China’s super power in global digitalization

Almost every attempt of American internet giants cracking into China market seemed like a suicidal mission. Blaming regulator policy, Great Firewall or simply the unique ecosystem, their ember of love for doing the business in the Middle Kingdom never truly dies. That is why recently Google managed to crawl its way back to set up an AI center in Beijing. Google first came to China in 2006, but after a decade, the game table already turned around. Not only have most homegrown tech companies launched their own AI centers either in or outside China but also they have the money and expertise to compete with their western counterparts at an international level, in no inferior position.

 

These days the rest of the world is swayed in awe by the sheer purchasing power of China, from middle-aged China DAMA to tech conglomerates. The rise of China investment money has been indeed well documented.

  • It is said Chinese outbound venture capital totaled $38 billion during 2014–2016 and accounted for 14% of global venture capital investment outside China. About 75% of that money went into digital sector.
  • In the past two years, China’ Triopoly BAT (Baidu, Alibaba, Tencent) made 35 overseas deals, compared with 20 by the top three US internet companies.

 

If few critics ever dubbed Chinese money as “dumb”, with the elapse of time, Chinese investors learned quickly to be savvy, and the deals sealed by China internet giants are simply master stokes. For instance,

  • Tencent paid USD8.6 billion, its biggest acquisition so far, to take a majority stake in Finnish game maker Supercell, the developer of the popular game Clash of the Clan. The move helps Tencent generate over 10% of global gaming revenue, making it the largest gaming company in the world.
  • Alibaba lavished USD1 billion to acquire a controlling interest in leading e-commerce platform Lazada, aiming to leverage its 550 million customers in six Southeast Asian countries.

 

If some said Chinese money just knew how to become the owner of the foreign business, they were wrong again. China tech company’s digital experience in the local market can be the inspirational source brought beyond the border and relevant for overseas entrepreneurship.

  • In November, Tencent acquired 12% stake in Snapchat. Many instantly began to speculate that Tencent’s success in WeChat might help Snapchat to redesign its product in the areas like gamification, news feed, related adds, or even O2O (online to offline) services.
  • Wish, a five-year-old e-commerce in the US, which reached sales in single digit billions and reportedly turned down USD 10 billion all-cash offer from Amazon, was co-founded by China-born engineer who adapted a model partially inspired by Alibaba’s Taobao.

 

In fact, China’ consumer-centric digital innovation has been gradually exporting to the overseas markets. Few examples here,

  • Cheetah, a Chinese mobile internet company, has produced many top ranking apps outside China, such as its mobile utility products Clean Master and Cheetah Keyboard, casual games Piano Tiles 2, and its live streaming product Live.me
  • Ofo and Mobike, China’s “dockless” bicycle-sharing companies, have aggressively expanded into Singapore, the UK, and the US.
  • Meitu, a selfie app with image-editing software that enables users to beautify self-portraits, has attracted younger users globally and pushes its presence in Brazil, India, Japan, the UK, US etc
  • Musical.ly, a lip-syncing and video-sharing app, purely built by a Chinese team and headquartered in Shanghai, has gone mainstream in the US and other western markets, with over 200 million users. Now musical.ly is merged with Toutiao which is a USD 30 billion local AI media unicorn and happens to own a string of overseas media companies under its portfolio.

 

China tech companies have the burning ambition to be the leader on the stage of global digitalization. The point is no longer about can they make it; rather how profound and how fast can they strike the impact, especially in the developed economies. 

 

Author: Cecilia Wu