Chinese tech sector companies, once the darlings of Chinaâs private sector, are facing challenges, as many of them have been battered by strict regulatory oversight and flailing international expansion coupled with data security concerns and lack of chip availability.
How the Chinese tech sector fared in 2023 and what its future might look like are the questions addressed through IMDâs latest
China Company Transformation Indicator.
We investigated 37 listed tech companies in key sectors, including the internet, smart home and city, semiconductors and electronic components, and original design manufacturers (ODMs). Top revenue generators are JD.com, Alibaba, and Tencent, closely followed by Foxconn Industrial Internet and Lenovo. The indicator also includes six semiconductor companies from China, which are at least a factor of 10 smaller than the internet giants â and
far from their global peers Nvidia, AMD, and Qualcomm. But what is not happening now may come later âespecially given Chinaâs drive to accelerate the semiconductor sector.
We looked at the top performers in terms of core resilience versus future readiness across eight factors and 41 variables, ranging from the leveraging of advanced technologies, such as AI, APIs, and edge computing to ESG, business diversity, and success. The results are striking. The Chinese tech sector is still dominated by internet technology firms with the âBATsâ (Baidu, Alibaba, and Tencent) in the top five, along with JD.com and NetEase. But itâs also noteworthy that we already see three hard-tech companies in the top rankings, including semiconductor giant SMIC, transformed incumbent Lenovo, and the global security technology leader Hikvision.
BATs transforming, but with an emphasis on the business basics
The âBATâ club members â which went from untouchable in the 2010s to being challenged by competition, consumers, and regulators alike in the 2020s â appear to be undergoing a transformation. Indeed, the time of fast growth is long gone and these over two-decades-old companies are in search of mature management models and growth approaches while rethinking some of their diversifications.
Alibaba is strengthening its core e-commerce business, while
some observers suggest the company is also reevaluating its offline retail investments. At the same time, it maintains its investments in new technologies. This is apparent in its work in generative artificial intelligence (GenAI), where they are the leading and real contenders from China. The company is also willing to make bold decisions with active founders in the background â or sometimes, leading from the front. An illustrative example is Alibabaâs restructuring and persistent focus on core businesses which continues to give them a sustainable lead over the other tech companies, if only for its expansive reach, data foundations, and access to the countryâs top talent.
