In a previous series, Alban Fournier, a young French professional who fell in love with Asia warned us that China was the next worldwide International giant in the making. In this piece, he is expatiating on this previous report and delving into the details of what makes Chinese Internet players stand out from the crowd.
[this report is published in instalments, type http://bit.ly/albanchina2 to put all the pieces back together]
Fournier: the man who prefers QQ ID: 1557637787 to his Twitter handle
What is currently planned at Alibaba, Tencent, Sina, and Baidu is worth further investigation, hence this sequel to my initial piece on Chinese Internet. My duty is to continue the story published last year and called “Chinese Internet industry ready to grow beyond borders”.
People were quite sceptical in 2008 when I announced that China, as a country, was good at disruptive innovation following a trip in Beijing. At that time, I placed my bets on a Chinese Internet becoming almost the only alternative to its American predecessor. Who would have imagined that change would accelerate so much at the very beginning of 2012?
China: already an Internet giant
China has the world’s largest Internet traffic thanks to its population, the world’s biggest with more than 1.3 billion people. With the strong increase of its Gross Domestic Product, extraordinary engineering talent, plenty of venture capital, Chinese entrepreneurs and large firms now have the necessary resources to compete worldwide.
[Baidu : screen capture by Alban Fournier]
From a social behaviour point of view, there is a fundamental difference between American and Chinese people: in the U.S.A. (and in Europe too) a majority of online users are “spectators” while a majority of users in China are “creators”. China is therefore much more active market and its users generate a lot of UGC (user generated content) every day. This discrepancy is one of the reasons behind the success of QQ games, a Tencent service dedicated to free online gaming.
Now that Chinese Internet players are giants at home, aren’t we just about to see them thrive beyond borders?
Strategic investments before 2012
In 2011, Tencent formed several strategic partnerships in China: among them, Kingsoft Corporation Limited, an Internet security software editor and eLong, Inc, a leading online travel service provider in China. Outside China, in addition of being active in the U.S.A., Russia, India, Vietnam, Thailand, Tencent acquired a majority stake in Riot Games, a Los Angeles-based developer and publisher of online video games.  In 2010, Tencent invested $300m in Digital Sky Technologies (DST) of Russia, bringing two internet powerhouses of the emerging markets together in a long-term strategic partnership.
Alibaba prepared the future of Alipay reaching an agreement with Yahoo!, and SoftBank. Alipay is a leader in China in providing payment processing services. Alibaba also developed operations in the U.S.A. and formed a partnership with Turkey’s Logo Group to reach Turkish companies.
Among others, Renren and Dangdang are listed on the New York Stock Exchange. We can expect more US IPOs by Chinese companies. There are at least 10 Chinese Internet companies which have made confidential filings through the Security Exchange Commission. Those Chinese tech companies aiming at an IPO are also growing their business through innovation.
to be continued …