China Musings #12: China's rise among the world's leading tech companies

Today, 8 out of 20 most valuable tech companies in the world come from #China. 

In the context of China, it would have been unimaginable in 2005 that the most valuable companies would be companies not owned by the government. Yet here we are, with 8 of them among the global tech elite. Just five years ago, China was represented with only three companies.

In 2013, this list had three other countries in the mix (Japan, Russia, Korea). Today, however, the list only has American and Chinese companies. An interesting development considering that in other industries, the largest players are rather distributed globally (think of car manufacturers, pharma, energy, and retail). The same cannot be said for the rapidly-growing tech industry. In a connected world where a tech company can achieve hyperscale in 3-5 years, having a huge homogeneous home market with deep pockets as the install base is proving to be a huge advantage.

Aside from the USA-China duality, the other major noticeable aspect of the list of the world’s largest tech giants is that it clearly shows a divide between top-tier companies and those further down the ladder. In fact, there is not a single company with a valuation between $200 billion and $450 billion. The top seven companies on the list account for 81% of the total value of the list, and they are all above the $450B mark. These include behemoths like Apple, Alphabet, Amazon and Microsoft, but also two big Chinese companies as well (Tencent, Alibaba). Meanwhile, the bottom 14 companies muster up just 19% of the value – a fact that underlines how hard it is to vault a tech company into the upper echelon of the market.

And it looks more and more likely the next battleground in the coming decade will be between the tech giants from US and China. We live in interesting times... so, in all seriousness, what’s your China strategy? No matter if you are a business an individual, you just cannot ignore what’s going on in China.