On the afternoon of July 9th, Beijing time, "The Economist" wrote an article recently. The two competitions that compete for the world's number one are in full swing. One is the World Cup in Russia. The main characters in the competition are Neymar and Harry Kane. One game was launched on smartphones in the hands of consumers in other emerging economies such as India, Indonesia, Brazil, and other Chinese online stars such as Google, Amazon and Facebook and Alibaba and Tencent.
Commercial geopolitics means that the world's largest technology companies have a total market capitalization of $4 trillion, and there is no need for real face-to-face confrontation. American companies have no access to the Chinese market and compete with local companies. Chinese giants also respect the US market; Before maturity, Europe was always under the curse of Silicon Valley.
However, time and ability are changing. Chinese technology companies that once mimicked Silicon Valley products are now pioneers in the industry. For example, Tencent's communications application WeChat is no less than any product in California.
As a result, mainland companies are poised to make a big splash in overseas markets outside the US and China. Emerging market revenues, increasingly popular smartphones and a continuously improving Internet infrastructure are powerfully attracting all technology companies. When the next one billion Internet consumers, Alibaba is replacing Amazon, Google is racing against Baidu, and Tencent proves that it can fight Facebook.
However, the strategies of these companies are all different. American companies usually set up branches from scratch. They invest in subsidiaries that provide similar services to Indian or Mexican users as expected by domestic users. For example, Amazon is committed to investing in India. Hundreds of millions of dollars to replicate its services in the United States. Amazon also rebranded the acquired company. For example, Amazon bought Dubai's e-commerce website Souq.com for $650 million last year, and finally marked it as 'Amazon. the company' .
The services provided by Google and Facebook overseas are similar to those offered to US consumers; therefore, the recognition of the two companies in Brasilia and Bangalore is almost the same as in Boston and Berlin. Google users all over the world use the same Chrome browser, YouTube website or Android mobile phone operating system, and advertising in the same way. WhatsApp and Instagram are all owned by Facebook and are also very popular around the world.
In contrast, few users in Indonesia or India know the brand of Alibaba. Alibaba's strategy in emerging markets is not to set up its own stores, but to invest in local businesses – whether buying directly or acquiring minority stakes. In the past two years, Alibaba has built a group of companies that focus on shopping, payment and delivery, including India's Paytm and BigBasket, Indonesia's Tokopedia, Singapore's Lazada, Pakistan's Daraz and Turkey's Trendyol. Most consumers will certainly not know that the applications they use are actually supported by Chinese technology giants.
Tencent also invested in a large number of Indian companies, involving a wide range of fields, including shared rides, online education, music streaming, medical health, IT and e-commerce, as well as Nigerian payment companies and Indonesian logistics companies. Emerging market share is less active than the other two companies, but its investment in artificial intelligence can be used globally for autonomous vehicles.) According to data company CBInsights, Tencent, Alibaba and its The subsidiary Ant Financial has invested 43% of the Asian 'Unicorn Creation Enterprise'.
The different ways these companies take reflect the way Western and Chinese companies make money. Most of Google and Facebook's revenue comes from advertising, which means their services don't need too much localization.
On the other hand, the competitive advantage of Chinese companies has always been to deal with payments and the distribution of goods in countries that have previously had difficulty achieving goods distribution. Businesses based on solving such basic problems are difficult to output directly. 'For such a thing, one size fits all The solution doesn't apply to different countries,' said Tan Yinglan, a technology investment company at Insignia Ventures Partners. The experience of becoming a distribution expert in Singapore is largely unhelpful in Indonesia, a country with more than 175,000 small islands. Similarly, The payment methods that work in Vietnam are not feasible in Brazil or Nigeria, because the banks and regulatory systems in these countries are different. In other words, if this complexity is left to local entrepreneurs to solve, wait for them to obtain After successful acquisition, the effect may be better.
So how do these different strategies compete with each other? The most competitive places in China and the United States are mainly concentrated in India and Southeast Asia. The scale of investment can reflect a little bit of information: According to data provider Tracxn, Indian startups received a total of $5.2 billion last year. China's technology investment, compared to 2016, only 930 million US dollars. Market research group Forrester said that Chinese technology giants (including Jingdong and Didi taxi) spent a total of 6 billion US dollars in Southeast Asian companies' acquisition last year.
Chinese companies have several advantages. They have a reliable track record in attracting hundreds of millions of emerging market consumers to the Internet. Expatriates in Malaysia or Vietnam, plus tourists from the mainland, provide beachheads for companies to enter these markets. Positions. These Chinese giants also reached the tacit support of the national government. The founders of Asian startups are more willing to follow Ma Yun than the US amnesty; in order to run their companies for a long time, they are obviously more willing to adopt the Chinese model.
But in the eyes of critics, China's approach is similar to what the Japanese group did in the 1980s: over-investing in 'showing assets' in a hopeless and irregular way. Chinese companies sometimes inevitably end up competing with themselves, such as Both Tokopedia and Lazada, both of whom are investing in Alibaba, sell similar products in Indonesia. Shortly after investing in the former Indian e-commerce darling Snapdeal, Alibaba invested in Paytm.
The valuation may be surprising. Of course, the abundance of funds is also part of the reason. Worried about losing their wind-related investment in the region, the home wants to continue to invest. The appetite of the Softbank Group has tasted the sweetness in China, and now is keen on other The emerging technology market repeats this victory.
The advantage of American companies lies in their historical record of success and the prestige. The Silicon Valley giants have more or less international operations since the beginning. Amazon's UK and German subsidiaries are about to celebrate their 20th anniversary. English companies are easier than Chinese companies. Hiring employees or attracting users. More than half of Google and Facebook’s revenues come from outside the US market. The most internationalized Chinese company, Alibaba, accounts for only 10% of its overseas revenue, although the company hopes to It is possible to sell about half of the products in overseas markets before 2025.
Global weight cannot be ignored in local competition. Some services, such as Amazon's movie streaming service, can be promoted from one country to another, and its relationship with global suppliers is also the same. In this way, overseas subsidiaries are established. The cost will be much less than the acquisition. So far, Amazon has spent about $3.5 billion on establishing an Indian business. Amazon's market share in India is comparable to that of Indian local e-commerce Flipkart, but the latter financing is almost Amazon. Double the investment.
The downside of the American corporate approach is that the business model that its subsidiaries adhere to is proven to be effective only in a completely different environment. Like the Chinese, most Asian consumers use only mobile phones to access the Internet; the three giants of the United States The first bucket of gold is from the PC side. Some people think that the executives sent by the headquarters are not as energetic as local entrepreneurs, and they are too dependent on the capital of the headquarters.
However, perhaps both models work well and there are signs of convergence. The advantages of being part of a global team can be decisive in providing certain services – such as search or social media – Alibaba is making small moves to India. Companies promote their own B2B platforms to help them sell products abroad, in which case they expand in a similar way to those used by US competitors. In other areas, when local common sense is more important, the United States Companies may adopt a more Chinese approach, which is to build a subsidiary 'ecosystem'. For example, Amazon is said to be interested in acquiring Flipkart, and Wal-Mart has bought a majority stake in the company; Google is also considering minority investment In addition, on June 17, Google announced that it will invest 550 million US dollars in the Chinese e-commerce company Jingdong.
In emerging markets, the number of free service users is bound to be alarming – eight of the top 10 Facebook users are emerging markets, and India leads with 270 million users. So many users can translate into corresponding The level of revenue and profit is still unclear. Besides the e-commerce in India, the value of goods sold online in India is only about 27 billion US dollars per year. This figure can be realized within 9 days of all e-commerce companies in China, and the US only needs to Three weeks.
But this is not a problem. As long as you can win the next billion users, it seems that it can be paid for. The Chinese technology giant must consider the fact that the number of new Internet users is gradually decreasing; but they also have confidence, influence and ability. Expanding overseas. The US giants may have thought that there would be no local rivals in emerging markets; but the reality is the opposite. The situation today is very different from that of four years ago.