If You're Not in Pain, You're Not in an Emerging Market

JAKARTA–It was only a few days ago I was sitting in a wheelchair getting a blood transfusion.

It was Friday night in Singapore, and I was at Clarke Quay— a pseudo-outdoor mall of clubs. It’s like a smaller scale version of the Las Vegas strip frequented by Singaporean college kids, goofy Western expats and hot Asian girls, mind-bogglingly shimmied into too-tight dresses.

Everything in Clarke Quay — and Singapore for that matter– is highly competitive, and the clubs rotate in and out of business. So to stay popular, it’s important to have a gimmick. There was Highlands, the scotch bar, where the waitresses wore short kilts and the chandeliers had antlers. There was Lunar, where the gimmick was simply being “cold”– indeed that can be a novelty in Singapore’s sweltering heat and humidity. Then there was the Pump Room where a large cross-dresser belted out tunes, in between the thumping techno music.

But I was at the most over-the-top, a bar called Clinic. You sit in a wheelchair, and you get your drink in the form of an IV– with a name like the blood transfusion–delivered by a young nurse. Want a shot? It comes in an oversized plastic syringe. It felt a little wrong. I mean, I’ve seen enough of Asia to know people could have used those medical supplies for more than partying. But there I was nonetheless, doing wheelies and sucking on an IV.

It was the essence of Singapore: An Asian themepark developed for Asians who want a Western lifestyle and Westerners who want an Asian lifestyle– but can’t quite commit to either. A true sign you’re in Singapore? I didn’t have to use a single squat toilet– even in the dodgier areas of the city. In Asia, the toilets don’t lie.

Singapore times how long it takes to get through its immigration line, obsessively trying to get it under 11 minutes. I breezed through on arrival and departure. “I’m here because of the airport,” said KF Lai, founder and CEO of BuzzCity, an ad network that monetizes the throng of mobile users in Singapore’s chaotic neighboring nations. Compare that to Jakarta. I arrived Saturday and despite being on one of the only arriving flights at that time, I stood in the immigration line for about 45 minutes.

It’s not that Jakarta doesn’t have its Western bubbles. But they’re smaller and colliding with the city’s larger reality much more frequently. The walk in between the comfortable apartment I’m borrowing in Jakarta and the cavernous, Western shopping mall, the Grand Indonesian, took me through a sprawling slum and along streets so jammed with traffic, I almost got clipped by a motorbike a few times. My first day in town, walking through the slum– getting deeper and deeper as I kept taking wrong turns– I stuck out like a sore thumb. A big, tall, pale-white American woman who only knows about three words in Bahasa. One of those was “pulsa,” which means “credit.” I was wandering this neighborhood seeking a top-up on my pre-paid SIM card– something that is ironically easier to do in the slum here than in that opulent mall.

This is the disconnect of Southeast Asia right now: There is enough of a middle class that Western companies want to be here, and Web companies in particular want to make sure they don’t miss out like they did in China. But a place like Jakarta is still a Wild West. A neighborhood like the one I wandered through is so far from the consumer reality in the US that it’s hard to imagine the opportunity is as big as it is for Western companies. Trying to do business in Indonesia, particularly in the Web space, is about vacillating between the fear that it will take another ten years to build a $1 billion Web business (ala India) and the fear that it’ll take off overnight without you (ala China.)

Progress on this kind of scale is just messy and putting a comfort bandaid on it only hides the issues and the opportunities. Almost every day in Jakarta there’s a protest in front of the city’s Soviet-esque Welcome statue, that people get plenty of time to look at because the roundabout is always clogged with traffic. It’s the realistic underbelly of a country surging headlong into democracy and capitalism: Democracy means people dissent and capitalism means everyone who can afford a car wants a car. In my opinion, parts of Jakarta can put on a better face than India– where there’s been so much rapid urbanization the big cities are an out-of-control infrastructure mess. But plenty of Jakarta is scary and unpredictable, plagued with poverty and corruption.

It’s this disconnect that Singapore is hoping to bridge, a sort of economic and cultural translator for the West. And on paper– and in a few industries that I’ll detail in my next post– that makes sense. Singapore is, after all, just a short flight from India, China, most of Southeast Asia. And because it is 40% made up of immigrants, you can find a lot of local market expertise on the tiny island. But is Singapore really that much closer to the market? Physically yes, but don’t kid yourself: If you’re this comfortable, you’re not experiencing an emerging market and you’re not going to understand your customers. You aren’t going to understand how the five-tower pricy apartment building I’m staying in sold out in a flash, how the Grand Indonesian was packed with affluence-seekers on a Sunday afternoon and yet how so many people on the walk in between still live like it’s 100 years ago. If that’s what you want to understand in Asia, Singapore might as well be on the moon.

Sure, Singapore is growing at an economically drool-worthy 18% a year but that’s not because of an exploding middle class climbing the prosperity ladder. Lai and others tell me between 50% and 70% of the economy is in providing comfort for the region’s wealthy, whether it’s five-star hotels, expensive expat penthouses, or the real cash king– financial services for offshore money. Singapore is like a summer camp for the region’s rich, and that’s mostly who you’ll find there.

There’s just no hack around the pain of building a consumer business in emerging markets. Living in Singapore won’t teach you the market, any more than living in an expat enclave in Jakarta will. Without experiencing the pain and frustration of everyday life, you can’t understand this new customer. Like the old West, it’s exactly that unstructured inefficiency that creates so many opportunities. By the time problems like local talent, infrastructure are all figured out, you’ve got China– a place where local companies have grabbed most of the opportunities.