PERHAPS NO COMPANY embodies the ups and downs of Chinese big tech better than its biggest tech firm of all—Tencent. Two years ago the online empire seemed unstoppable. More than a billion Chinese were using its ubiquitous services to pay, play and do much else besides. Its video games, such as “League of Legends”, were global hits. Tencent’s market value exceeded $900bn, and the firm was on track to become China’s first trillion-dollar company.
Then the Communist Party said, enough. Xi Jinping, China’s paramount leader, decided that big tech’s side-effects, from distracted teenagers to the diversion of capital from strategically important sectors such as semiconductors, were unacceptable. Tencent was, along with the rest of China’s once-thriving digital industry, caught up in a sweeping 18-month crackdown.
With regulators declaring video games to be “spiritual opium”, and barring under-18s from enjoying them for more than three hours a week, Tencent’s new titles were held up by censors. It was forced by trustbusters to tear down the walls of its super-app to let other payment processors in. Last year it sold its stakes in JD.com and Meituan for a combined $36bn, in part to shore up its balance-sheet but possibly also to assuage regulators’ concerns about its ubiquity. To make matters worse, Mr Xi’s draconian zero-covid policy infected Chinese consumers with a bad bout of thrift. In the third quarter of 2022 Tencent’s revenues declined by 2% year on year, its worst performance on record. By October its market capitalisation had collapsed to less than $250bn.
These days things are looking up for China’s internet firms. Shoppers are “revenge spending” their way out of zero-covid gloom. The government’s clampdown on tech seems to have ended: regulators are easing off the companies’ old businesses and giving them more room to toy with possible new ones, from short-video entertainment and cloud computing to artificial-intelligence…
2023-02-12 09:52:23
Link from www.economist.com
The coronavirus pandemic has had far-reaching global impacts and has forced many countries and companies to rethink the way they do business. For the world’s most populous country, China is no exception, and the Chinese technology industry is adapting in its own way.
In this “new normal”, the big Chinese tech companies, such as Alibaba, Tencent, Baidu, and even Pinduoduo, have seen unprecedented success as consumers turn to them for their daily needs.
The sudden rise of these companies is due to their ability to rapidly pivot and quickly expand their digital ecosystems. With the world now pushing digital payments, online shopping, virtual services and entertainment, online communications, and cloud-based network infrastructures, Chinese tech giants have played a key role in keeping the country connected and ensuring that businesses and citizens can continue to function during the pandemic.
Alibaba, for instance, has adjusted its platform to become a one-stop-shop for people to get everything they need, whether it be food delivery, online shopping, remote education, and video entertainment.
In order for companies to survive and stay ahead of the competition in this new era of digital transformation, they must utilize the technology available to them.
For those looking to expand their business in China, adapting to the country’s big tech industry is now more important than ever. It is crucial to understand the language, the platforms, and user habits of the Chinese consumers. Additionally, taking advantage of the country’s advanced hardware and software capabilities will ensure that products and services launched in China will be better suited to the local market.
The Chinese technology industry is evolving rapidly and predicting what opportunities the next “new normal” will bring is difficult. But one thing is certain: those companies that are able to adjust and stay ahead of the competition will reap the rewards.