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Opinion | Chinese Big Tech firms are on the comeback trail amid economic recovery and US tensions
- Recent earnings reports from Alibaba, Baidu and Tencent show optimism in an improved regulatory environment and a recovering Chinese economy
- The achievements of Chinese tech companies in international markets showcase their entrepreneurial spirit and commitment to globalisation
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China’s leading technology companies are making a comeback. Recent earnings reports from Alibaba, Baidu and Tencent for the first quarter of this year show optimism in an improved regulatory environment and a recovering economy after the lifting of Covid-19 pandemic restrictions in the world’s second-largest economy.
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Alibaba, which owns the South China Morning Post, witnessed a 2 per cent increase in revenue compared to the previous year. Despite a slow start to the year, the operator of two of China’s top e-commerce platforms observed positive domestic growth momentum in March. Baidu, which is working hard to position itself as an artificial intelligence pioneer, reported a 10 per cent growth in earnings, which surpassed analysts’ expectations.
After a series of negative and flat quarters, Tencent posted an impressive 11 per cent rise in revenue, also exceeding expectations. The company attributes its performance to a substantial rebound in payment volumes, advertising sales and gaming, based on the solid recovery of domestic consumption in China, which saw Covid-19 restrictions lifted in December.
This was also the first quarter since the central economic work conference held in December, where Beijing pledged its support for tech companies in leading development, creating jobs and competing internationally. Gone are the targeted investigations and massive fines. Instead, officials now talk about “normalised regulations” and have signalled the end of the campaign to rectify major internet platforms.
China’s Big Tech firms are now championing the integration of digital and real economies. This goes beyond providing cloud services to corporate clients. For instance, Tencent is assisting local highway operators in deploying radar to help prevent traffic accidents, and Huawei is automating coal mines to significantly reduce the need for underground personnel. These ventures, although they are less publicised, are making China’s tech giants stand out from “pure” internet platforms such as Meta.
The fortunes of these companies remain closely tied to China’s economy. The primary business operations of most tech companies are concentrated in sectors such as consumer goods and advertising, which are inherently correlated with the overall economy. The revival this year of China’s economy, which the International Monetary Fund projects to grow by 5.2 per cent, is the foundation of a rapid upturn in the revenue stream.
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