests that AI livestreaming presents a cost-effective alternative, reducing expenses associated with studio rentals and human hosts. Despite the benefits, the upfront costs of AI adoption remain a barrier for many small businesses. Simple AI chatbots can be a more affordable solution, often requiring minimal investment. Industries such as fashion and food and beverage in Vietnam are beginning to utilize chatbots for managing inquiries and orders, as noted by Parida. While larger companies may invest in customized AI solutions, smaller businesses often lack the financial resources for such luxuries. Even those with the technical expertise face high costs, with Lita Global spending around $2,000 monthly on AI, including expenses for OpenAI's API. However, projections from Gartner suggest that the costs associated with genAI APIs will drop dramatically by 2027, potentially making AI adoption more feasible for smaller enterprises. In markets like Southeast Asia, where labor costs are low, the incentive to adopt technology for efficiency may be diminished. Yet, Wirtz argues that technology can yield significantly better outcomes for existing business practices. He likens AI adoption to the rise of e-hailing services, which improved safety and pricing transparency for tourists. With a vibrant population of tech-savvy entrepreneurs, particularly in Vietnam, the excitement for AI integration remains robust. "It's a very hungry young population," Parida concludes.