Abstract

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China’s internet players are shifting the centre of gravity in the global digital economy and forcing multinationals to rethink fundamental assumptions about the sources of innovation-led growth.

When it comes to China the numbers are usually big and digital is no exception. Alibaba holds the world record for the largest opening day IPO, and Tencent’s WeChat achieved more mobile transactions over Chinese New Year than PayPal did in all of 2015. But it’s not just the internet giants that are breaking records: PwC’s analysis shows that Venture Capital (VC) investment value in China-based internet businesses was worth USD 20bn in 2015, exceeding VC investment in United States-based internet business (USD 16bn) for the very first time. China’s internet players are shifting the centre of gravity in the global digital economy and are too important to be considered as known-unknowns.

Having a huge domestic market is an obvious factor in making China’s internet companies so valuable, however there are other significant variables at play. Where Chinese businesses were once derided as copycat innovators, the leading digital players have now developed into world-class trendsetters at the intersection of eCommerce, mobile and social technologies. The biggest players – Baidu, Alibaba and Tencent (collectively known as BAT) – are digital leviathans with broad ecosystems, disruptive business models, and unique services, and they have permanently changed customer expectations and industry dynamics. ​