China’s economy is burgeoning and so is its tech industry, which is in healthy competition with the United States. Just think — some of the biggest names in tech are headquartered in China, such as the national big four companies: Baidu, Alibaba, Tencent, and Xiaomi. Other American businesses like Microsoft, Apple, and Tesla also manufacture chips and parts there.
China’s largest tech companies cater to its massive population. Baidu, for example, provides search engine-related services; Alibaba focuses on e-commerce; Tencent is the creator of WeChat, a messaging, gaming, and social media app. Xiaomi manufactures phones, consumer electronics, and home appliances. It is also the largest local manufacturer of smartphones in China, after Samsung.
China’s big four tech companies are like their Silicon Valley counterparts (Amazon, Microsoft, Facebook, and Apple) in that they completely dominate the market. Each of these companies made huge investment leaps, yet China is always striving for more and not resting on its laurels.
Even though these tech companies face increased pressure and scrutiny from the government, that is not deterring them from achieving their goals in any shape or form. The COVID-19 pandemic has also slowed down the production of tech products because of China’s Zero-COVID policy. Nevertheless, all that hasn’t hindered China’s resilience. The country still boasts some of the biggest minds in the tech industry while producing countless new software and tech engineers each year.
An In-Depth Look at China’s Largest Tech Companies
China’s big four tech companies, Baidu, Alibaba, Tencent and Xiaomi, are often collectively referred to as BATX. Together, they generate billions of dollars in revenue and have revolutionized the way people shop, browse, and communicate.
Initially competing with Google, Baidu gained momentum locally in 2010 when Google ceased operating in China. Following Google’s model, Baidu is an online search engine that generates revenue using pay-per-click (PPC) advertisements from businesses that want to increase their website’s visibility on the search engine results page (SERP). Baidu’s estimated revenue is over 19 billion USD, according to macrotrends.net. Recently, however, the increase of social media apps impacted Baidu’s ad-centric model as many began skipping the search engine in favour of searching on other apps like Alibaba and ByteDance.
Alibaba was founded in 1999 by Jack Ma, a business tycoon, investor, and philanthropist. The e-commerce platform is China’s version of Amazon. With more than 22,000 employees, Alibaba continues to dominate the Chinese market, thanks to the optimization of online payments with the introduction of its Alipay app. It is estimated that for every ten online purchases in China, eight are made through Alibaba. Just as Amazon dominates the U.S. market, Alibaba controls China’s, making it the largest retailer in the world with a market cap of more than $400 billion, according to Exactimo, a digital platform for business students. After going public in 2014, Alibaba’s revenue skyrocketed; however, a series of scandals and controversies over counterfeit products saw its CEO Jack Ma step down in 2019. The top role was given to businessman Daniel Zhang.
Tencent was founded in 1998 by four entrepreneurs: Pony Ma, Zhang Zhidong, Xu Chenye, and Charles Chen. Initially starting as an internet service provider, the company released a messaging app in 1999, which generated its first capital. Tencent began to take shape in 2008 by investing in smaller entertainment companies. With major stakes in the video gaming industry, it is currently the largest video game company in the world. According to TechCrunch, Tencent is the first Chinese tech firm to be valued at $500 billion, surpassing Facebook’s net worth. With stakes in video games like Call of Duty and Fortnight, and as being the creator of WeChat (China’s version of WhatsApp), Tencent is China’s fastest growing company.
According to Asia’s Nikkei.com, Xiaomi is China’s third largest smartphone producer, behind Samsung and Huawei. The company generates revenue by producing smartphones, TVs, and consumer electronics. It is also one of the largest local internet service providers. Its estimated revenue is $47.52 billion, according to marketcap.com. Xiaomi’s smartphones dominate the market in China, and its internet services have expanded its reach to nearly 130 million users domestically.
What China’s Growing Tech Industry Means to The World
While Silicon Valley has conquered the world of tech in the United States, the growth of the Chinese tech industry created new and challenging career and economic development opportunities. Its major advances in mobile tech and innovation are integral to the country achieving its vision to compete with other technology hubs globally.
While many might argue that China has followed Silicon Valley’s footsteps, China was ahead of the game on mobile technology. People in China are increasingly using digitally automated ordering and payment methods. A New York Times story highlighted that many do not own a personal computer, which means mobile phones are the main device for more than 600 million users who own them.
For global business investors, China is a major source and supplier of manufactured products. Value for money and cost of labour have allowed American and international companies to source and manufacture supplies in China. Apple, for example, gets 18 per cent of its revenue and 85 per cent of manufacturing from China, according to Axios.
The robot-driven tech revolution has also taken China by storm. To mitigate the cost of labour and market demand, factories in China are beginning to replace humans with robots. According to the Financial Times, China is poised to overtake Japan to become the world’s biggest operator of industrial robots. That on its own is revolutionizing the face of the tech manufacturing industry.
More companies are switching to manufacturing their tech products in China because it provides fertile ground for budding entrepreneurs to develop their skills. Chinese leaders are looking to young entrepreneurs to spearhead the tech revolution, and catapult China’s tech strategy on the world stage in league with Silicon Valley.
With its numerous contributions, China’s tech strategy has convinced the world that it is capable of achieving remarkable feats locally and globally.
David Messiha | Staff Writer