The Chinese tech giants' future growth

In the west, some Chinese tech giants are only known to the investors as they like to stay their businesses at home. For example, Baidu and Alibaba are the two Chinese IT giants in terms of their market capitalisations and many other characteristics; however, the majority group of people in the west has never tried to use the Baidu search engine or Alibaba's e-wallets. Of course, people can argue that the mainstream products of these Chinese companies have perfect or even better substitutions in the western market; therefore, the Chinese giants cannot break into the western market. This could be one explaination; however, when we look at the search engine market, we can see that apart from Google, there are produts like Microsoft's Bing, Yahoo and some other less famous search engines. Microsoft, Yahoo and other search engine companies all have or at least had tried very hard to win market shares from Google. However, the Chinese search engine company, Baidu, has only tried its best to win the dominating market share in the Chinese market and with the help from the government regulation, and it finally succeeds; meanwhile, it has done almost nothing in the foreign search engine market. It does not mean that these Chinese giants do not join the international business, as they join the international business in a differnet form. In the global market, they do not perform like tech companies, they perform like investors or asset management firms. They may aggressively buy foreign companies with potentials and instead of selling their own products, they sell the products of the companies they owned. The very classical example is Tencent. Many Western teenagers may never use its popular chatting application in China, QQ, but they play League of Legends, whose company has been bought by Tecent.

Besides the companies like Baidu and Alibaba, some Chinese tech giants have become very active in the global market. Xiaomi, Huawei and other Chinese smartphone companies are winning more and more market shares in recent years and become known to many foreign customers. Some of these companies do have some very advanced technologies that they do not only offer the traditional Chinese products, the cheap products, they actually are able to offer some very quality products. Once they become more and more famous in the global market, they are no longer just Chinese brands, they have the potentials to become global brands, just like Apple and Samsung. They have the ability and possibility to produce some cutting edge products, which make them much greater in the future.

To conclude, the current Chinese tech giants are entering into two growth paths. One group is trying to become international asset holding companies, which have less risky future but relatively limited growth potentials; the other group is trying to become supernational tech giants, which is a more risky strategy but greater growth potentials. Both strategies are reasonable; but in terms of effects on the Chinese tech industry, the second path could lead to more innovations.