China’s Internet Giants Reduce External Investments Amid Economic Slowdown
China’s leading internet companies, including Alibaba Group Holding, Tencent Holdings, and Baidu, have significantly reduced their external investments in response to an economic slowdown, regulatory challenges, and geopolitical tensions. According to data compiled by a Chinese consultancy, these companies collectively made 102 investment deals in 2023, reflecting a nearly 40% decrease from the previous year.
Tencent, known for its extensive holdings in China’s internet sector, experienced the largest reduction in investment deals. In 2023, the company struck only 39 investment contracts with 37 companies, a significant decline from the 95 and 299 deals it made in 2022 and 2021, respectively.
Baidu, a web search and artificial intelligence (AI) firm, participated in 24 investment deals last year, down from 52 in 2021. E-commerce giant Alibaba, which owns the South China Morning Post, was involved in 39 deals, a decrease from 91 in 2021.
The decline in external investments by China’s internet giants was primarily triggered by Beijing’s campaign to rein in the disorderly expansion of capital. As a result of regulatory tightening measures, these companies have considerably scaled back their expansion efforts. In 2023, Tencent focused its investments on corporate services, healthcare, and video games, while Alibaba primarily targeted advanced manufacturing firms.
Chinese tech giants displayed a growing interest in AI investments, particularly in the development of large language models (LLMs) to compete with OpenAI’s ChatGPT. Both Tencent and Alibaba backed multiple AI start-ups working on LLM technology, which enables chatbots to understand complex questions and offer humanlike responses.
Other major Chinese tech companies, including ByteDance, the owner of TikTok, and JD.com, made fewer investments compared to Alibaba and Tencent. Xiaomi, a Beijing-based smartphone maker, emerged as the top investor with 82 deals in 2023. In addition to its smartphone business, Xiaomi recently entered the electric vehicle market with the launch of its first EV, the SU7.
The reduced external investments by China’s internet giants reflect the challenges they face amidst an economic downturn and stringent regulations. However, they continue to explore strategic opportunities, particularly in AI and emerging technologies, to maintain their competitive edge in the global market.
Source: South China Morning Post (SCMP)
Note: This article is generated by OpenAI’s language model.
