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Why 95% of Traders Fail

Chinese Internet Leaders Will Shake the World 

Companies / Internet Apr 24, 2017 - 06:14 AM GMT

By: Dan_Steinbock

Companies A decade ago, Chinese internet companies were still marginal internationally. Today, they are world-class industry innovators. In the internet economy, the leadership is shifting from the advanced West to the emerging East.

Today, China’s leading internet companies rival their counterparts in the West in terms of scale, value and innovation. Yet, their impact outside of China is still relatively limited. Even the international leader Alibaba generates less than 10% of its revenue outside China.


But things are changing. Chinese internet players are already expanding in other emerging economies particularly in Asia but also in Brazil and Latin America, as well as Africa. And as Chinese foreign investment has recently taken off, it is the internet companies that are pushing outbound investment and mergers and acquisitions. Third, these companies are exporting their disruptive business models.

And this is just the beginning.

From the US internet revolution to Chinese e-commerce revolution

In the late 1990s, the United States was amidst a technology revolution and I interviewed most pioneers of the early internet. It was an exciting time. America was the pioneer of the new cyberspace frontier.

Some 15 years later, I saw the coming of another transformation that would subvert the internet economy from within. That’s when I predicted that “China's e-commerce explosion will shake the world.”  

Before 2008, there were barely 250 million internet users in China, but the internet penetration was still growing at 35% annually. Today, there are almost 700 million users, and the penetration is still growing at some 7% per year. Today, most Chinese spend a third of their time on mobile internet with WeChat and a tenth with QQ, while three giant companies - Tencent, Alibaba and Baidu - accounting for more than 70% of mobile time spent, according to US industry data.

In the process. Chinese e-commerce companies have become as big or bigger as their peers in America. If the US has its Wal-Mart, CVS, Kroger and Walgreens, China has its Alibaba, JD.com, China Resources and Suning.

In just one decade, China’s leading internet companies have shifted the center of gravity in the global internet economy to the East. Investors are following in the footprints. In 2015, venture capital investment value in China-based internet businesses was estimated at $20 billion, which exceeded comparable VC investment in the US ($16 billion), for the first time.

From imitators to innovators

In the US and Europe, Chinese success is often explained as a simple result of a huge domestic market. While the latter has facilitated the drastic expansion of Chinese Internet giants, it does not explain their success, particularly the extensive ecosystems, disruptive business models and unique services of the Big Three - Baidu, Alibaba and Tencent.

In the past, US and European multinationals crafted their global strategies for the Chinese marketplace. The idea was that what works internationally will succeed in China. That was predicated on two assumptions: global services can be cloned for China and that Chinese companies pose no competition.

Those assumptions no longer apply. Today, Chinese Internet giants are fast globalizing their services. In the coming years, they will complement multinational leaders in one industry after another. Chinese Internet companies are no longer local imitators but global innovators.

Dr. Dan Steinbock is an internationally recognised expert of the nascent multipolar world. He is the CEO of Difference Group and has served as Research Director at the India, China and America Institute (USA) and visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Centre (Singapore). For more, see www.differencegroup.net   

© 2017 Copyright Dan Steinbock - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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