This article was published on April 17, 2014

Risk-averse Chinese mobile tech firms are suddenly going all-in on global, but why?

Risk-averse Chinese mobile tech firms are suddenly going all-in on global, but why?
Si Shen
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Si Shen

Si Shen is the founder and CEO of PapayaMobile, a global mobile company with products including AppFlood and Kiwi Calendar. PapayaMobile is Si Shen is the founder and CEO of PapayaMobile, a global mobile company with products including AppFlood and Kiwi Calendar. PapayaMobile is headquartered in Beijing, China and also has offices in San Francisco and London.

Si Shen is the founder and CEO of PapayaMobile, a global mobile company. This article originally appeared on LinkedIn and was republished with permission.

As the founder and CEO of PapayaMobile, headquartered in the rapidly growing technology scene from what some call the Silicon Valley of China – also known as Zhongguancun – I’ve been living and breathing China’s tech industry, which at face value has been a rabidly risk-averse Chinese tech culture. Then, in 2013, a sudden mad dash among these Chinese companies began, each jockeying to be recognized and taken seriously as a global company.

As early as 2012 and 2013, these same companies probably wouldn’t have minded being acknowledged as just a “Chinese company.” But technology corporations are uncharacteristically breaking out of their shells; Starting in H2 2013, major Chinese technology powerhouses began funneling increasing amounts of stockpiled capital into the acquisition of international mobile users through international mergers and acquisitions, branding campaigns – or just through good old user-acquisition strategies like mobile advertising.

As a witness I’d say that there are a few motivating factors that have contributed to this transformation.

China’s saturated broadband market

So what’s happened between early 2013 and today?

Smartphone adoption and shipments in China have eclipsed the U.S., but major Chinese companies are finally comfortable with their foothold in the Chinese market. The China market alone was purportedly suffocating – China Mobile and Tencent publicly announced that growth in China was stagnating as the country’s broadband adoption was reaching saturation.

In fact, if you attended 2013 GMIC in Beijing, you might remember the fireside chat wherein Pony Ma admitted that the future of Tencent sat solely on the “internationalization” (his word, not mine) of WeChat. China Mobile, while the company is campaigns its users to adopt 4G, the TelCo has also suggested that in the face of stagnant growth, it was looking internationally – for example with its Skype and messaging competitor, Jego.

Not surprisingly, for major Chinese companies like these, with limited prospective growth, there’s really only one place to go, and that’s anywhere else but China.

Of course everyone’s motivations are different and each founder or CEO has in their own mind why they’re entered their Chinese tech companies into this global race. While my experience isn’t one that might be shared by every founder, I can come to a couple of additional conclusions.

As China makes waves, its international influence ripples domestically

AppFlood (a PapayaMobile product), due to its position as a global mobile ad network with business abroad, has fielded requests for help from Chinese startups to corporations (Chinese game companies included) seeking international branding through PR, rebranding, or other marketing activities.

What I can say from experience and in dealing with Chinese firms as of late, is that there’s a shared fervor to go global – and it’s more apparent now that IPO news from major Chinese technology companies like Alibaba and Sina Weibo are splashed on front pages, while Tencent, Xiaomi, Lenovo, and other Chinese companies are making headlines internationally for their global competitiveness.

But while the fervor is apparent among large Chinese companies, the effects are rippling outward among mid-sized startups. These startups are suddenly aspiring to build a global brand through expansion plans, which they hope to follow up with an IPO in the next couple of years (or raise another massive round of funding).

The problem is that amid this mad dash, there’s the first obstacle of trying to understand just how to go global.

Some are solving the problem with key international hires, whether through an international marketer, PR firm, or sales(wo)man. Others might be eyeing potential investment or acquisition opportunities – in the frame of Lenovo’s acquisition of IBM’s server business and Alibaba’s investment in Viber.

“Going out,” going global

There’s this phrase in China, which the Mandarin readers might recognize: “请进来,走出去” (pinyin is qing jinlai, zou chuqu) The phrase is translated as “please come in, go out.”

The meaning behind “Go out,” without getting into semantics, is something like a challenge posed to Chinese companies encouraging them to expand internationally, in the vein of what Apple, Microsoft, Google, and other U.S.-based firms have managed to do for the U.S.

But obstacles for China in the past have stymied any aspirations for “going out.” China’s mobile market was immature; domestic competition for the Chinese market alone was and still is fierce; and China has been plagued by its “copycat” image.

Despite this, China’s tech industry is evolving with multiple variables in play including IPOs, revamped brand recognition, and Chinese mobile innovations collectively contributing to 2013 and 2014’s rise of China as a global technology contender. We’re finally beginning to witness Zhongguancun “going out” and running with it.

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