Europe & the USA must look beyond Silicon Valley
Google, Amazon, Facebook and Apple are never far from the headlines. The Silicon Valley sweethearts, collectively known as GAFA, are responsible for some of the most notable technological developments of the past few decades. According to a Statista survey conducted in March, 93 per cent (or more) of respondents knew who the tech giants were. But, of course, the results were taken from participants in the US. Across the Pacific in China, there are a host of other powerful players that the Western world has seemingly overlooked. The Chinese tech scene is booming, but which are the most disruptive companies?
Founded in 2000, Baidu is the most popular site in China, pulling approximately 80 per cent of internet search traffic. But, like Google, Baidu is much more than just a search engine. The company’s name refers to a ‘persistent search for the ideal’, which goes hand in hand with disruption. Baidu users can access music services, cloud storage, maps, translation services and even food deliveries. Baidu is pursuing an expansionist strategy, setting its sights on Brazil, Egypt, Thailand, Indonesia and Japan. Baidu even has a lab in Silicon Valley which is developing autonomous vehicles, and like all tech companies has a strong commitment to Artificial Intelligence.
If you’ve heard of any of the companies on this list, it’s likely to be Alibaba. Earlier this month, the ecommerce conglomerate became the first Asian business to hit the $400bn USD benchmark and is one of the top ten most valuable companies in the world. Alibaba provides consumer-to-consumer (C2C), business-to-consumer (B2C) and business-to-business (B2B) sales through online platforms. The retail leader has its own shopping search engine and payment services including Alipay,
It also offers cloud computing solutions. By pulling C2C, B2C and B2B transactions together, Alibaba is creating a one-stop platform for sales which is redefining traditional retail.
This month, Tencent replaced Alibaba as the most valuable Asian company, exceeding $500bn USD. The 19 year old company is the world’s fifth largest internet firm by revenue, now surpassing Facebook. Gaming forms a large part of the business’s wealth generation, but it’s most well known for running WeChat, the top social messaging app for Chinese consumers. As well as dominating social messaging, it runs 70 per cent of the music streaming market and, through WeChat, owns the biggest mobile payment platform in China. In a transformative move, Tencent recently announced the availability of advertising solutions for US marketers. This could serve to bridge the gap between US and Chinese markets. Like GAFA, the above three companies now have their very own acronym – BAT.
4. Didi Chuxing
China’s answer to Uber, Didi Chuxing, is disrupting transportation in mainland China by developing a ride sharing service that provides 20 million rides per day across 400 cities. The startup, founded in 2012, has received $15.7b in funding from investors including SoftBank and Apple. Despite the country’s tendency to keep themselves to themselves when it comes to technology, Didi Chuxing aspires to be a global company. This became even more apparent after the acquisition of Uber China last year. The company is also paving the way for electric vehicles by developing their own charging network.
5. WinSun Global
Initially, WinSun Global may not seem suited to this list of technological behemoths. However, the Shanghai based business has caused a stir across the globe with their pioneering 3D printed structures. Originally a building materials supplier, the construction firm innovated to avoid disruption (and consequently disrupted its industry) by developing a 22-foot-tall industrial 3D printer. In 2013, Winsun used the machine to print 10 houses in 24 hours. The creation of functional structures using additive manufacturing has driven disruption in construction, taking large scale 3D printing out of the prototype stage. WinSun presents another example of a company that looks well beyond China. In 2016, the company built the world’s first 3D printed office in Dubai.
Huawei is a multinational networking and telecommunications company that manufactures and distributes consumer electronics. This month, the Shenzen based business claimed it will create facial recognition technology that captures 10 times as many data points as Apple’s equivalent. Although a product is yet to be revealed, Huawei certainly has the resources to challenge Apple as the third largest smartphone seller worldwide. The mobile giant is also looking to disrupt the enterprise IT sector, building a suite of cloud services, storage solutions, Internet of Things capabilities and Big Data. CEO Eric Xu has announced a strategy of ‘cloudification’ that could step on the toes of the likes of IBM and Cisco.
Founded in 2010, software and consumer electronics company Xiaomi has demonstrated unprecedented growth and is now the fifth largest smartphone maker in the world. As of this month, Xiaomi will partner with search success story Baidu to develop deep learning, voice recognition and conversational AI. The collaboration demonstrates that Chinese companies are just as willing to enter strategic partnerships, particularly when this involves the improvement of Artificial Intelligence. Xiaomi has expanded into the Indian market and is now looking to do the same in Western Europe, potentially disrupting consumer electronics.
While Chinese consumers might not have access to YouTube, iQiyi is the next best thing. The seven year old online video platform has 500 million active monthly users and encouraged the transition of Chinese content into a paid subscription model. It was recently revealed that iQiyi would disrupt the industry yet again by working with parent company Baidu to develop AI for entertainment. This involves improving video encoding, clipping, keyword searches and content recommendations. The company’s next step is likely to be an Initial Public Offering (IPO), with a view to enter the US market in 2018. Netflix and YouTube may not be threatened, but their competitors might.
ZTE is a multinational wireless and cloud services provider that also manufactures smartphones. Their latest smartphone, the Axon M, is a foldable, dual screen model that harks back to the flip phones of the pre-iPhone and Android era. What’s most disruptive about ZTE, though, isn’t its phones. This year, ZTE teamed up with state owned corporation China Mobile and US telco Qualcomm Technologies to complete the first 5G interoperability development test (IoDT). ZTE plans to release 5G services for unmanned aerial vehicles, cars, submarines, a VR cloud game and of course wireless access. It looks like the proposed next generation standards for wireless are becoming a reality.
Brushing shoulders with the startups and innovative tech companies of China is Lenovo, an incumbent that has ridden the tidal wave of disruption to remain the world’s leading PC company. As well as creating consumer electronics, Lenovo now offers IT management software and storage solutions. In 2005, the firm acquired IBM’s personal computer business, opening up access to foreign markets. Lenovo is also encouraging open innovation, and has set up a New Business Development platform to collaborate with startups. Lenovo is one of the few examples of traditional Chinese companies that have successfully self disrupted to remain relevant.
The Western tech community would do well to keep an eye on the disruptive businesses of China, both as potential partners and as competition. Connecting with Chinese companies is easier said than done though, given the ongoing enforcement of the Golden Shield Project – also known as ‘the Great Firewall of China’. The project blocks the use of certain Western sites including Facebook, Twitter, YouTube and, predictably, a number of publications. While Google will be reintroduced this year, citizens found to be using Virtual Private Networks (VPNs) to access these services will be fined the equivalent of three months’ average salary. Regardless of what happens in the West, the Chinese technology train is hurtling forward. Can their Western counterparts keep up?