CHINA’S NEXT EXPANSION INITIATIVE-TECHNOLOGY

Since the 2013 launch of the Belt and Road Initiative (BRI), the Chinese government  has directly lent $600B plus to emerging markets, made foreign direct investments of $90B, and exchanged $6T in trade with the 136 countries that signed BRI cooperation documents. It’s no coincidence, that during these seven years, China’s economic, diplomatic and military influence has dramatically increased. 


The question is, “What’s the next expansion initiative?”   Certainly Xi Jimping going after Jack Ma is not out of character. But if the Chinese government could thoroughly take over Hong Kong, I wonder about a potential state driven technology “expansion” initiatives. Consider the following; 


Jack Ma’s Ant Group, an Alibaba affiliate and the world’s largest fintech company, was initially ordered to reduce the influence of its technology on financial services.   Sure, Ant’s online dominance in payments, customer facing systems and personal credit ratings minimizes competition. The recent news that the Chinese government  wants to curb Ma’s empire by taking a bigger stake should not come as a surprise  because Jack Ma’s Ant Group can disrupt the Chinese banking system. The parent company Alibaba which provides on line retail, cloud computing wealth management and lending is currently facing an anti trust probe. Would anyone be totally surprised if Ant and eventually Alibaba ends up being controlled by the Chinese government? 
Not widely known outside Asia, Tencent is actually the fifth largest internet company in the world behind Google, Amazon, Facebook and eBay. Tencent also owns WeChat, a mobile messaging app is used to read news, pay bill, order transport or food and even run small businesses. Tencent is also the largest video game publisher in the world. What’s really interesting  is that Chinese tech companies’ global expansion has been more of a hardware story so far and Tencent may also make it a service and software story. 


Consider the global importance and potential Chinese influence of the other five largest Chinese technology companies, Baidu, Huawei, Xiaomi Lenovo and ZTE. Baidu is the main search engine in China. The initial results of its speech recognition system performed 10% better than Google’s Web Speech. Huawei is now the world’s second largest telecom equipment supplier after Sweden’s Ericsson. In the global smartphone market, Samsung has a 25% share, Apple has 12% and Chinese companies Xiaomi, Lenovo and Huawei together hold approximately 20%. Lenovo is the world’s #1 manufacturer of PC’s. ZTE is in the network systems and telecommunications  businesses and is the second largest worldwide filer of patents after Panasonic.


It’s not so far fetched to think China’s technological expansion could eventually be largely State driven. We already saw hints of it with Huawei.  If so, it may have even more important implications-especially if the US government proceeds with the break-up of the large US technology companies. 


But even if this notion is wrong,  stop for a moment and consider the implications for the privacy of data and the Chinese ability to influence the US economy in the future.