Chinese IT Giants
Chinese social networking services (SNSs) and online video platform providers are emerging as big players in the global Internet industry, propelled by their recent good performance. Despite the country’s closed policies on the Internet, Chinese Internet companies have been able to grow their business and to expand their influence to the global market.
According to overseas media outlets and industry sources on March 12, Chinese Internet enterprises have achieved remarkable growth. For instance, SinaWeibo, the Chinese equivalent of Twitter, will be listed on the New York Stock Exchange in the second quarter of this year. YoukuTudou, the “YouTube of China,” turned its first profit in the fourth quarter of 2013.
Last year, Tencent, one of China’s largest Internet services companies and the maker of WeChat, succeeded in the mobile-messaging app’s New York IPO, and its stock price more than doubled as a result. As WeChat was able to mobilize more capital and increase its share of the global market owing to its IPO, SinaWeibo faced rumors over its sluggish growth, since the number of users decreased. In response, the company is planning to accelerate the launch of a new global offensive to increase its brand awareness and raise additional capital through its IPO.
YoukuTudou successfully made a profit by achieving net profits of 910 million yuan (157.3 billion won, US$148.0 million) in the fourth quarter of last year, a 42 percent year-on-year gain. China’s largest online video site was created through a merger between the largest and second-largest Internet sites Youku and Tudou. After the amalgamation, the top online video platform provider has been focusing on diversifying profits, as shown by investment in its own programs and the launch of its mobile video service.
Recently, Tencent and Alibaba, two of the top three Internet companies based in China, reportedly suggested its strategic investment to YoukuTudou, raising the possibility of a large-scale M&A deal in the future. The move is considered to be part of their strategy to strengthen the weak areas of their businesses by designating the online video market as the outpost to secure competitiveness in the IT market in the long term.
Chinese Internet companies’ continuous efforts to increase their size though IPOs and M&A deals have put global Internet enterprises on edge, though. The phenomenon is due to the fact that as Internet firms in China with sufficient capital and a closed door policy are growing exponentially, the global mobile and Internet ecosystem’s center of gravity is shifting towards the most populous nation.