Last year’s new strategies are old already, and across the industry established business models are running out of steam. We’ve seen big changes afoot in the last few months of TechNode coverage: China is no longer a bottomless well of new users and cheap coders. The trade war is further splitting the Chinese and US ecosystems—and threatens to cut Chinese companies off from core US technology like CPUs and the Android operating system. No one is sure how to reach the latest generation of young people. Even China’s decades-long economic boom is flagging. But new waves of opportunity are starting to crest, as China’s startups and tech giants explore new technologies and new markets.
In the TechNode Squared community, members are talking about these issues. One member sees trouble:
I think this is some big news. Essentially it will either delay Huawei’s access to US technology or completely cut it. Some similarities to ZTE last year. Although Huawei is somewhat more independent from US tech than ZTE, it still relies on it for key parts of its business. FPGAs from Intel or Xilinx, EDA tools, emulators, etc. from Synopsys and Cadence. Even CPUs from Intel.
Another member sees potential if the US takes its own pieces off the Chinese chessboard:
The bigger impact here, in my opinion, is enterprise software/solutions. So China is now entering this wave of “2B” (ie, to business) investments, which is just a buzzword for developing its enterprise software sector. The market is huge and largely untapped…
Alibaba and Tencent’s involvement in building enterprise ecosystems, underpinned by their cloud infrastructure as the base for customer acquisition, thus brings 1) dollops of corporate venture capital which then leads to a rapid build-up; and 2) much better margins cos of cross selling software to the large installed user base. Many of these listed US SaaS firms are unprofitable today because they are spending huge amounts on sales & marketing for customer acquisition and managing churn; you can quite easily see how this becomes much more manageable being part of the Alibaba/Tencent ecosystems (think about the rise of Pinduoduo or JD’s hypergrowth after Tencent’s investment). Amazon understands this and that’s why they offered a MongoDB clone called Amazon DocumentDB recently.
As such, I think “2B” becomes a lot more interesting, catalyzed by this move on Huawei.
TechNode can’t actually see around corners, but this Thursday in Shanghai we’re offering the next best thing: Emerge, a one-day conference dedicated to trends, issues and ideas that will shape the next decade of tech in China. There’s still time to buy tickets—or watch this space for coverage of key themes by TechNode’s crack team of correspondents.
In emerging technology, Blockchain Dreams: Regulations and Rewards will cover the opportunities as companies and government race to master blockchain—even as cryptocurrency remains mostly out of bounds. Can Ethical AI Exist in China? Will discuss the potential and peril of the rush to put the machines in charge.
On markets, the 2B Shift will explore the potential of enterprise markets to replace flagging consumer growth, while Digital Marketing: Finding China’s Youth will figure out how to stay relevant with the kids.
On the big picture, Corporate Innovation: Harnessing China Speed will discuss best practices for merging startup energy with corporate strategy, and a special live recording of the China Tech Investor Podcast with New York Times Asia tech correspondent Paul Mozur will discuss the divergence of the Chinese and US tech ecosystems.
We hope to see you there at Emerge —but if you don’t, we’ll keep you in the loop.