Thursday, November 1, 2018

China is seeing the rise of a new kind of conglomerate, companies that occupy unprecedented roles in the world’s second largest economy. With business models built around advanced technology and data, and with the advantages of an immense domestic market, a supportive policy environment, and ample capital, these companies are constructing a new corporate model—one with reach into virtually every sector of the economy and state.

Indeed, the two largest of these Chinese “bigtechs,” Alibaba and Tencent, both among the world’s largest companies by market capitalization, are best understood as Google, Facebook, Twitter, Amazon, PayPal, Charles Schwab, Orbitz, Uber, and Spotify rolled into one, with numerous other functions on the side. But, unlike many of those firms, Alibaba and Tencent also operate with a tight link to state objectives, particularly on issues related to urbanization, financial inclusion, the social credit system, domestic intelligence, the Belt and Road Initiative, advanced healthcare, autonomous vehicles, and facial recognition.

This paper examines the role and reach of Chinese bigtech, with a view toward understanding implications of this new model for China and other markets.

IIF Authors

Dennis Ferenzy

Dennis Ferenzy - IIF
Associate Economist, Innovation