Image source @ Visual China
Text | Good looking business, the author | Dong Xiaohua, the editor | peace of mind
Nine years ago, when the mobile Internet began to sweep the world, Ma Huateng, a deputy to the National People's Congress, spoke on behalf of the Internet industry for the first time at the two sessions.
In his speech, "going out" was mentioned at great length. At that time, Ma Huateng believed that the mobile era gave Chinese Internet companies a new opportunity for internationalization, because the international Internet giants in the PC/WEB era had not yet made global products suitable for the mobile era.
Later facts proved that with the rise of the mobile Internet, a large number of Chinese tool-based APP has flourished overseas.
By 2021, the mobile Internet will once again become the driving force for Internet companies to "go global", but this time, it is driven by a "sense of crisis".
The golden age of the mobile Internet is coming to an end - under the combined effect of mobile traffic peaking, supervision in the Internet field antitrust, geopolitics, and various pressures, Chinese Internet companies have once again set off a wave of sea.
Whether it is a senior giant such as Ali and Tencent, or a new giant like ByteDance, going to sea is a big event in 2021, and even carries their growth hopes for the next stage.
So, how will the Big Three pan for gold overseas in 2021? What have they achieved and what challenges have they faced? In 2022, what kind of scene will the Internet giants go to sea?
Byte to the sea: games, cross-border e-commerce are hard bones
Overseas, ByteDance has TikTok, which has 1 billion MAU. In addition to advertising, ByteDance wants to find more monetization methods for TikTok.
In 2021, factors such as the peak of domestic Internet traffic and the tightening of supervision have become another layer of impetus for ByteDance to go global.
Games and cross-border e-commerce are grasped with both hands, both hands are very hard, and the challenges are also huge, which is a true portrayal of ByteDance going to sea in 2021.
In terms of cross-border e-commerce, in 2021, ByteDance will invest/acquire e-commerce industry chain companies in a big way while re-testing the Water ToC e-commerce business.
In September last year, TikTok officially launched the e-commerce product TikTok Shopping, which includes two models: TikTok Shop (small shop) and TikTok Storefront.
TikTok Shop is similar to TikTok, where payment takes place within TikTok; in the TikTok Storefront model, consumers can browse products without leaving TikTok, but enter the merchant's online store to place orders and pay.
At the end of 2021, Byte's overseas independent e-commerce APP - Fanno was launched in a low profile. Judging from public reports, at present, Fanno is mainly based on its own business model, supplemented by inviting third-party sellers to settle in.
Fanno's download page overseas, picture/network
Some people in the cross-border e-commerce industry believe that ByteDance's self-operation first in the case of insufficient experience in overseas e-commerce is conducive to quickly understanding the market, rapid verification, rapid adjustment, and strong control.
The other side of the coin is that self-operation requires ByteDance to build its own team, complete a series of links from procurement, supply chain, marketing, logistics and distribution, etc., and bear inventory risks.
Doing cross-border e-commerce is a complex system engineering. In the past year, ByteDance has also invested in many industrial chain companies, including cross-border large sellers StarLingco and Patuoxun, cross-border supply chain service provider Zongteng Group, and cross-border logistics company iMile.
Fanno's goal is to provide cost-effective products to users around the world, but initially it tested the waters from Europe, perhaps to avoid the more competitive Southeast Asian market.
In Southeast Asia, Ali, Amazon, and JD.com are all lining up. In the field of cross-border e-commerce, ByteDance is still a novice, on this road, it will continue to grow bigger, it will definitely meet giants such as Amazon and Ali, and competition is inevitable.
The game is another main line of ByteDance's 2021 sea. With the tightening of domestic game version numbers and the tightening of supervision, "going to sea" has become the focus of ByteDance's game business in the past two years.
In addition to self-developed games, Byte Tio dDD also attacks the game field through the way of "buying, buying and buying", and the same is true in the overseas game market.
In March this year, ByteDance spent 4 billion US dollars to acquire Mu Hitomi Technology, which became the highest investment event in the game industry at that time. Mu Hitomi Technology is the largest MOBA game company in the Southeast Asian market and can help ByteDance seize the Southeast Asian market.
In April, ByteDance also wholly acquired Youai Interactive Entertainment, a game company that is influential in Japan and South Korea, and its placement-like RPG mobile game "Place Girl" is known as the "Japanese National Hang-up Mobile Game".
In December last year, ByteDance increased its stake in The European and American casual game developer Maibo Games, rising from 3.96% to 18.6%.
From the perspective of revenue, ByteDance games have begun to achieve results.
In the November 2021 mobile game revenue list released by Sensor Tower, ByteDance's game overseas revenue top 30 products have 3 models.
In July last year, Yan Zhi, head of ByteDance's game business and president of Asahi Lightyear, revealed that most of Lightyear's business is global, and overseas flows account for nearly 80% of the global total flow, including Mu Hitomi.
Byte, which started from the information flow, began to cut into the game field in 2018, and was not optimistic, on the grounds that Byte does not have game genes.
Today, through self-development and large-scale investment, byteDance's game business has completed the process of 0 to 1. However, in the early days of ByteDance, it was more trying casual games, and there was still a lot of room for improvement in medium and heavy games.
Medium- and heavy games require strong experience and accumulation in research and transportation, which is not easy for latecomers such as Byte, whether at home or overseas.
Ali: In addition to e-commerce, technology also has to go to sea
Globalization, domestic demand, and cloud computing are also known as Alibaba's three major development strategies. Ali is also a "pioneer in the sea" in domestic Internet companies, and over the years, its e-commerce, Alipay, Cainiao, Alibaba Cloud and other businesses have been promoting internationalization.
Looking back at 2021, Ali's overseas business can be said to be: it has been working hard, but it has not yet met expectations, and it will be added.
On Double Eleven in 2014, Ma Yun clearly proposed that "within ten years, Ali will have half of its revenue from overseas customers."
Alibaba's financial report for the first half of fiscal 2022 shows that its revenue from cross-border and global retail & wholesale business was 30.294 billion yuan, accounting for only 7% of the total revenue in the current period.
Compared with the goal of "half of the income comes from overseas", Ali's internationalization still has a long way to go.
After Singles Day in 2021, Ali once again announced organizational restructuring and personnel arrangements – Dai Shan and Jiang Fan were responsible for the newly established "China Digital Business" and "Overseas Digital Business" respectively.
Among them, Dai Shan is in charge of Taobao (including Taobao, Tmall, Alimama), B2C retail business group, Taocaicai, Taote and 1688, which together form the "China Digital Business Sector".
Jiang Fan is in charge of the two overseas businesses of AliExpress and International Trade (ICBU), as well as a number of subsidiaries such as Lazada for overseas markets, which together form the "Overseas Digital Business Sector".
In 2021, Daniel Zhang stressed on many occasions that overseas market potential is huge, and going overseas will be one of the main growth drivers of Ali in the next few years.
Ali's latest organizational structure adjustment, with Jiang Fan as the overseas digital business sector, has been interpreted as Ali's performance in the overseas market again.
Domestic traffic has peaked, competition has intensified, and the slowdown in growth has been reflected in Ali's financial report.
According to Alibaba's second quarter report for fiscal 2022, Alibaba's revenue was 200.7 billion yuan, significantly lower than the market expectation of 207.4 billion yuan. Among them, the revenue growth rate of Taobao and Tmall was only 3.4% year-on-year, which was significantly lower than the market expectation of 6%-8%.
At the same time, Ali also lowered the full-year performance guidance, from 30% to 20%-23%, indicating that it is not optimistic about growth.
Therefore, Ali can not only compete with JD.com, Pinduoduo, Meituan and other stock markets in China, it needs to go out more aggressively.
Alibaba's globalization, the largest part of the current revenue is still in the e-commerce business, especially cross-border and global retail business. The growth of this business is currently mainly achieved through Lazada and AliExpress.
Not long ago, Alibaba disclosed Lazada's new goal: to serve 300 million Southeast Asian consumers in the future, achieving an average annual GMV of $100 billion, which is 5 times the previous one; Lazada's current annual active buyer size is 130 million.
In addition to the e-commerce business, Alibaba Cloud has also been mentioned in a more important position. In Q2 fiscal 2022, Alibaba Cloud accounted for 9% of Alibaba's total revenue, carrying the heavy responsibility of Alibaba's second growth pole.
In 2015, Alibaba Cloud established an international headquarters in Singapore, and then set up data centers and teams in the United States, the United Kingdom, Japan and other places.
At the Alibaba Investor Day event held not long ago, Zhang Jianfeng, president of Alibaba Cloud Intelligence, revealed that Alibaba Cloud's revenue in the Southeast Asian market increased by more than 60%.
In 2021, Alibaba Cloud will set up new data centers in Indonesia, the Philippines, South Korea and other places to upgrade the organizational structure of overseas teams, and at the same time, Alibaba Cloud announced that it will invest 6 billion yuan overseas in the next three years for infrastructure and industrial ecological construction.
Ali's rookie is also actively promoting internationalization. At present, Cainiao handles more than 5 million cross-border parcels per day, which has become one of the world's new four major cross-border parcel networks, comparable to the world's three major express delivery giants FedEx, DHL and UPS.
In November 2021, the overseas warehouse set up by Cainiao Network helped Spain's "Double Eleven" shopping festival, photo/Xinhua News Agency
In addition to B2C package delivery and inventory management, Cainiao also provides B2B services to customers. At present, the number of merchants serving Cainiao in the world exceeds 700,000.
The Southeast Asian market is seen by many Internet giants as a blue ocean to be reclaimed. E-commerce penetration there is only 11 percent; by 2025, Southeast Asia's entire internet economy is expected to double from its current level to $363 billion.
Therefore, competition from peers will be a major challenge for Ali in Southeast Asia.
Lazada is currently the third largest e-commerce merchant in emerging markets, behind Shopee under Sea, a "small Tencent in Southeast Asia", and Mercado Libre, a Latin American e-commerce platform.
Shopee is Lazada's fierce rival, it took two years to achieve a counterattack on Lazada, winning the throne of GMV and total order volume in Southeast Asia. Over the past few years, its GMV growth rate has remained above 70% year-on-year for a long time.
JD.com and Amazon are equally ambitious and aggressive in southeast Asian markets. Ali wants to eat Southeast Asian cake, which means that there is still a hard battle to be fought.
Tencent: WeChat did not do it, who will do it?
In 2013, Ma Huateng had high hopes for the internationalization of WeChat.
He even told the media, "Success or failure, (Tencent) this is one opportunity in this life." ”
However, the vast majority of WeChat users are still Chinese users, and WeChat's international history cannot be looked back. Although WeChat did not do it, games, investment and Tencent Cloud can continue to do, but the road is long.
Games are Tencent's largest source of revenue, with a long-term revenue contribution of more than 50%. However, in the first three quarters of this year, Tencent's revenue growth slowed down, and one of the reasons behind it was the decline in game growth.
In 2021, with the tightening of domestic game version numbers and stricter supervision, Tencent Games' revenue in the first three quarters of last year increased by 16%, 10.7% and 7.7% respectively.
Although Q3 is the peak summer season, last year's Q3, Tencent's game revenue, the top pillar of Tencent's game revenue, only grew by 8%, lower than the market expectation of 10%+.
In the face of this situation, the necessity of Tencent games going to sea has been improved, and it has also become a topic of concern for securities companies and secondary markets.
In the 2021 Q3 financial report, Tencent disclosed the performance of domestic games and overseas games separately, and Q3 overseas games increased by 20% year-on-year, accounting for 25% of the overall game revenue.
However, compared with peers, the proportion of Revenue from Tencent's overseas games still has room to increase.
SensorTower data shows that in September 2021, only 31.6% of the revenue of the world's top Mihayou "Original God" came from China's iOS, and the United States and Japan contributed 42% of its revenue. Tencent's "Glory of Kings" revenue from China's iOS accounts for 95%, and overseas versions account for only 5%.
Tencent's management said that the next step is to increase investment in games going overseas and expand market share.
In addition to the game going to sea, throughout 2021, Tencent is still laying out overseas markets through a large-scale "buy, buy, buy" approach.
According to IT Orange's statistics, as of December 24, 2021, Tencent has invested a total of 268 in 2021, of which 48 are overseas investments.
In 2021, Tencent will acquire 9 companies wholly owned, of which 5 are overseas companies, and all of them are game companies.
Guosen Securities believes that the overseas mobile game market space is vast, Tencent has deep IP and research and development advantages, and overseas games are expected to become its large-scale growth drivers.
In the Tencent system, tencent cloud is also associated with the sea strong. In the past two years, Tencent Cloud has been working hard to go out.
Since 2018, Tencent Cloud CDN has begun to deploy overseas, first from the Southeast Asian market to help Chinese overseas enterprises solve problems, and then with the "Belt and Road" to expand to the Middle East.
With domestic goods going to sea, Tencent Cloud also released a one-stop solution for cross-border e-commerce in 2021, which can provide cross-border e-commerce merchants with full services including 11 links such as website construction, finance, logistics, overseas warehouses, customs declaration, and tax refunds.
However, with the anti-monopoly and regulatory tightening of domestic and foreign regulators in the Internet field, Tencent has also begun a "reduction" model overseas.
On January 4, both Tencent and Sea announced that They would reduce their holdings in Class A shares in Sea from 21.3% to 18.7%, while Tencent significantly lowered its voting rights in Sea.
Behind Tencent's move, the Longbridge Dolphin Investment Research Team believes that it may be to clear the way for Sea's e-commerce platform Shopee to enter the Indian market.
Previously, after Shopee launched a test in India, it was opposed by the relevant authorities, who asked to investigate Shopee and emphasized that Tencent holds a 25% stake in Sea, which can be regarded as a Chinese company.
For Internet giants such as Tencent, great influence is its advantage in going to sea, but it is also easier to be targeted by local regulators, affected by anti-monopoly, international tensions and other factors.
In 2022, the giant's going to sea is worth looking forward to
People in ancient and modern China and abroad seem to have an eternal enthusiasm for "going to sea". China had Zheng He's voyage to the West, and abroad had Magellan's circumnavigation of the globe.
Generations of Chinese entrepreneurs are also constantly making waves overseas. As China's Internet enters a new stage, a new maritime era of Internet giants is opening.
In the global market, what awaits China's Internet giants is "big fish and big water", but also "big winds and waves". Since Chinese enterprises have gone overseas, they have always faced challenges in supervision, employment, localization and competition in overseas markets. These problems need to be faced by Ali, Tencent and ByteDance in the process of going to sea.
TikTok is arguably the most successful global product made by Chinese Internet companies, but Chinese Internet companies have not yet had any particularly successful cases in exploring commercialization around the world.
In 2022, what kind of scene will the Internet giants go to sea? This is worth looking forward to.