One industry to rule them all
The Institute of International Finance recently released a report on the size of “Big Tech China”, written by Dennis Ferenzy, which provides an insight into the scale, scope and ambition of Big Tech China.
The world is witnessing a rise of an industry that is expected to control every aspect of our lives. Through technologies such as deep learning and AI, together with collaboration with the Chinese state for mass data collection of its citizens. Chinese Technology companies are able to make customized user experiences and predict future consumer behaviour. Two companies that are ruling the stage with this new technology in China are Alibaba and Tencent.
These two firms have more concentrated businesses than their western counterparts and are the leaders of the Chinese Technology revolution. They control companies in industries such as video gaming, streaming, social media, search engine’s, online shopping, payments, credit rating, insurance, banking, chat, maps & navigation, health, logistics, autonomous automobiles, food delivery, building smart cities and education just to name a few. All these subsidiaries transform the physical reality of a billion people into the virtual world, through a variety of diverse apps for every single need that can be imagined. The breadth of the businesses has a similar spectrum of activities of at least a dozen US companies put together: Apple, Google, Twitter, Facebook, WhatsApp, Netflix, Amazon, FedEx, Spotify, PayPal, Uber, Microsoft.
China is ahead of the world in many of the above sectors. For example, mobile payments totaled approx. USD 15.4 trillion in China in 2017, which compared to the USD 377 billion in the United States. The growth in this industry is exponential, as in 2015 mobile payments only accounted for USD 2 trillion of total transactions. These transactions are then used by AI start-ups to customize user experiences in other apps owned by the parent company (Alibaba / Tencent).
This report was global in focus and did not discuss the African market in detail. Alibaba plans to empower up to 200 African entrepreneurs. Most investments are also focused in South Africa, where Standard Bank has partnered with WeChat to launch WeChat Wallet, and Alibaba through its platform Alipay has launched Alipay in South Africa, giving Chinese tourists access to more than 10 000 merchants.
Verdant Capital is currently in detailed discussions with Chinese tech companies regarding potential investments in African fintech ventures.