Chinese tech no longer looks to Silicon Valley for ideas

Demand-driven innovation and emphasis on building ecosystems have brought China’s tech scene closer to the rest of the world.

Photo from Pexels

Photo from Pexels

By PENG Xin, SI Linwei


In 2016, Xiaomi’s LEI Jun appeared on the cover of WIRED magazine. The feature article opened with a statement that Xiaomi was not “a Chinese interloper cloning Apple's IP and originality,” and went on to explain how Xiaomi became a US$45-billion (290 yuan) company. Its market cap today is around US$65 billion, a success attributed to creating an “ecosystem.”

Xiaomi might have shouted loudly about its honesty and credentials, but no one listened. At the time, Chinese companies were perceived as pirates who simply plundered ideas from overseas. In the same year as the article came out, Carly Fiorina, Hewlett-Packard’s former CEO and a 2016 Republican presidential candidate said the Chinese were not entrepreneurial, didn’t innovate, and were stealing America’s intellectual property.

‘I am not Steve Jobs’

The most successful Chinese companies today did model themselves after their US counterparts. Baidu was China’s Google. Meituan started its business modeling after Groupon. Alibaba and Tencent took ideas from eBay and Myspace. Lei Jun might have said, “Don’t call me China’s Steve Jobs,” but it’s not clear if anyone with any gravitas ever had. China’s startup founders at the time seemed to believe that saying “Steve Jobs” over and over again would somehow increase their bottom line. Some still do.

But many of these clones have morphed into completely different entities from the originals, who, whether they admit it or not, are now looking to China for ideas.

WeChat, Meituan and Alipay are often cited as the standard-bearers of Chinese tech. But tech giants in China don’t simply innovate by becoming bigger and eventually all-encompassing (although expansion itself can be a form of innovation). They have come up with new business models that are changing, if not revolutionizing, the global tech scene.

“‘[C]lone’ apps have rapidly evolved to become incomparable to anything that came before them in the United States, while innovative new models are creating newly minted unicorns,” wrote Liz Flora, a researcher at the consultancy Gartner. “These days, it’s often the US companies that are the ones late to the game with successful new features.”

A copy-from-china example is the infusion of social media and e-commerce. Amazon launched “Amazon Live” in 2019, styled after Taobao’s live stream channels that are “part variety show, part infomercial, part group chat,” as Bloomberg described it. Apple introduced “App Clip” last year, which allows users to access apps without downloading them. WeChat mini program has offered the same feature for years. Unlike RED, which has unabashedly called itself an e-commerce app from day one, Instagram insisted on being a photo-sharing platform until 2019, when “Shop” was added and heavily promoted.

It’s about the ecosystem

Even more remarkable is Tiktok, now the world’s most popular social media app that no late-coming American rival has successfully challenged. Facebook, Instagram, and Google have all launched similar short-video functions (Lasso, Reels, Youtube Shorts, respectively) but so far none has achieved the same level of popularity. (Lasso was shut down after a two-year run.)

Many have tried to explain the rapid rise of Chinese tech. One theory is that Chinese companies are demand-driven. Mobile payment, pioneered by Alipay and now accounts for 86 percent of digital payment in China, became the go-to payment method for cash-reliant and security-conscious small businesses because credit cards had never been in prevalent use in China. This, to some extent, reduces overspending on advanced technologies that have only limited commercial application, a pitfall for some Silicon Valley companies.

Another, and probably more compelling reason, is the focus on “ecosystem.” Each Chinese tech giant has invested in a galaxy of startups, whose long-term impact goes far beyond the investor’s core business. Alibaba and JD’s logistics infrastructure, painstakingly built over the years, has transformed the consumer market beyond e-commerce. Baidu, Meituan, and Didi, all convinced that transportation is critical to their futures (though for different reasons), are investing heavily in autonomous driving. This also energizes the capital market and encourages startups to be bolder and faster.

The rise of the super unicorn

In a world where companies and countries are all vying for influence, it’s all too easy to argue about who copies whom. But in the grand, globalist scheme of things, the stakes are higher than rivalries alone.

As companies evolve and expand, innovations spark more innovations, and the spillover can invigorate the market of entire regions or even the whole world. The expansion of Chinese tech companies in Southeast Asia has given rise to a long list of super unicorns, such as Gojek (Meituan is an investor), Lazada (owned by Alibaba), and Shopee.

Chinese companies are not behind every single one of them. But with Chinese tech, the dynamics of the world’s tech scene are no longer the same.