Chinese tech giants have seen a blockbuster year of growth, acquisitions and investments.

Commonly referred to as the BATX (Baidu, Alibaba, Tencent & Xiaomi), the growth boom has been mainly led by Tencent and Alibaba, who have grown to US$527.5 billion and US$475.6 billion in market capitalisation respectively.

Tencent had even managed to briefly overtake Facebook in market capitalisation in November 2017, to become the world’s fifth-largest publicly traded company when it reached US$528 billion – which was just above Facebook’s US$522 billion in market capitalisation.

Even Xiaomi, which saw plunging sales in 2016, has bounced back. It was fifth place amongst Chinese smartphone makers in 2016 but 2017 saw it grow so fast that Strategy Analytics estimates that it will overtake Oppo, Huawei and Apple to become the world’s second-largest handphone maker, just behind Samsung. With this improvement in business, Xiaomi is even considering an Initial Public Offering (IPO) in 2018, which is expected to be one of the largest ever.

The BATX’s Global Investments

With excellent momentum for growth, the BATX has been active in investments globally, participating in over US$30 billion of funding rounds worldwide.

China has been a key receiver of their investments, receiving 66% of the total (US$20 billion). 

Despite the emphasis on China, the BATX have also recognised the need for growth outside of their domestic market. Within the Asia Pacific region, Southeast Asia and India have been the focus for investments, receiving US$3.3 billion and US$3.1 billion respectively.

Outside of Asia, the USA got over US$5 billion in investments (16% of the global total).

Investing for Future Business

As part of our infographic, we also analysed the businesses in which the BATX have invested in.

Three areas stand out in terms of the amount invested:

1. Offline to Online (O2O) with US$6.706 billion invested into 8 startups

2. E-commerce with US$6.213 billion invested into 13 startups

3. Autonomous Vehicles with US$5.459 billion invested into 13 startups

However, if we look at the number of startups invested in, the focus of the BATX changes to:

1. Fintech with 15 startups receiving a total investment of US$838.7 million

2. Artificial Intelligence (AI) with 15 startups receiving a total of US$1.015 billion

3. Sharing Economy with 13 startups receiving a total of US$2.042 billion

Building the Next Chinese Unicorns

Back in 2010, almost every billion dollar startup (also known as “unicorns”) was launched in the US or Europe.

Today, according to Quartz, 1 in 3 comes from China.

Investments from the BATX, either directly or indirectly, have been a key driver for the growth in Chinese unicorns. Our analysis found that there were 13 such unicorns who received BATX investments in 2017 across areas as diverse as O2O, AI and Mobility.

However the battle for market share in these segments is mainly limited to Alibaba and Tencent. This is especially significant in the O2O space where Tencent has two companies, deals platform Meituan-Dianping and online ticketing platform Maoyan-Weiying going up against ele.me, Alibaba’s food delivery startup.

What’s Next for 2018?

The various battlefields in China will continue to shape investment strategies for the BATX in 2018.

1. With Tencent’s e-commerce partner JD.com launching its own offline stores to compete with Alibaba’s Hema Xiansheng, the battle for the O2O market will likely intensify with a greater push into offline engagement opportunities such as tech-enabled stores which combine online and offline consumer data.

2. China’s third-party mobile payments market will continue to grow further after tripling in 2016 to reach US$5.5 trillion in transactions. To become ever essential, Alipay (54% market share in China) and WeChatPay (40% market share in China) will likely increase their investments into bettering and introducing new fintech offerings which can also expand their footprint outside of the Chinese market.

3. The BATX will continue to invest heavily into AI and autonomous vehicles as they seek to gain an upper hand against the US GAFA (Google, Amazon, Facebook and Apple). Coupled with support from the Chinese government, which has goals of having Chinese research leading globally by 2030, it will not be surprising that the BATX will be able to achieve this through greater investment of financial resources, data and more.

 


Check out our full infographic below!

BATX Investments 2017