Analysis | China’s largest tech companies have spent billions on investments, but are they smart shoppers?
Alibaba and Tencent, two of Asia’s most valuable companies, have made an array of investments as they build their ecosystems and go head-to-head in “new retail”
China’s technology triumvirate comprising Baidu, Alibaba Group Holding and Tencent Holdings have become some of the country’s most active investors, spending billions of dollars in a variety of industries, whether to support their own core operations or to diversify into exciting new areas.
A look at available investment data shows that Tencent is the most active of the three, having taken part in at least 94 investment and merger and acquisition (M&A) deals since the beginning of 2017, according to data compiled using Bloomberg’s M&A function. That is almost 25 per cent more than Alibaba’s 74, and far exceeds Baidu’s 25 deals.
Broadly speaking, the three firms’ investments shine a light on how their business strategies are evolving. Alibaba and Tencent, which vie for the title of Asia’s most valuable company, have gone head-to-head as they gear up for a war targeted at the intersection between online and offline retail. The aim is to integrate offline retail – otherwise known as bricks-and-mortar – and e-commerce to create a seamless shopping experience for China’s 1.3 billion consumers.
SPENDING SPREE FOLLOWS US COUNTERPARTS
However, the investment splurge by Chinese technology companies is not too dissimilar to that of their US counterparts, many of which historically acquired or invested in firms that were deemed as key to future growth. Facebook, for example, bought photo-sharing app Instagram in 2012 and messaging platform WhatsApp in 2014, while Google acquired YouTube in 2006 and navigation app Waze in 2013.