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My notes from Bloomberg/China Tech Ecosystem briefing this morning

I was kindly invited @ Bloomberg this morning for a briefing about the Chinese Tech ecosystem, so I though I'd share my notes with you. Feel free to email me back for more info, you know I answer 100% of my emails (although not necessarily in 24h!) Here we go. * Internet access is by far more Mobile than Fixed. For ex the share of traffic is at 34% mobile for Google vs 65% for Baidu (its Chinese equivalent), 30% Amazon vs 75% Alibaba (its Chinese equivalent) * Local digital players are protected from US giants by the "Golden Shield": There are only 3 fiber cables connecting China with the rest of the word, and there are all controlled by the government which prevents foreign digital players entry (Google, Facebook,..). Only exception is Apple (who does more harm to Samsung than Huawei/Xiaomi anyway - and Android has 90% market share). * In terms of digital services, "Everybody uses Everything" : The BAT = Baidu 90%, Alibaba 50%, Tencent 90% (with the % representing the proportion of internet user using services from these 3 brands). Tencent's product portfolio covers 71% of mobile usage share of time (which in China is broken down, in terms of time spent, by : 18% Social Networks, 17% Media, 15% Instant Messaging, 13% Shopping, 11% Gaming – surprising low as it’s ~30% in advanced markets - , 10% Browsing, Search 8%, Banking 4%, Maps 2%,…). The distant second is Baidu at 50%. * So far mobile phones were not shipped with service pre-loaded – and when something was shipped by default, it wasn't necessarily used as customers download the services they want to use ("Content is King" vs the "Device is King" that we saw in Europe for the decade post the iPhone introduction in 2007). This starts changing with 5 players building vertical stacks ecosystems (hardware , service portfolio) ; Tencent, China mobile, Xiaomi, Alibaba, and Baidu who is rumored to eye at Xiaomi's acquisition. * Alibaba is the most advanced for services outside of China, mostly via their payment system ( AliPay) that they deploy to retail/merchants in US and Europe to allow Chinese tourists to pay for their shopping while on holidays. The next one is Tencent (via its gaming portfolio e.g. Supercell)


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