BUKALAPAK: Retail Empire of the Overseas Chinese (Part 2)
Unravelling the Outsized Influence of the Overseas Chinese Tycoons on ASEAN's Economic Future - and Why BUKA Isn't Just Another Indonesian E-Commerce Company
In 2008, a book was launched by the bestselling author Joe Studwell that would catch the attention of both investors and historians at the same time. Curiously named ‘Asian Godfathers’, the book’s title was clearly in reference to the crime film epic The Godfathers which revolved around the storied lives of American mafia mob bosses.
A synopsis of this book would start by expounding on the outsized influence that the so-called ‘Overseas Chinese’ had on the economic development of early Southeast Asia — in particular, the then newly independent nation-states of Indonesia, Thailand, Malaysia, the Philippines, and Singapore (as well as Hong Kong). From 1911 when the Qing dynasty fell in China until the CCP came to power in 1949, there was a huge outward migration of Chinese immigrants out of China as the war-torn country was devastated by a trifecta of calamities — WW1, WW2 and the Chinese Civil War. While many of the immigrants would find a home in America, over 90% of the roughly 8.5M Chinese expatriates had settled themselves in nearby Southeast Asia (ASEAN) by the early 1940s.
This “Chinese diaspora” do in many ways mimic the Jewish diaspora that found itself settling across much of Europe during the Middle Ages. Scattered in a disorganized manner across ASEAN, these newly settled ‘Overseas Chinese’ found themselves lost in a foreign land which at the time was still heavily ruled by the European colonists. Without the inertia of a culture environment or strong political institutions to count on, they inevitably were forced to learn how to thrive by turning to each other for support and catering to their Anglican rulers. As we shall see later, this eventually developed into a loose community of ‘Overseas Chinese’ which traversed national borders and formed the economic bastion of post-independence ASEAN — to ignore them would be to miss the full picture of the region’s economic development.
How does all this tie back to Bukalapak? In my previous Bukalapak Part 1 report, we noted how one of its major shareholders the Salim Group is currently being managed by precisely one such Overseas Chinese group — the family dynasty of the revered Liem Sioe Liong (otherwise known as Sudono Salim), whose son Anthony Salim still runs the Indonesian “chaebol” today. In my view, it is impossible to gain a full appreciation for Bukalapak’s potential without first understanding its relationship with the wider Salim Group - which I described before as being a key chess piece of the latter, and therefore its role in the wider regional retail industry of ASEAN and its geopolitical place in the increasingly relevant Indo-Pacific.
While the Bukalapak Part 1 report explored BUKA’s fundamentals from a purely micro perspective, this Bukalapak Part 2 report provides the ASEAN macro investment context by introducing readers to the Overseas Chinese tycoons and their outsized influence on the future of the regional ASEAN economy — which both BUKA and the Salim group will play a role in shaping. The upcoming Part 3 report will build on top of that by exploring the Indonesian macro environment (business, economic and political) and geopolitical macro environment that BUKA operates in — which is highly relevant to the thesis, and will provide the necessary context to understanding BUKA’s valuation. Having such a comprehensive 360° point of view will help readers understand how most of BUKA’s potential lies far beyond Indonesia’s borders — owing to the looming influence of the Overseas Chinese in ASEAN. Nor is this macroeconomic context relevant to the BUKA thesis alone — it is equally indispensable to the understanding of just about any regional ASEAN mega-cap owned or controlled by any Overseas Chinese tycoon in the region, of which there are many.
This is the real-life story of how ASEAN came to be, a historical account of various larger-than-life characters — with the duality of man on full display. It is a tale rivaling Game of Thrones — one of racial tension, loyalty, nation-building, sordid corruption, power balance & consolidation, network building, political & economic patronage, and their consequences on the common man. But most of all, it is a clash of wills between those who claim a spot among the Greats - a function of competing visions for what each party considers the best way forward for civilization; and the future of their country. They don’t call it ‘Pancasila’ for nothing.
Honestly, you don’t even need to be an investor in Bukalapak for this report to keep you on the edge of your seat. It’s practically a fantasy novel in and of itself. If you don’t believe me, why not sign up for a free trial below and find out?
Salim Group Corporate Structure (part 3)
Indonesian Politics & Influence on Local Businesses
Geopolitics & BUKALAPAK
Financial Analysis & Valuation
Mitra Bukalapak’s website (O2O market)
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Salim Group & The Overseas Chinese of ASEAN
Given the outsized influence that the Overseas Chinese tycoons of ASEAN are expected to have on the future economic destiny of the region, the intention of this Part 2 report is to familiarize readers with the background context of this group — as well as their interactions with their local political and economic environment. While some of the things discussed here might be familiar to people living in Indonesia, anyone living outside of Indonesia will gain a new appreciation of the Indonesian operating environment that their business investments are situated in after finishing this report. And since there are striking parallels between the stories of the respective Overseas Chinese tycoons across ASEAN (e.g. Sudono Salim in Indonesia, Robert Kuok in Malaysia, Chin Sophonpanich in Thailand), readers can extrapolate the investing lessons learned from this report to analyze the future prospects of other ASEAN companies owned by other Overseas Chinese tycoons as well.
This report will start by providing the reader with sufficient historical context about the Salim Group & The Overseas Chinese community of ASEAN — in order to grasp the regional investment factors germane to the Bukalapak thesis, which we shall explore further in Part 3. As you can see from the chapter list above, I will be covering an enormous amount of ground in this report — hence in the interest of brevity, I shall not be diving into the full details of every relevant aspect discussed here. However, I will be providing links to all of the material that I have come across thus far — so that anyone who is interested in the full story behind Sudono Salim & this mysterious Overseas Chinese community can indulge themselves in the inner workings of this open secret society. Let us begin.
History of Liem Sioe Liong & pre-Suharto Indonesia
The Salim Group was founded by an Overseas Chinese tycoon named Liem Sioe Liong. Liem fled China in 1938 when Japanese soldiers marched on his sleepy province of Fujian (bordering Taiwan) and he had to choose whether to fight or flee. Bribing a Xiamen official, he was allowed passage to Semarang, Central Java aboard an 800-ton cargo ship operated by freight company Holland Lines. On his arrival in Indonesia, nobody was there to receive him — and he was placed into a holding cell by Dutch officials until his brother-in-law showed up to release him three days later.
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