Chinese tech giants have reached global heights of value thanks to shrewd business moves and the insular nature of China’s online marketplace. Tencent and Alibaba rank amongst the world’s top 10 companies and they continue to grow every day.
With more than 750 million Internet enabled customers in China, billions are being spent on apps, games, online shopping and services. Since the market place is essentially closed off from the rest of the world Tencent and Alibaba have a virtual monopoly in Chinese e-commerce.
Last week Hong Kong’s Tencent became the first Asian company to reach a $500 billion market value. It briefly even snatched the no 5 spot from Facebook for world’s biggest company, when just considering market value. The company has seen itself gain widespread fame and acclaim with its popular WeChat application, which is used by almost all smartphone users in the country.
Immense Growth In An Insular Market
Alibaba is only a few billion dollars short of attaining the same lofty heights as Tencent. The company’s stock has grown more in value this year than Amazon and both are racing to reach the coveted $500 billion market value. Alibaba has become a proxy investment for brokers looking to invest in China and as such its market value keeps seeing growth, despite their stock also being the most shorted as investors bet against the continued growth of the Chinese economy.
The top 5 companies include Apple, Alphabet, Microsoft and Amazon and now they could be joined or overtaken by these two Chinese giants. It can’t be overstate the importance that China’s closed-door policy has played in powering these companies incredible growth. It has not only given them a fantastic and exclusive platform to work with, but it has also protected them from outside competition, specifically the competition from Amazon and co who offer the exact same services as Tencent and Alibaba.
Quick Tech Adoption Across Varied Demographics
Zhao Chen from Plug n Play noted that in China technology is being adopted fasterthan anywhere else. The country’s large rural population has been quick to pick up the use of Smartphones and other tech. He mentioned how his 88-year-old grandfather uses WeChat as well as WeChat Payment to send and receive money quickly and easily, and could even enjoy Australian sports betting online if he wanted to.
In fact it is this multifunctional approach that WeChat adopted that has resulted in its 1 billion monthly users. The app caters to social media, messaging, payments, games and publishing services. Their exclusive game, Honour of Kings resulted in an 84% revenue spike n their gaming division in the third quarter alone.
Alibaba has cornered the e-commerce market in China with the site selling literally anything, from soaps to foods, to party decor and clothes to airplanes. They have also followed in the footsteps of US retailers and started offering special promotions such as their Singles Day, which is similar to Black Friday.
This year it resulted in record sales that grew by 40% since last year. Alibaba traded in over $25 billion in revenue on a single day, November 11th. These figures are very hard to ignore by investors, as this growth is almost exponential. With Tencent and Alibaba not going anywhere anytime soon, they look set to grow even more diverse and powerful in the coming years.