ALIBABA has turned in to a technology giant in the state dominated economy of China. Group’s US stock offering is a wake-up call about an emerging wave in the global technology industry. Until now, all the Chinese companies that made a display in global stock markets were state-owned banks and oil companies.
China’s tech giants expanded while attracting little notice abroad as they have little incentive to take on the risk and distraction of expanding overseas, therefore many focus on a fast-growing home market in the world’s second-largest economy.
Alibaba, founded in 1999 to link foreign retailers with Chinese producers of goods, also has stepped up its focus on its home market. The company has spent more than $2 billion, since the start of 2013, to create or acquire web-based video, finance and other consumer businesses. Chinese buyers accounted for a big portion of last year’s $248 billion in sales on its e-commerce platforms.
Although they have now strong foots in the global market, Alibaba pumped $215 million into Tango, a mobile messaging service, and $75 million into Shoprunner, a U.S. logistics outfit. Huawei with China’s biggest annual research and development budget at 16 billion yuan ($2.5 billion) employs researchers in Silicon Valley and other global tech centres. Haier Group, one of the biggest global appliance manufacturers, has a design studio in Los Angeles and a factory in South Carolina.
Despite the remarkable success of the private sector, the Communist Party still pumps billions of dollars into Soviet-style, state-directed technology plans. It has created its own mobile phone, encryption and other technology standards but failed to attract users. The government has spent heavily since 2001 on trying to develop homegrown computer chips to compete with Western industry leaders.
During the tech boom in the late 1990s, the government expanded university enrolment and asked state-owned phone carriers to add millions of new lines and create rural internet access. The number of university graduates, a big share of them in engineering, computer science and other technical fields, rose fivefold over the past decade to a record 7.2 million this year.