Over the last decade, China's technology industry has grown at a breakneck pace.
With over 100 large- and mid-cap enterprises, the industry is becoming increasingly diversified.
From self-driving cars to cancer detection, Artificial Intelligence to solar panels, electric
vehicles, battery technology, telecom infrastructure, mobile apps –
China leads the game in every sphere.
While China's technology push is inevitable.
Rising tensions with the West, in particular with the US, have put it under the spotlight.
Join us today to get an insight of the rising Chinese Tech Companies.
We will also be discussing why Chinese companies are having a hard time expanding globally,
and the US-China Tech Rivalry.
Technology and self-reliance are two fundamental pillars of modernization in China.
In the previous 30 years, it has succeeded in this goal, by establishing itself as a
major manufacturing power and implementing policies to create and market its own technologies.
Chinese firms have long been regarded as low-cost mimics.
Previously, Chinese enterprises served as contractors for American and European companies,
providing low-cost labor to construct their high-tech goods.
This, however, has altered in recent years.
Chinese firms are increasingly ascending the value chain.
Now, they are a high-end product manufacturer.
So, Now you might be thinking: what’s fueling the growth of Chinese Tech companies?
China's rise in Tech can be attributed to a number of causes, including a talented and
lower-cost labor force, as well as massive government subsidies that have forced Western
competitors out of business.
The country is putting a lot of effort into supporting innovation in order to move up
the global value chain and become a producer of high-end components and goods.
Its goal is to become the world leader in a variety of fields, including renewable energy,
artificial intelligence (AI), electric vehicles (EV), medicines, biotechnology, and digitized
manufacturing.
The Chinese government has poured at least $60 billion into the electric-car industry,
including research and development money, tax breaks, and finance for battery-charging
stations.
Revenue for China's software development industry is anticipated to grow to $1.2 trillion in
2021, with profit accounting for 14.5% of that amount.
The developing green economy relies heavily on lithium-ion batteries to power electric
vehicles and store solar and wind energy for later use.
In terms of its production, China is well ahead.
Global demand for solar panels is booming as countries scramble to harness more renewable
energy sources.
And China is by far the biggest supplier of the technology.
In both emerging and developed economies, there is a long tail of Chinese-built enterprises
tackling financial services, education, health care, and other social applications.
The velocity with which China's economy has grown, as well as the scale of its technology
acquisition and innovation strategy has alarmed countries around the world.
There have only been a few examples of Chinese technology companies succeeding in foreign
markets in the past.
However, in recent years, there has been an increase in the number of Chinese tech companies
expanding their foreign operations.
The "going global" of technology businesses is an unavoidable condition of economic globalization,
but it is also a strategic choice to expand the foreign market in order to boost competitiveness.
With low-cost and high-quality handsets, several Chinese companies that are less well-known
in the West have made significant inroads in Africa and Asia, enabling Chinese smartphones
account for more than half of global sales among the top 15 brands with its Infinix,
Tecno, and Itel brands.
Xiaomi, for example, is now the world's third-largest smartphone manufacturer, while TikTok currently
has a billion monthly users.
Shein, a Chinese fashion brand, has also gained popularity among young Western shoppers.
Meanwhile, internet behemoths like Alibaba and Tencent continue to grow their international
operations.
However, such achievements do not come without critics.
The recent decade has seen a rise in criticisms of China's technology acquisition practices,
with claims that Beijing participates in forced technology transfer and outright intellectual
property theft.
As a result, trade sanctions have been imposed, as well as heated discussions about the degree
of decoupling.
For example, when Huawei became more powerful globally, the US effectively banned the equipment
domestically and lobbied allies not to use it, claiming that China could use it to spy
or disrupt networks.
Moreover, the US considers China's advances to be predatory and harmful to America's interests
and has taken a number of moves to counteract them in the last few years.
TikTok, along with hundreds of other Chinese apps, is banned in India.
Both the US and Indian governments have justified such moves by citing national security concerns.
Xiaomi is now attempting to clear its name after the US Department of Defense branded
the Chinese company as a People's Liberation Army associate.
While these companies have denied sharing user data with Chinese authorities on numerous
occasions, the country's state-run economy and laws are not helping their cause.
The National Intelligence Law of China mandates that businesses collaborate with state intelligence.
Businesses must store user data within China and give it to the government under the Cybersecurity
Law.
At the moment, Chinese enterprises do not have a clear set of domestic rules to refer
to when problems about data access arise.
Policymakers have long recognized that a lack of clarity in policy is producing substantial
issues.
Even if China's data privacy laws are strong, there is a risk that the government may just
demand user data whenever it wants.
This is one of the major reasons why China is finding it difficult to expand its Tech
globally.
Now you might be thinking…
Will Chinese Tech companies ever be able to replace US tech companies like Google,Apple,
Facebook, and YouTube?
According to one estimate, China's tech industry is currently 42 percent as powerful as the
US.
The Chinese economy has yet to reach the point where it can exercise the same level of technological
control as the United States, but it is growing quickly and could catch up to the US in 10-15
years.
However, in emerging markets, American companies will confront substantially more competition
than they would have anticipated.
China has banned US based apps like Facebook and Google in its territorial premises and
has its own alternative apps for these.
WeChat, Alibaba's online marketplace, and Baidu's search engine have all helped to establish
a cyberspace that is distinct from that dominated by US internet giants like Facebook, Amazon,
and Google respectively.
In 2021, Xiaomi surpassed Apple to become the world's second-best smartphone, with Samsung
in first place.
The short video-sharing app, TikTok became the only, non-Facebook app to complete a benchmark
of 3 billion global installs by July with 1 billion monthly active users by September
2021.
China is also speeding up measures to replace American and foreign technology by appointing
a government-backed body to assess and certify local suppliers in sensitive areas.
Google has already invested $550 million in JD.com, a Chinese e-commerce company.
While China has advanced fields such as e-commerce, e-payments, and AI through its local market,
it has not made equal progress in key technologies on the global market.
Despite significant investments in marketing its high-tech sector, China remains at the
bottom of the rankings, with the United States, Japan, Germany, and Taiwan continuing to lead.
Apart from that…
Chinese technology companies do not have sufficient experience and support in going global.
The companies, government, intermediaries, and industry associations do not have well-defined
roles, with important breakthroughs yet to be achieved, the regulatory framework to be
refined, and the goals of going global to be soundly defined.
And the lack of relevant intermediary and industry association platforms is an important
factor hindering Chinese technology companies’ “going global” ambition.
China's technology companies have primarily limited their global expansion to established
countries and areas such as Europe, America, and Japan and have started their expansions
in developing countries.
Cooperating with developing countries in domains where they are world leaders can be more fruitful
because the required investment is lower and critical technology are easier to obtain.
Now, Moving on to the…
US-China Tech Rivalry “The U.S. is still the world’s leader,
but China is coming up very fast.”
China, according to the United States, poses an existential threat to both its security
and its chosen world order.
Criticisms of China’s industrial policy have become insistent and louder and behind
it there is a bigger issue of China’s quest to become a major technological power.
The so-called "tech cold war" is quickly becoming the crucial battleground in the superpower
struggle between the United States and China.
The United States has always maintained restrictions for strategic technology exports, but they
have been applied to Chinese enterprises in a more stringent manner in the past few years.
It was unsurprising that the US would target Chinese telecommunications behemoths Huawei
and ZTE, given their global stature.
While the United States has long had a technological advantage, China is quickly catching up, spending
substantially in artificial intelligence, robots, 5G and 6G, microchips, and surveillance
technology.
Today, no matter what the outcome of their trade negotiations, the US and China will
be engaged in intense geopolitical and technology competition.
In Conclusion we can say that China has made significant progress in developing
the institutional framework for a knowledge-based economy, but it still has a long way to go.
It is not only looking to join the ranks of global technological powers, but to replace
them altogether.
Moreover, China is unlikely to impose any restrictions on its technologies in the short
to medium term since it is at the stage where it needs to build an economy based on innovation
and technology with access to markets in the west in order to avoid falling into the Middle-Income
Trap.
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