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Chinese Internet Companies Heading West

Chinese Internet Companies Heading West

16.09.2014 05:46

With Alibaba poised to set a new record for the world's biggest IPO in New York, other Chinese Internet companies are also eyeing Western markets, says DW columnist Frank Sieren. It will be interesting to see how Alibaba, China's biggest e-commerce platform, fares this week with its US initial public offering. If investor demand is as high as analysts predict, Alibaba could set a new record for the world's biggest IPO. But hype aside, it's worth paying heed to the other Chinese Internet businesses as successful as Alibaba and now also looking to expand westwards. Chinese search engine Baidu, for example, is becoming an increasing annoyance to American IT companies. In May, Baidu hired Andrew Ng away from Google to be chief scientist at its research lab in Silicon Valley. Recent weeks then saw the Chinese poach Zhang Yaqin from Microsoft, where he served as vice president and chairman of its Asian-Pacific research and development group. It's not hard to see why Zhang was lured away - th

With Alibaba poised to set a new record for the world's biggest IPO in New York, other Chinese Internet companies are also eyeing Western markets, says DW columnist Frank Sieren.



It will be interesting to see how Alibaba, China's biggest e-commerce platform, fares this week with its US initial public offering. If investor demand is as high as analysts predict, Alibaba could set a new record for the world's biggest IPO.



But hype aside, it's worth paying heed to the other Chinese Internet businesses as successful as Alibaba and now also looking to expand westwards.



Chinese search engine Baidu, for example, is becoming an increasing annoyance to American IT companies. In May, Baidu hired Andrew Ng away from Google to be chief scientist at its research lab in Silicon Valley. Recent weeks then saw the Chinese poach Zhang Yaqin from Microsoft, where he served as vice president and chairman of its Asian-Pacific research and development group.



It's not hard to see why Zhang was lured away - things haven't been going well for the Microsoft in Asia of late. Beijing has banned the use of Windows 8 on government computers, while Chinese authorities have launched an anti-monopoly investigation into the US technology giant.



Zhang won't have to worry about such matters at Baidu. There, he'll be up against very different challenges. The company's primary concern right now is maintaining its position as one of the top three Internet companies in China, home to over 600 million Internet users.



Chinese market just got tougher



Until now, China's Internet giants had domestic markets carved up between them. Baidu had the search engine market cornered, Alibaba e-commerce and Tencent social networks and gaming. But now their dominance is being threatened by the rapid spread of smartphones and the proliferation of young, ambitious companies.



Zhang's job will be to help Baidu defend itself against the competition. The company is also eyeing the global market. It named its new lab in Silicon Valley the "Institute of Deep Learning," but it's highly unlikely that it will be focusing its energies on artificial intelligence. Chief Financial Officer Jennifer Li revealed a year ago that Baidu was planning to invest in the search engine market worldwide.



Baidu and all of China's leading Internet firms started out as copies of US companies. Once pale imitations, some of them are now outstripping the originals. With this in mind, Tencent, best known for its social networking platforms QQ and WeChat (the Chinese answer to WhatsApp), has already embarked on a westwards expansion. WeChat's 600 million users in China have now been joined by 200 million users overseas. Tencent is also making some useful investments abroad, spending over $2 billion (1.5 billion euros) on US Internet firms like the e-commerce company Fab, Riot Games and Epic Games.



Alibaba goes from strength to strength



The westwards expansion of Alibaba, meanwhile, is still underway. It will likely use part of its earnings from the IPO to buy a few more Western startups. Last October, it spent over $200 million on ShopRunner, an online retailer that competes with Amazon. It has also invested in the online sports merchandise retailer Fanatics as well as Quixey, a search engine for apps.



The days when the likes of Facebook and Google were the uncontested kings of the world markets appear to be over. Further evidence that we are moving towards a multipolar world.



DW columnist Frank Sieren has lived in Beijing for 20 years.



 
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