2014: The Year of Internationalization for Chinese Tech

By January 14, 2014
Vivo X3, the world's thinnest smartphone

2013 was a banner year for digital technologies in China. We saw Wechat come of age, online-to-offline flourishing along with e-commerce, and mobile becoming the dominant platform for internet access. 2014 will see the continuation of these trends, but the biggest story will be the international expansion of Chinese digital products and services.

Since China officially joined the WTO in 2000, the government has promoted the 走出去 "Go Global" policy for its companies to expand the footprint and soft power of the country. But at least in terms of brand power, it has so far seen limited success. Lenovo, arguably the most successful example, got to where it is not through organic growth but by a high-profile acquisition of IBM's PC unit in 2004. 

China has developed faster than any other country in the decade since that event. Its leap from pre-industrial to digital is nothing short of astounding. The country's consumers are now some of the most active in the world in terms of mobile usage, social media, and e-commerce. Beijing for example is bustling with internet startups and has gained recognition as the Silicon Valley of Asia.

However powerful the internet economy has become within China, no true tech superpower has yet emerged out of its billion-strong confines. Startups like Xiaomi have provided a high-profile image boost, and internet giants like Tencent and Alibaba have been planting the seeds through the years. They even have the market values to boot, but their coverage is still mostly domestic. All that is set to change this year. 2014 is the year that China will come of age and finally be seen as a digital trendsetter. 

Take Xiaomi for example. Already a hit brand in China, it sold close to 20 million phones in 2013. This is unheard-of for a company that's barely 3 years old, yet it's not staying complacent. Last year, it hired Google VP Hugo Barra to head its international expansion. Its flash sales events in Taiwan and Hong Kong were sold out in mere minutes, showing early signs of success. This year, it is opening an international office in Singapore to sell its high features-to-price ratio smartphones to the booming Southeast Asian market.

Huawei is another company to watch out for. It is emulating the Samsung approach – covering all the market gaps and feeding off the halo effect of a star product. What the Galaxy S series did for Samsung, the ultrathin Ascend P series is doing for Huawei. Also like Samsung, it leverages its ownership of a wide swath of the value chain for product range versatility and quick international market expansion.

Oppo and Vivo are two brands no one outside of China has probably heard of. Vivo is already very popular in the second and third-tier cities where it advertises a lot, but it recently gained a lot of press for producing the thinnest smartphone in the world at 5.75 mm. Oppo is even more ambitious, partnering with well-known Android ROM maker Cyanogenmod to launch their flagship N1 in key international markets.

In the online services front, Chinese companies are no less ambitious. Tencent has already expanded its international footprint through strategic investments in game companies like League of Legends maker Riot Games and Infinity Blade developer Epic Games. It also made a very intriguing investment last year on ephemeral messaging startup Snapchat.

The ace in Tencent's sleeve is of course Wechat. 2013 saw it growing to over 100 million users outside of China as it became one of the top social platforms in the world. Having already signed Lionel Messi as its international endorser, it is also opening international offices in Singapore and the Philippines as it not only expands but also monetizes its huge user base.

Its rival Alibaba has always had a global presence through its B2B platform, but this year will see the outward expansion of its other services. Fueled by its dreams of financial domination, Alipay's coverage will be more global than ever in its bid to dethrone Paypal as the de facto online payment service. Tmall and Taobao will also gain traction in expanding to Southeast Asia. Alibaba is leveraging its economies of scale in its home country as a headstart in expanding globally.

The most encouraging sign is that international expansion is not exclusive to the technology giants. Momentcam is a photo-sharing app which converts portraits into caricatures. According to App Annie, MomentCam has become No. 1 among free apps on the App Store in 18 countries, and has been among the top photo apps on Google Play in 11 countries. This was even before the app had an English-language version. Momentcam's success only shows that Chinese startups are becoming more attuned to global tastes, just as the world is warming up more to Chinese creations.

China has always been seen as a copycat in terms of technology. Just like with investments, it has always taken in a lot and very little out. Through the years, it has learned from more advanced markets and localized according to domestic tastes. This year, it is coming full circle as Chinese tech companies start pushing their products and services back out to the world.

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