Private companies in China can only survive when they team up with Tencent or Alibaba, creating a business scene that is unprecedented, says business analyst Shaun Rein, author of The War for China’s Wallet: Profiting from the New World Order to the South China Morning Post. “They basically have a gun to your head and you have to choose which of the two companies you want to work with.”
The South China Morning Post:
Among all of China’s 124 unicorns – private companies with a valuation of US$1 billion or above – 50.8 per cent are controlled or backed by BAT, according to a February report by information service provider ITJUZI.
“It’s impossible to be independent. Alibaba or Tencent would either copycat your technology or business model or they’ll invest in your competitor,” said Shaun Rein, managing director of China Market Research Group.
“They basically have a gun to your head and you have to choose which of the two companies you want to work with.”
Rein warns that if the Chinese internet landscape ends up looking similar to Japanese keiretsu or Korean chaebol – conglomerates that control huge swathes of their respective country’s industries – innovation will be stifled over the long term because large companies often become less nimble…
“If a [huge] company like Ele.me can’t even exist individually then what others companies can?” asks Rein, who is author of the book The War for China’s Wallet: Profiting from the New World Order.
Are you looking for more experts who can help you to make sense out of China’s digital transformation? Do check out this list.