It’s easy to rank companies by metrics like revenue or monthly active users. But sometimes, data doesn’t tell the whole story. Sometimes you need to get subjective.
This post These are the six best tech companies in China right now appeared first on Tech in Asia.
Subjective is the objective here, in what I want to stress is my own personal list of the best Chinese tech companies operating right this second. What do I mean by best? To me, being the best isn’t simply about making the most money. What impresses me is companies that can innovate, companies that are trying to solve actual problems, and companies that are looking far into the future rather than just aiming to hit their sales targets next quarter.
Here are my six picks.
Baidu’s obviously a market leader in online search and advertising, and it does very well financially. But that alone would not have been enough to get the company onto this list. Baidu deserves a spot among the best for two reasons: guts and forward-thinking.
To my mind, one of the gutsiest things a publicly-listed company can do is make a strategic decision that it can be fairly certain its investors won’t understand. But that’s exactly what Baidu did this summer, posting weak Q2 earnings thanks to heavy investment in the O2O sector. Most of Baidu’s Western investors don’t get O2O, and the company’s shares tanked and have been on the downslope virtually ever since. That was a gutsy call, but there are already signs that it’s paying off.
O2O is a short-term play in the grand scheme of things, though. Baidu is looking way into the future, too, working on everything from autonomous cars to artificial intelligence. Baidu’s deep learning research has already led to some amusing diversions, but I suspect that in the long run those guys are more likely than anyone else on this list to invent the world’s next big thing.
A concept image of Letv’s supercar.
Letv makes this list thanks to the company’s sheer audacity in expansion. Not long ago, Letv was just a video streaming company. But despite impressive success in the video streaming industry, Letv has in recent years decided to jump wholeheartedly into completely new businesses.
In the past few months alone, Letv has launched a line of smartphones and a line of smart bikes. It’s planning to bring its phone to the US market soon, moving very fast by Chinese standards. Oh, and did I mention the company is working on an electric supercar?
This kind of ambitious expansion doesn’t always end well, but Letv looks poised to do better than you might expect. For example, although it might seem strange that a streaming video firm wants to get into the car industry, Letv is taking it really seriously. The company has already inked a partnership with Aston Martin and set up a California-based team with talent from some of the world’s top car companies (including Tesla).
The car is especially important to Letv’s presence on this list, because China’s air pollution problem is dire. The country desperately needs an electric car cool enough to make car owners give up their Audis, and thus far Tesla hasn’t been doing that. Letv isn’t the only internet company working on a smart car of some kind, but the company’s dedication to making it fully electric means that it’s at least trying to be part of the solution.
Tencent is a massive money machine with fingers in dozens of different pies, but it makes my list for one reason and one reason only: WeChat. Tencent wasn’t the first company to create a mobile messaging app. Far from it. In fact, when WeChat first came out, it was accused of being a Whatsapp clone.
But with the benefit of hindsight, it’s clear that Tencent saw WeChat as far more than just a chat app. After all, it already had its QQ chat app, the most popular IM application in the country at the time WeChat was launched. WeChat was destined to be a new kind of social platform, and Tencent has expanded it into a kind of one-stop-service mobile platform that has everything from video messaging to online banking.
Seriously, you can do basically anything on WeChat these days. Want a virtual butler? WeChat has it. Need to book a car or get your dinner delivered? No need to leave the WeChat app. Looking to do some securities trading? You can do that from WeChat. You can play games in WeChat, you can book karaoke in WeChat. Heck, you can even snitch on people violating China’s smoking laws in WeChat.
Tencent is one of China’s best tech companies right now because it has had the vision to take the mobile chat app – which was well-worn territory by the time WeChat launched – and turn it into something much, much bigger. I’m not even sure how to describe what WeChat actually is at this point, but I know it’s damn important. It has allowed anyone with a phone to access all kinds of internet-related services that many simply didn’t – or couldn’t – use before.
Xiaomi’s weird Segway thing
Xiaomi earned a spot on my best companies list years ago for dragging down the price of high-performance smartphones in China, giving more people access to iPhone quality without the need for iPhone money.
These days, Xiaomi’s phone business seems to be foundering a bit. It could be argued that Xiaomi is a victim of its own success in a way: its high-performance, low-cost smartphones and online sales gambits proved so effective that competitors poured into the market, and even the big players were forced to respond with better offerings at Xiaomi’s price points.
But smartphones aren’t the reason Xiaomi’s on this list now. Like Letv, Xiaomi has expanded rapidly in recent years into all sorts of other industries. It now sells everything from smart lightbulbs to Segway-style scooters. But what Xiaomi has done better than Letv – better than anyone – so far is cultivate an ecosystem that brings third-party hardware makers into the Xiaomi camp. This includes a lot of interesting hardware startups, of course. But it also includes major players from outside the tech industry, like athleticwear company Li Ning, which has partnered with Xiaomi to create smart running shoes.
If the Internet of Things is really going to be – ahem – a thing, then this kind of all-inclusive ecosystem is going to be necessary. And while lots of other companies are trying, right now Xiaomi’s ecosystem looks more interesting that what anybody else can bring to bear.
China Aerospace Science and Technology Corporation (CASC)
Let’s get the bad part right out of the way: if China ever nukes another country, the warhead will probably be strapped to a rocket powered by CASC tech. But even deducting some points for its participation in weapons and defense research, it’d be hard to argue that CASC isn’t doing some of the coolest and most important technology work in China.
CASC is a state-owned behemoth that’s responsible for virtually every aspect of China’s space program. The Long March launch rockets that virtually every Chinese spacecraft uses to leave earth? CASC makes those. China’s Shenzhou manned space vehicles? CASC’s behind those too. The Chang’e moon landers: you guessed it, CASC. CASC is even the firm behind the experimental Tiangong-1 space station, and when China’s full-sized manned space station launches in 2023, you can bet CASC will be behind that one, too.
Maybe including CASC here is a little unfair – after all, the nation’s space program is a highly sensitive industry and it’s not like a startup or private company would be permitted to compete with CASC in this area. But although CASC has been handed a de-facto monopoly status, the company still deserves credit for taking China from a firmly ground-based power to a major space explorer in a relatively short time with just one major accident (which was nearly 20 years ago). And since space exploration is another area that I’d consider of paramount importance for human survival in the long term (Stephen Hawking says humans will need to colonize other planets to survive), that’s pretty damn important, and enough to earn CASC a place here.
OK, I’m cheating. China’s government isn’t really a company (although it certainly owns an awful lot of companies). But it’s getting this spot on my list, because without it, some of China’s most important tech companies – its green energy companies – probably wouldn’t exist.
When it comes to solving real problems, there’s really nothing that’s more important than climate change. The destruction of our environment poses a literal existential threat to homo sapiens in the long run, but even in the short run, the consequences of continuing with business as usual would be dire. Nowhere is this more evident than China, where thick, toxic smog often descends on some of the country’s biggest population centers, and where air pollution alone causes well over half a million deaths each year.
There are dozens of green tech companies in China working on this problem from every angle, with solar and wind firms at the top of the heap. But rather than pick one to include on this list, I feel it’s important that I give some credit to China’s government. It is frequently the target of my criticism for other reasons, but in terms of green technology investment China’s record is pretty unassailable. China has been investing more in greentech than any other country for years now, and that’s likely to continue. In fact, over the next 15 years China’s government is expected to invest US$2.5 trillion into greentech. (Of course, Chinese government policies are also causing a lot of the environmental devastation, but that’s true of many other governments that aren’t putting as much into solutions as China is).
There are lots of private investors in cleantech too, of course, but without the Chinese government pumping billions in the industry, things would be moving a lot slower. And this is a problem that we simply cannot afford to move slowly on.
There’s my list. But just in case that wasn’t controversial enough for you, here are some of the companies I didn’t include, along with the reasons why:
- Alibaba: it makes lots of money, and I considered including it for some of the interesting investments it has made. But Alibaba itself is a pretty bread-and-butter firm. It’s not solving any serious real-world problems and as far as I know it’s not involved in any world-changing future tech research.
- Didi Kuaidi: Like Uber, Didi Kuaidi is basically just an illegal cab company with a slick smartphone app.
- Qihoo 360: Big and ambitious, but lacks a consistent pattern of success when it expands outside of its core business (see: smartphone efforts, search efforts, etc.)
- JD: see Alibaba.
- Sina, Netease, etc.: With the exception of BAT, the “old guard” of internet giants have mostly fallen from their peaks. Still important companies, but no longer as important or relevant as they once were.
- Youku: Deserves credit for leaping into original content way before Netflix did, but what have they done since? Can’t compare with Letv’s rapid expansion.
- Your favorite Chinese startup: They’re not big enough yet and there’s a good chance they’ll fail before they get big enough to accomplish anything real.
Who would make your list of the best tech companies in China right now?