Global strategies of Chinese tech giants Alibaba, Tencent and Bytedance in the past decade
This publication is part of a series of blog posts written by research apprentices, offering reflections on their experiences and insights gained during their time at the DIGISILK project
In the past decade, China’s leading tech companies have expanded globally. As part of the King’s Undergraduate Research Fellowship (KURF) during the summer of 2023, I researched the investment strategies of Chinese tech giants Alibaba, Tencent and Bytedance by collecting, visualising, and analysing data on their internal and external investments in the period 2014-2023. Based on the companies' financial information gathered from online databases Tianyancha, IT Juzi, Australia Strategic Policy Institute, and Choice, this analysis delves into the investment patterns of these tech giants, offering insights into their overseas strategies as well as their evolution over time, and regional and sectoral preferences.
Investment Patterns
The enthusiasm exhibited by these tech giants for outbound investments varies significantly. Tencent emerges as the most ardent investor in foreign markets, allocating a large 21% of its total investments to international enterprises. In contrast, Bytedance displays limited interest in overseas investments, dedicating a mere 4% of its investments to international endeavours. Alibaba is in the middle, with an average of 16% of its total investments in tech dedicated to international companies.
Timeline of Investments
The timeline of outbound investments reveals insights into how these companies' strategies have evolved. Since 2014, all three tech giants have demonstrated an increasing interest in expanding their global footprint. Interestingly, in 2021, there was a surge in internal investments, possibly in response to government restrictions on Chinese companies listing their stocks overseas and incentives for the adoption of domestic technology in mid-to-high-end markets. It is worth mentioning that Tencent's outbound investments surged in 2022 and 2023, alongside a notable decrease in internal investments.
Sector-Specific Analysis
Sector-specific analysis pointed out the industries that capture the attention of these tech giants. Although the three giants diversify their investments across various sectors, they often prioritise those aligned with their core competencies. Alibaba, for instance, exhibits a diverse portfolio that spans e-commerce and services across 106 overseas enterprises, while Tencent focuses primarily on the entertainment, media and gaming sectors. Bytedance invests in only eight international companies, primarily in the entertainment and media sector. Besides, the finance sector captures both Alibaba and Tencent’s attention, possibly driven by increased government scrutiny and tighter regulations on internet finance within China, leading to potentially lower profits from investing domestically in financial services.
Regional Preferences
Regionally, Asia, North America, and Europe collectively received approximately 94% of the investment from the three tech giants. By contrast, South America, Africa, and Oceania got comparatively little Chinese commercial investment.
The United States emerges as the primary focus for these tech giants, with significant investments in this mature market. India, as a significant emerging market, also garners large attention. Additionally, Bytedance and Tencent look for more opportunities in North America or Europe, while Alibaba directs its focus toward Asia.
Interestingly, the influence of Chinese national policies on the investment decisions of these three companies seems limited. There is no clear pattern showcasing that countries participating in the “Belt and Road Initiative” (BRI) receive more commercial investment from these three tech giants. Among the top five countries receiving the highest number of investments, only Singapore signed a BRI agreement with China. Yet, foreign policies of certain countries might have some influence: the Indian government’s restrictions on capital inflows have affected investments from China since 2021.
Shared Investment Targets
The analysis of overlapping investments unveils relationships among the three tech giants. Alibaba and Tencent have investments in ten common companies, often concentrating on industries in developing countries such as electric vehicle suppliers and e-commerce platforms. This small number of shared investment targets suggests that each company often pursues its unique path.
Moreover, competition among these giants extends to investments in other companies. For instance, Tencent's investment in YG Entertainment and Alibaba's in SM Entertainment highlights their involvement in the rivalry between the two Korean entertainment giants. Similarly, Shopee, an e-commerce platform backed by Tencent, and Lazada, which was acquired by Alibaba, are fierce competitors in the Southeast Asian market.
Spotlight on Southeast Asian Firms
To further examine the role of Chinese tech commercial investments on regional dynamics, I also examined 11 companies in Southeast Asia which were the recipients of Chinese investments. GoTo, an Indonesian tech company formed through the merger of Gojek and Tokopedia, received investments from both Tencent and Alibaba. Additionally, Lazada and Shopee, two competing e-commerce platforms, are backed by Alibaba and Tencent, respectively. These examples demonstrate how Chinese tech giants can play a significant role in overseas business sectors.
Concluding Remarks
Chinese tech giants such as Alibaba, Bytedance, and Tencent have adopted similar yet distinct strategies in their global expansion efforts. They tend to prioritise sectors aligned with their core businesses while also exhibiting different regional preferences. Notably, they engage in limited cooperation and intense competition in the outbound market, investing in potential competitor companies while sharing relatively few common investments. While internal policies of countries that received Chinese investments can influence, limit or encourage Chinese investments, as we’ve seen above in the case of India, the impact of Chinese national policies appears to be limited
Hailo Mao is an undergraduate student in Economics at King’s College London and joined the DIGISILK team in the summer of 2023.