high-tech China

The Chinese are shaking down the Silicon Valley giants

Start
Tencent and Alibaba are now trailing Facebook and Amazon in terms of market capitalisation: an illustration of the rise of these technological giants in a China where smartphones and electronic payments are omnipresent.
 
Ca mobile gaming hampion and operator of the popular WeChat messaging service, Tencent last week became China's first $500 billion technology group, briefly surpassing California's Facebook.
 
China's number one online retailer, Alibaba, listed on Wall Street, is just behind, narrowing the gap with the American Amazon. A symbolic wake-up call for the Silicon Valley giants, who have so far locked the club of the world's top five stock market valuations.
 
This year, Tencent and Alibaba have seen their share price double in unison with a surge in income.
Their success" is explained firstly by the take-off of mobile internet« AFP's Shameen Prashantham, from CEIBS business school in Shanghai, deciphers the latest news from Chinese manufacturers of affordable smartphones.
 
Some 724 million Chinese connect to the web via their mobile phones, according to the government. This will dramatically increase the user base and the volume of data collected," says the government. privacy laws here are far less protective than in the West.« says Mr. Prashantham.
 

Electronic Strings

 
In the middle of the 2000s, Tencent made its mark with QQ, an Internet messaging system close to Microsoft's MSN, while Alibaba - launched by former English teacher Jack Ma - prospered with its Taobao auction platform.
 
Today, Tencent is enjoying its addictive "Honor of Kings" game, while its WeChat application (messaging, social networking, e-commerce, games, etc.) has nearly a billion users, half of whom spend 90 minutes a day on it: an enthusiasm that is not dampened by the strict censorship of content in China. Alibaba, meanwhile, dominates half of China's e-commerce between businesses and individuals, while diversifying into everything from hard-copy stores to finance and digital content.
 
Admittedly, both are taking advantage of the setbacks of their American competitors on the Chinese market: Facebook is banned in China; e-Bay quickly threw in the towel; Amazon is struggling to take off and has recently had to sell off assets in the Chinese cloud.
 
However, "Tencent did not imitate Western formulas, he tried to innovate. We owe the rise of electronic payment to him," insists Huang Hao, a researcher at the Chinese Academy of Social Sciences.
Innovative idea: Tencent enabled WeChat users to exchange "electronic 'red envelope' gifts," he says, while Alibaba developed its Alipay online payment platform.
 
Then their rival mobile payment systems took off thanks to taxi booking applications, before conquering almost all the country's shops and restaurants, where you can pay with your smartphone by scanning a barcode. « Even my 88-year-old grandfather is getting used to communicating and paying via WeChat.« says Zhao Chen of the technology investment firm Plug-and-Play.
 

International battle?

 
In addition, there are lucrative economic models fuelled by artificial intelligence. While Amazon takes its share of each transaction, Alibaba earns the bulk of its income through its highly targeted advertising revenues. « Without advertising, you can't sell anything« Liu Song, a clothing salesman on Alibaba's Tmall platform, told AFP that he deplored "the fact that we are not able to sell our clothes on the Tmall platform". have to buy all the keywords corresponding to each article "to reach potential customers.
 
Tencent, on the other hand, sells virtual items to players of "Honor of Kings" or emoticons on WeChat. Only 17% of its revenues come from advertising (compared to 97% for Facebook). Moreover, WeChat users' content is stored on their smartphone and not on expensive external servers.
 
Finally, while their income remains concentrated in China, both groups " show their ambitions for globalized ecosystems (...) to the great joy of Beijing« says Wei Wei, founder of GSL Innovation. In the United States, Tencent invests in Snapchat and Tesla, Alibaba sets up laboratories in California...". They're in learning mode, disadvantaged.« ...tempers Shameen Prashantham.
 
Conversely, in emerging markets, they can make their mark thanks to their experience of Chinese changes: Alibaba already controls the Lazada platform in Southeast Asia, Tencent is investing in e-commerce and taxi applications in India.
 
Something to scare the American giants? Not necessarily, according to Ms. Wei. « But they must prepare to see these Chinese players enter the international arena..."
 
Source: AFP

0 Comments
Inline Feedbacks
View all comments
ICO
Previous article

ICO, three letters that will change startup funding

bitcoin
Next article

Bitcoin, an archetypal bubble ready to explode?

Latest articles from ECONOMY

JOIN

THE CIRCLE OF THOSE WHO WANT TO UNDERSTAND OUR TIME OF TRANSITION, LOOK AT THE WORLD WITH OPEN EYES AND ACT.
logo-UP-menu150

Already registered? I'm connecting

Inscrivez-vous et lisez three articles for free. Recevez aussi notre newsletter pour être informé des dernières infos publiées.

→ Register for free to continue reading.

JOIN

THE CIRCLE OF THOSE WHO WANT TO UNDERSTAND OUR TIME OF TRANSITION, LOOK AT THE WORLD WITH OPEN EYES AND ACT

You have received 3 free articles to discover UP'.

Enjoy unlimited access to our content!

From $1.99 per week only.
0 Shares
Share
Tweet
Share
WhatsApp
Email
Print