When Alibaba listed on the New York Stock Exchange in September 2014, it was the largest initial public offering ever at US$25 billion and has rapidly become one of the world’s most valuable companies with a market value of US$253 billion. Although China’s technology and internet industry was already well developed, it was a watershed moment signaling that China’s internet industry had arrived on the world stage.
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Today, the top 3 listed Chinese internet companies (Alibaba, Baidu and Tencent) have a combined market value of US$574 billion, the only country to produce technology companies that rival the market value of their U.S. counterparts. Even privately held startup companies are achieving significant valuations in their private funding rounds with 4 of the top 10 most valuable private technology companies originating from China. According to PwC, venture capital investments in Chinese internet companies (US$20.3 billion) exceeded U.S. companies (US$16.3 billion) for the first time ever in 2015.
The Chinese technology industry no longer consists of just commodity-like hardware manufacturing companies or ‘copycat’ companies. They are at the forefront of the internet and software innovation, particularly in mobile.
What are the main reasons for this phenomenon and which companies are leading the way?