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tencent.com
Will U.S. online consumers start buying from Chinese online giants like Tencent? |
U.S. Internet companies have had a hard time in China. Global winner
Google has been kept on a second place in China by domestic search engine
Baidu. Chinese auction site
Alibaba gave
Ebay a run for its money and took over
Yahoo's China operation.
Meanwhile, giant Tencent from Shenzhen kept Microsoft's MSN and its Web hosting services out of reach of a top position. Tencent claims to have around 230 million accounts, close to an average of two accounts for each of the 140 million Chinese Internet users. Tencent is even jeopardizing China's monetary system with its QQ coin.
There is still a world to win for those companies in China. For instance, only recently Tencent moved into video-sharing. However, signs increasingly indicate that Chinese companies are ready to jump for global markets -- and online that is mainly the U.S. market.
Those initiatives involve smaller players such as Anothr.com, still in beta and delivering RSS feeds to Skype and Gmail. Tencent is preparing a major English-language instant messaging upgrade, suggesting it is going after Microsoft's home market.
Also, the Chinese Second Life clone HiPiHi will launch this summer, most likely both in Chinese and English. Market rumors suggest other similar business moves.
There is a good reason for Chinese Internet companies to reach to global/U.S. markets. The Chinese companies know better than their foreign competitors that the buzz about the growing Chinese middle-class is mostly hype.
Macroeconomist Arthur Kroeber, editor of China Economic Quarterly, as an economic category China's middle class will only reach the size of the current U.S. middle class (280 million) in 10 years. At that point, the spending power of the Chinese middle class will only equal a quarter of U.S. middle class spending power. Also, it's very unlikely that middle class Chinese will buy the same products and services as Americans.
Therefore, it's logical for Chinese Internet companies to go for the money of the U.S. middle class. We have an interesting year ahead.
