The rise of China as a technology super-hub

I recently attended a seminar at Magic Circle law firm, Clifford Chance, where experts in the legal and commercial challenges and opportunities of technology in emerging markets provided insight into the use of technology in China, Africa and Latin America. I found learning about the rise of fintech companies in China and Africa fascinating, so I decided to do some further research.

This post will focus on the developments in China.

I found it fascinating to learn that Baidu, Alibaba and Tencent are now valued at a combined 1 trillion USD. This accounts for almost one-third of the MSCI China Index (an index measuring the equity. market performance of the emerging market indices of Brazil, Russia, India and China).

The average value of fintech unicorns in China are reported to be at least 8x the value of the fintech unicorns in the US. This could be due to the fact that they have more internet users than those of the US and all of Europe combined, Unicorns like Baidu, Alibaba and Tencent have unprecedented access to users data. This is heightened by the protectionist nature of China, applying tight domestic restrictions on FAMGA (Facebook, Apple, Microsoft, Google, Amazon) and completely kicking out Facebook and Google before 2011.

Alibaba's Ant Financial Services Group handled more payments in 2017 than MasterCard.

Tencent has over a billion users and combines the functionality of Facebook, iMessage, PayPal, UberEats, Instagram, Expedia, Skype, Netflix, WebMD, elite, GroupMe and many others. WeChat has made itself almost indispensable to the daily lives of its users which has not yet been achieved in the US. Medical assistance is now achievable though WeChat due to a partnership with UK's Babylon Health.

What effect is the trade war having on China's progress?

Although the trade war led to Alibaba and Tencent losing more than a 10th of their value in May 2019, the quarterly results published in August 2019 showed that Tencent's profits have risen from 17.9bn yuan to 21.4bn yuan in a year. Alibaba and JD.com also posted healthy results, indicating that the trade war is not having a great effect on the rise of the tech supergiants in China.