In 2017 alone, Alibaba spent $11 billion on its top 10 investments, while in the past two years it sealed 70 deals worth a combined $29 billion. Tencent invested in more than 60 companies in 2018. The two companies have become the core investors new companies need to have to ensure a smooth market penetration.
“If you are a tech startup you either have to get money from Tencent or Alibaba or you won’t be able to grow because these two companies control the tech ecosystem,” Rein says. “Basically, any new idea is getting funded by one of the two and its major competitor is funded by the other one of the two.”
While the Chinese technology sector seems to be driven by trends – startups tied to blockchain or artificial intelligence are currently fashionable – experts say competition on the open market has become so high in the country that young companies need more than investment capital to be successful.
“Everything to do with sales and marketing is super important, even more so than I would say in the U.S. because it’s such a highly competitive market and everything moves super, super fast,” says Tal Badt, director of business development at Tsinghua University’s x-lab, a university-based education platform aimed at fostering creativity, innovation and entrepreneurship. “In order to survive, they have to stake a claim very early on, devote a lot of resources and be very, very aggressive toward fast expansion in all directions.”