2013 was a year that saw exciting things happen in China’s tech scene — and there have been certain key trends that stood out in particular.
As the world’s largest smartphone market continues to grow, mobile devices probably took pole position among the top trends of this year — and as Chinese firms reach saturation point in their home market, they are starting to take over smaller firms, enter alliances, and even move overseas.
A new era of tech events has begun
We’re back in New York this November for the 4th edition of our growth-focused technology event.
Here’s a look at the seven key trends (or events) that took place in China this year.
Chinese smartphone manufacturer Xiaomi has been on a tear this year, becoming one of the hottest phone-makers in the country. The young company was founded three years ago and released its first device in 2011, but 2013 was when it shot to recognition across the world, firstly by nabbing Hugo Barra, previously Google VP for Android.
Barra was only one facet of Xiaomi’s steamroller year though. One of the greatest milestones for the company was when it notched up an impressive valuation of $10 billion in its latest funding round. Its revenue for the first half of 2013 reached $2.15 billion after it sold 7.03 million devices — just shy of the 7.19 million units it sold during the whole of 2012 — and it has likely already hit its target of shifting 15 million devices for the whole of this year.
Xiaomi released four smartphones in total this year. In April, it launched the variants of its then-flagship smartphone, the Mi-2S and Mi-2A. Subsequently, it unveiled its lowest-priced phone yet in July — the $130 Hongmi. Following that, it launched its latest flagship device Mi-3 in September, along with a smart TV, in the process displaying its immense popularity in the world’s largest smartphone market. Further proof of its popularity in China came when it overtook Apple on market share in the second quarter this year, according to figures from Canalys, an independent analyst firm.
In 2013, Xiaomi also took its first foray into the international realm, launching its mobile phones in Hong Kong and Taiwan.
The new year will only herald in even more milestones for Xiaomi. After hiring Barra, it is a natural step for the company to head overseas — and it seems like Singapore may be its next stop. After all, Xiaomi recently revealed that users of its Android-based MIUI firmware span 58 countries, with the second-largest group of users after China coming from the US.
2. The iPhone comes to China Mobile
It’s been a long time coming — years, in fact. In 2013, Apple’s iPhones finally made it to the world’s largest carrier with over 740 million subscribers: China Mobile.
This came as China also claimed another milestone in 2013, after Chinese authorities issued 4G licenses to the three major telecommunication operators, heralding in the super-fast network. Earlier this year, Apple gained regulatory approval for its iPhones to run on the TD-LTE standard used by China Mobile for its 4G networks.
There has been a lot of hype over the China Mobile-iPhone deal. It seems like for Apple, being present on the carrier would significantly widen its reach and sales efforts in China’s mobile market — but whether or not that turns out to be true remains to be seen.
In the meantime, Apple has had a pretty impressive run in the world’s largest smartphone market in 2013 — after it turned things around in China in Q4 FY2013. CEO Tim Cook said that the company was able to grow its relationships with the government and carriers in China, resulting in the greater China region generating $27 billion in revenue for Apple in the full fiscal year of 2013, a 14 percent increase.
3. Chinese firms eye the US
As Chinese firms settle comfortably into their domestic market, the next step for them as they seek to spread their influence globally and capture more opportunities is the US — and at no point has this been clearer than in 2013.
Chinese Internet giant Tencent is a prime example of a local firm taking big strides this year, as it seeks to conquer overseas markets. It was rumored to be leading a financing round into Snapchat, after it led a $150 million investment in design-focused e-commerce service Fab in June.
E-commerce giant Alibaba has also made a play for the US. In August this year, Alibaba was said to have paid $75 million for a minority stake in two-day shipping service ShopRunner, and subsequently it also led a $206 million round in the same service. ShopRunner represents a strategic investment for Alibaba, as it offers a viable competitor to Amazon Prime and can help familiarize Alibaba with the US market.
Alibaba has also been making its way overseas to other English-speaking markets. It made a subtle-but-significant play for Western companies in October by launching an English-language microsite for Tmall, its B2C shopping site for brands — and earlier in September launched its Taobao marketplace in Singapore incorporating a dual-language registration page, seeking to make its mark in Southeast Asia.
4. A string of investments, mergers and acquisitions
China’s tech industry witnessed a string of mergers and acquisitions in 2013, as Internet giants prepared for battle.
The biggest one in particular was a huge buy by Chinese search giant Baidu in July — the acquisition of third-party app distribution platform 91 Wireless for a whopping $1.9 billion.
Earlier this year, Baidu also announced it would buy PPS Video for $370 million, becoming China’s biggest video provider as it already owns iQiyi after buying a majority stake last November. In August, Baidu also purchased a majority stake in e-commerce website operator Nuomi for about $160 million and, to round off the year, it acquired e-bookstore Zongheng for about $31 million.
Other than Baidu, Alibaba has also been on a buying spree throughout 2013, as it pursued more alliances to beef up its presence.
The most notable one for Alibaba was in May when it purchased an 18 percent stake in Sina Weibo, arguably the nation’s most important social networking platform. This marked Alibaba’s strategy of collaborating with established players in the social space to enrich its shopping experience — leading to the launch of a “Weibo-Taobao” platform to make it easier for customers on the Twitter-like microblogging platform to shop on e-commerce site Taobao.
At the start of this year, Alibaba confirmed that it was acquiring Xiami, a popular social music-streaming service — and in April its Taobao Marketplace rolled out functionality for Xiami, apparently to help transform the retail site from merely a shopping platform to a lifestyle and media platform.
In May, Alibaba also confirmed that it made a $294 million investment for a 28 percent stake in China’s top mapping platform Autonavi, while in July it confirmed that it inked a strategic investment in outbound travel site Qyer.com for an undisclosed amount, to boost its travel offerings on marketplace site Taobao.
In November, Chinese analytics provider Umeng confirmed that it was acquired by Alibaba too, and in December Alibaba invested $364 million in electronics manufacturer Haier Group as it looks to expand its logistics and delivery capacity.
Tencent has not been resting on its laurels in 2013 either. Other than making investments in the US, in September Tencent announced that it invested $448 million in Sogou for a 36.5 percent stake, and merged its Soso search-related business with Sogou, stepping up its presence in the search market as it sought to become a credible rival to Baidu.
5. The Bitcoin rollercoaster in China
Crypto-currency Bitcoin made waves in China in 2013 — consisting of highs and lows, essentially going through a rollercoaster in the later part of the year.
In November, it was revealed that BTC China had overtaken Japan-based Mt. Gox as the trading system processing the largest volume of Bitcoins, while it announced a $5 million Series A round. Back then, it was noted that BTC China handles 80,000 transactions per day — over $50 million worth of the currency.
The demand in China and among investors has been high throughout 2013 despite one Chinese platform disappearing with $4.1 million in customer money.
However, in early December, China’s central bank finally spoke up in response to the hype around Bitcoin, saying that banks and other financial institutions are not allowed to handle transactions made with the digital currency. It says it doesn’t recognize Bitcoin as a legal currency, but gave the green light for individuals to use Bitcoin online — at their own risk.
Subsequently, a series of incidents in the country culminated in BTC China stopping deposits in Renminbi, China’s currency — following reports that the Bank of China (BoC) had outlawed transactions between Bitcoin exchanges and third-party payment systems. This sent Bitcoin’s price crashing.
It remains to be seen how Bitcoin will adapt to the changes in the Chinese system during the new year, but the unfriendly environment is making it difficult to operate in — and challenges are aplenty.
6. WeChat becomes a platform
2013 was the year when wildly popular Chinese messaging service WeChat (users in China get a version known as Weixin) expanded its services and progressed toward becoming a platform.
In August, Chinese Internet giant Tencent rolled out an update to its mobile messaging app Weixin, incorporating payment services, a game center and a sticker store, in a bid to monetize the free app. The availability of mobile payments on Weixin lets users simply link an online bank account to pay for items, while Tencent’s payments solution Tenpay does the necessary backend work. In the meantime, the five mobile games it released have passed 570 million cumulative downloads, as revealed in November.
As Tencent deepened Weixin’s online-offline commerce link this year, in September it announced that users in China can pay via the chat app when they get a drink from its dedicated vending machines located across Beijing. The Internet giant has also reportedly been finalizing its online-to-offline collaboration with merchants through the year, which would see large chain restaurants get on board to let Weixin users pay with the app.
7. Smart TVs become mainstream
Chinese Internet companies flocked into the smart TV space throughout 2013 as they strived to conquer the living room.
Many new smart TVs arrived in China in recent months, as companies hoped to draw in consumers with impressive large screens to form the centerpiece of households, and includes a range of Internet entertainment services.
In early September, popular Chinese smartphone manufacturer Xiaomi announced its move beyond handsets as it launched a 47-inch 3D smart TV which is retailing for CNY2,999 ($490).
In July, Chinese e-commerce giant Alibaba announced that it had developed a smart TV operating system and was working with a number of partners, including Cisco and Chinese manufacturers, to develop smart TVs, set-top boxes and services to run inside them. The culmination of those efforts resulted in a total of three smart TVs unveiled in September, manufactured in collaboration with Skyworth.
A little over a month after Alibaba announced its smart TV OS, fierce rival Baidu also jumped into the space as it partnered with electronics maker TCL Multimedia to sell smart TVs, which include content and branding from its video platform iQiyi.
To round off the year, Tencent launched an Internet TV in December, which features integration with the Chinese version of WeChat — in terms of program controls and even payment solutions.
What to expect for 2014
In 2014, China’s mobile presence is likely to grow even stronger — as this year’s trends already indicate. Mobile devices are being used increasingly for leisure and entertainment, which will lead to mobile video and games becoming increasingly appealing, and companies will strive to get that right. Mobile is also extending its influence into payments, which will be played out in e-commerce. Most importantly of all, social communication is what ties mobile interaction together — and Chinese firms are likely to take steps to cement their presence in that area.
Perhaps, with wearable devices being produced by so many companies all over the world as well, it may be that China could see its domestic firms breaking into the market as well.