China’s tech market is evolving faster than any other country. But among the Dragon’s fastest-growing companies, these 3 firms are not only booming but also making giant steps to become key players in the national hi-tech plan
Currently, China is home to some of the world’s largest tech firms. Although the US still has an edge, the Chinese presence and influence are undoubtedly growing, and they are growing fast.
According to venture capital firm Kleiner Perkins Caufield & Byers‘ annual report on internet trends, the People’s Republic has nine of the world’s top 20 tech giants. And as these Chinese firms are getting bigger, the possibility that China will replace German and Japan as the US preeminent international technological competitor is getting closer.
Everything has changed from when Chinese tech companies built their foundation in the domestic market by copying and localizing US successful business models. Today, companies in China’s technological sector are leading innovation worldwide. And it is the Dragon that now owns the highest imitation rate by foreign firms.
In just a couple of decades, Beijing has positioned itself right on the cutting edge of global technological progress. Chinese behemoths like Alibaba are setting new precedents for what a single business can offer, becoming viable competitors of those Silicon Valley’s giants that still hold the crown in the tech world.
The country is also giving birth to a large number of talents. Every year, about four million university graduates major in technology, math, and engineering. The development of artificial intelligence (AI) is a top priority, as well as the Internet of Things (IoT), as shown by the numerous smart homes and smart city projects in the country. It is expected that in a few years robots will be part of people’s daily lives while Beijing will lead the world’s robotics sector.
It is all part of the Dragon’s ambitious plan to become a global tech superpower. Given that technology and science are considered the main battlefronts of the economy, the national Made in China 2025 plan aims to break the country’s dependence on foreign technology before making the PRC a technological leader.
China has the top-performing companies in most of the sectors, which are increasingly able to exert their influence over industries and governments around the world. Despite the White House’s attempts to limit Chinese tech giants’ spread, these companies are already establishing a presence in many countries by setting up research and development labs, building smart city systems, deploying 5G, and more.
Among the largest Chinese technology companies, there are Alibaba, Tencent, Baidu, JD.com, and NetEase. However, many other firms are quickly working their way up. Among them, Pinduoduo, Meituan, and Qihoo 360 represent the Top 3 fast-growing companies in the Middle Kingdom.
1. Pinduoduo, 拼多多 – The e-commerce that broke Alibaba and JD.com’s duopoly
Pinduoduo is the fastest-growing e-commerce app in China’s history. Roughly translated as “buy more together,” it is the social commerce platform for group-buying deals, which is threatening Alibaba and JD.com’s duopoly in the Middle Kingdom.
Founded in 2015 by a former Google engineer, Colin Huang, it has been China’s third most popular shopping app since July 2017 thanks to a platform that combines social interactions and elements of social media.
Initially, Pinduoduo found success in lower-tier cities and rural areas where it leveraged the absence of competition, offering discounted products to lower-income buyers. However, thanks to its social nature and a check-out system that allows automatic payment, the app quickly spread in higher-tier cities, moving away from the frame of a second-level platform.
The company now aims to answer the demand for fast and reliable delivery, especially since these two claims have overtaken the demand for competitive prices and a wide selection of products. Therefore, it is planning to invest in advanced technologies like AI-powered routing in order to develop and then improve its logistics network.
Today, Pinduoduo’s daily active users have outnumbered JD.com’s for at least the past 12 months, turning it into China’s second-biggest e-commerce company by the number of users. In June, Pinduoduo’s average monthly active users (MAU) were 366 million, an increase of 88% from 195 million in the same quarter of 2018. It represents almost half of the MAU of the total Alibaba ecosystem.
The company’s share prices surged 8.66% on August 29, increasing its market cap to $39.1 billion. Pinduoduo, therefore, surpassed Baidu in market value, becoming the fifth-largest internet company in China.
2. Meituan, 美团 – The number one e-commerce for services
Meituan has recently become the third-largest internet company in China. Following the motto “We Help People Eat Better, Live Better,” Meituan is also the Chinese leading e-commerce platform for services and the largest group-buying site by gross merchandise volume.
Launched in 2010 by Xing Wang as one of China’s earliest group buying sites, Meituan now offers over 200 service categories, covering 2,800 cities and counties across the country. It operates numerous well-known mobile apps in China, including Dianping and Mobike, in order to provide services like on-demand delivery, travel booking, catering, car-hailing, and many more.
“Eating” is still Meituan’s core business. However, in less than ten years, the company managed to expand the business and build a multi-level technology service platform, which cooperates with organizations, universities, research institutes, and more to build smart city concepts around the country and, therefore, improve the lives of its users.
Today, Meituan has 20 million daily mobile users with a total transaction amount that reached $72.4 billion at the end of 2018, a 44.3% increase over the previous year. It now ranks 13th in BrandZ Top 100 Most Valuable Chinese Brands released last May.
In September 2018, Meituan Dianping (3690.HK) was officially listed on the Main Board of the Stock Exchange of Hong Kong. Here, three days ago, on October 8, it reached a market capitalization of HK$516.2 billion ($65.8 billion), which makes Meituan the third-largest listed internet company in China following Alibaba and Tencent.
3. Qihoo 360, 奇虎 360 – The cybersecurity leader
Although it is less known abroad, Qihoo 360 Technology Co Ltd is the largest provider of internet and mobile security products in China and is successfully working to become a key member of the country’s national cybersecurity strategy.
It was founded by Yahoo China’s former president and vice president, Zhou Hongyi and Qi Xiangdong, in 2005. At first, Qihoo 360 was launched with the aim to create a search engine and compete with Baidu but the two founders soon became aware that antivirus and antimalware software was what China really needed.
In addition to cybersecurity products such as PC and mobile antivirus, today, the company also owns its own hardware line, it offers security training and consulting, and provides value-added services, including games. Moreover, Qihoo 360 is internationally praised for discovering vulnerabilities in other companies’ systems such as in the ones of Alaska’s FBI and Tesla.
The company launched an IPO on the New York Stock Exchange (NYSE) in 2012, which made it reach a market value of over $2 billion. In June 2016, it delisted from the NYSE and returned to China’s mainland stock exchange through a backdoor listing after agreeing a $7.57 billion deal with elevator maker SJEC Corp. At that time, its market cap surpassed $62 billion, which not only was a sevenfold increase on its previous value in the US market but it also made Qihoo 360 the most valuable software stock in the A-share market.
In 2017, Qihoo 360 also opened a cybersecurity center in China to boost the country’s cyber defense through military and civil cooperation. According to China Securities, it has also acquired many security companies such as Opera Software.
Currently, the firm accumulates nearly 10,000 patents of original technology and core technology. In August 2018, Microsoft released the global Top 100 security contribution list, in which Qihoo 360 is the most selected and the highest-ranked security vendors. This year, it is also listed in the Top 10 tech companies in China for the first time.
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