24 July 2018

Chinese Internet Companies Sharpen Their Competition at Home to Better Compete Abroad

Chinese e-commerce startup Pinduoduo is seeking between $16 and $19 per share in its upcoming initial public offering on the Nasdaq stock market, according to its latest U.S. Securities and Exchange Commission filing on July 16. At the upper end of that range, Pinduoduo would gather $1.63 billion in funding from the IPO and would see a valuation at about $24 billion. Pinduoduo is one of China's rising e-commerce companies, and major stakeholder Tencent hopes it can leverage it in its competition against rival Alibaba.

China's growing appetite for technology and online services has supported the growth of a number of its tech giants and entrepreneurs. The three largest companies — Baidu, Alibaba and Tencent, which are known as the BATs, an acronym of their names — are competing for supremacy over China's internet industry. Alibaba and Tencent are the two most important members of the BATs and are trying to lock down the market around their respective ecosystems. Alibaba, which started primarily as an online retailer, has ventured into logistics, e-commerce, mobile payments, artificial intelligence and cloud computing through its partnerships. Tencent also has branched out into a number of internet-related services, as has Baidu.

Together the BATs represent an increasingly important growth engine for the Chinese economy, but their competition isn't confined to China. They are also in a global contest for market opportunities in Southeast Asia and India, where they are competing not only with one another but also with American stalwarts such as Google and Amazon. While the innovation of Chinese companies in certain areas may be behind that of their American counterparts, the BATs are not slouches when it comes to inventiveness and the relentless pursuit of startups with new products to bring into their folds. As China and the United States enter into greater competition in tech, the rise of Chinese competitors to American companies is crucial to China's hopes for success, and the competition among its companies can help ensure that they stay innovative in a highly centralized economy

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