Log In

Enter your username and password below

China’s Internet ‘Godzillas’ Stomp Overseas

So many others have failed. But China’s internet giants are on the brim of dominating overseas. Reuters Reporter Tara Joseph gets a few words from Breakingviews’ China editor, John Foley.

Reuters Reporter Tara Joseph says, “Godzillas of the Internet,’ John. It makes sense that the Internet sector is hot in China. There’s about one billion people logging on. But all websites can’t be alike.”

Breakingviews’ John Foley says,  “No, we are looking for the winner – both in China and overseas, Tara. And we’ve decided that the Chinese Internet space is a bit like Godzilla, the Japanese monster that was supersized by radioactive waste. These – Baidu, Tencent, Alibaba – have grown up in very peculiar circumstances because of China’s censorship and its closed market. But now they’re of gigantic proportions and we’re wondering which one is going to make it in overseas markets.”

What’s the Key to Success?

Reuters Reporter Tara Joseph says, “So, what’s the key to make it in the overseas market, then? That’s a big market to succeed in.”

Breakingviews’ John Foley says, “Well, one key thing is innovation. Now, Alibaba is the company that gets all the credit for being China’s internet sensation… partly because it’s going to do one of the biggest IPOs of 2014. But we think that the most innovative company right now is Tencent. Tencent operates WeChat, the mobile chatting app, which has taken China by storm. It’s got maybe 18 million users overseas already. And you can use it, it’s not just a product it’s a platform, you can use it to pay for everything from financial products to taxi fares. It’s not just filling a gap in China, it could potentially fill a gap in markets like the U.S., too.”

Chinese Products Vs. Overseas Success

Reuters Reporter Tara Joseph says, “Very cool, that Tencent WeChat has made a deal with Google. But as we know from experience, Chinese products have not really been successful overseas. Why should the internet space be any different?”

Breakingviews’ John Foley says, “I think there are two reasons the Internet space might be different. One is that it’s the only sector, the only real sector in China that’s entirely privately owned. SOEs in the internet sector do not exist. So there is genuine innovation… we’re seeing it with Tencent, we’re seeing it with Alibaba, we’re even seeing it with Baidu, the search engine. The other thing is that investors are happy to put in capital to these companies, and they’re not really asking very tough questions about where that capital goes. We’re inevitably going to see that with Alibaba’s IPO. So while money flows freely to these internet giants, you can expect that sooner or later one of them is going to break out of its own market and run rampage overseas.”

Reuters Reporter Tara Joseph says, “China’s most innovative sector, the internet, a lot more to come.”