Beware the real Beast from the East: Chinese tech giants

 
Hannes Ben
A Chinese Alibaba employee walks through
Chinese tech companies are on a quest for global domination (Source: Getty)

The last week has seen the UK battered by the worst snow we’ve seen in years, thanks to freezing temperatures coming from the east.

But cold weather and heavy snow is not the only thing that is making the move from east to west.

Chinese tech giants Alibaba, Tencent, Baidu and JD.com have started to make their way over. For most British consumers these names will mean very little, and some may confuse JD.com – the second largest ecommerce platform in China – with the popular UK sports brand of the same name.

Read more: Let the Year of the Dog be one of further London-China collaboration

In this region, the storm of tech giants is very different to ours, with Facebook, Amazon and Google barely recognisable. The big tech players there have the potential to cause a snowstorm of their own over the coming years, leaving our tech sector struggling to compete.

But what impact could these companies have on a western market?

JD.com is one of the most recent of the eastern giants to make a subtle play for the west, with the opening of an artificial intelligence (AI) research facility in London and an office in Paris.

It may tempting to look at Amazon as the most innovative tech giant, especially as it is pioneering the future of shopping with its new AmazonGo store opening in Seattle. But when you consider that JD.com has already announced plans to open 100 of these stores across China this year alone, it shows just how ahead of the curve this region is.

What sets China apart when it comes to innovation is a willingness to test and learn. In the UK and US, we see buzzwords such as AI and augmented reality (AR) everywhere we turn. But it’s rare so far to see the real-life applications.

Instead of talking about the latest tech trends, China goes out and creates them, and finds a practical way to use them.

A prime example of this is the Starbucks store that recently opened in Shanghai.

The store is the largest Starbucks in the world, and customers are able to book coffee tasting experiences through Alibaba’s ecommerce site, and even buy special products related to the store’s launch. Customers can also experience a menu or product through AR from their mobile device.

Being able to emulate something of that grandeur would be hard in the UK, unless Alibaba again partnered with a well-known brand like Starbucks. This is the type of innovation and partnership we should be witnessing in Britain if we are to remain a global technology leader.

Naturally, we would expect a Chinese entrant to be met with an icy reception in the west. With Google entering a patent deal with Tencent, it’s clear that the US tech giants are already trying to limit the impact these companies will have. It will also take something of an epic magnitude to draw consumers away from the western platforms that they already know and love.

Logistically, the tech giants of China will face problems, despite having similar business models to that of their western counterparts. Being able to build a network here in the UK where they will be able to offer same delivery and customer service will be a huge challenge. The way in which consumers in the west purchase is different to the east, and it will take some time for eastern businesses to grasp this.

This is apparent within fashion, for example – in China, luxury brands such as Burberry are listed on Alibaba’s ecommerce platform and even offered with discounts during Single’s Day (a popular holiday).

Although Amazon does offer extensive discounts on certain promotional days, it’s a long way away from discounting luxury fashion brands. But with China driving global sales for the likes of Burberry, the western luxury market could see an all-important boost if Alibaba were to penetrate the market here too.

While it will be extremely difficult to beat Amazon, Google and Facebook on home turf, these Asian tech giants are up for a challenge, and the advanced technology China has to offer makes them a real threat.

Chinese tech companies are on a quest for global domination. The only way to achieve this is through taking a lucrative market share in the west. As a result, we could be about to see the hold that Facebook, Google and Amazon have on the western world start to melt away.

While the “Beast from the East” may have brought the UK to a standstill, the Chinese tech giants are about to propel it to new heights.

Read more: The UK must not get left behind by China’s rise as a new superpower

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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