China’s tech companies go global while no one is watching

While the whole world is watching what Google is going to do in China, Chinese Internet companies are quietly expanding their global operations. The latest company to do so is AliBaba.com, the country’s biggest business-to-business website, which is rapidly increasing its presence in Brazil.

Recently it has partnered with Ludatrade, a Hong Kong company, and expects a growth rate of 30 to 50 percent (disclosure: Yahoo owns 40 percent of Alibaba and my current Georgetown fellowship is endowed by them). Apparently, Alibaba already has 156,000 users in the country.

Earlier this year, we saw another interesting development: In January 2010, Shanda Games, China’s largest operator of online games, paid $60 million in cash and $20 million in equity for MochiMedia, a San Francisco-based Flash game advertising network and payments platform.

A question posed on TechCrunch, a technology blog, in relation to that acquisition and the future of relationship between China and Silicon Valley in light of Google’s debacle was a good one:

Chinese Web companies are building huge cash hoards and valuable stock currencies and it’s still a comparatively young Web market. Increasingly, these companies could be likely buyers of US startups—not the other way around. Will the Valley’s rhetoric stick then?

By "Valley’s rhetoric," they probably meant putting freedom and human rights ahead of business interests.

But that’s not at all: check this 2009 map (pdf) that visualizes China’s tech expansion (the map comes from Mobinode, a group blog about Asian tech industry). It clearly shows China’s investments into India, Malaysia, Vietnam, Russia, Korea, Thailand, Philippines, Brazil, Japan to name just a few (many of them are in the gaming industry). According to this recent article in (the government-owned) China Daily, even Chinese online encyclopedias are now expanding abroad, mostly to target Chinese living abroad (primarily in the U.S.).

Well, let me add a conjecture of my own: if Chinese companies are not allowed to buy oil and transportation firms here in the U.S., they will soon start buying Internet firms. Now, that’s a neat way to undermine "Internet freedom" from within. It’s only a matter of time before the U.S. Congress starts ringing alarm bells about the Chinese Internet takeover.

To read more about how China’s Internet and software companies are trying to expand globally, take a look at this article from Seeking Alpha, this post from MobiNode and SiliconHutong blog. This Jan 2010 piece from Reuters offers some more excellent analysis on the problems faced by Chinese companies seeking global expansion.