Experts: Seek the "foreign king" of China's Internet

At present, China's Internet has entered the "era of great navigation". Under the boom of "going to sea", how can Chinese Internet companies achieve "big waves of gold panning"?

Recently, Wang Hongmiao, a researcher at the Institute of Economics of the Chinese Academy of Social Sciences and a professor at the University of the Chinese Academy of Social Sciences, published an article to explain the way for Chinese Internet enterprises to "go to sea" according to the characteristics of different waterways, take precautions, adapt to local conditions, blaze new trails, gain insight into the real needs of overseas markets, and launch products and services that are "born and globalized" through global resource allocation.

The full text is as follows:

In recent years, under the agitation of various "dangers" and "opportunities", the boom of Chinese Internet companies "going to sea" has risen again, large factories and small enterprises have stepped out of the country to seek increments in the global market, and China's Internet has entered the "era of great navigation". However, under the international conditions of terrifying waves and complex environment, not all Chinese Internet companies can achieve "big wave gold panning". From the perspective of the industry, tools and e-commerce have natural advantages in going to sea due to their weak cultural attributes, and have become the vanguard of the overseas army. With the transformation from tools to content in recent years, the game, short video entertainment, and mobile payment industries have grown rapidly, expanding the territory of China's Internet companies.

China's digital economy is in the process of profound transformation and upgrading, and China's Internet overseas continues to create new stories on the basis of investment, models and technology going global. From e-commerce, mobile payment to games, more and more Internet companies and products are born overseas, serving the world, from insight into market demand, layout of overseas research and development, etc., towards a new stage of "Born Global".

E-commerce to the sea: the rise of independent stations, nuggets Nanyang

Over the years, mainland cross-border e-commerce has formed four representative models such as cross-border B2B platform (Alibaba.com), cross-border B2C platform (AliExpress), independent station (SHEIN), localization operation platform (Lazada), etc. Recently, ByteDance's Fanno and Kuaishou's Kwai have also taken action on overseas live streaming. As a pioneer in e-commerce, Alibaba has completed the localization of overseas e-commerce in Southeast Asia, Pakistan and Turkey through mergers and acquisitions and investments in B2C and B2B fields. As of September 30, 2021, Alibaba's international retail business ranked 4th in the world in terms of monthly active users, and the total transaction volume in the past 12 months ranked 6th in the world's e-commerce; lazada ranked 7th and 12th respectively in terms of single platforms.

Southeast Asia and Latin America, as emerging potential markets for e-commerce, have a regional e-commerce transaction penetration rate of less than 13%, and the proportion of e-commerce retail is relatively low compared to the Internet penetration rate. The 2021 Southeast Asia Digital Economy Report, jointly released by Temasek, Google and Bain, predicts that the total e-commerce sales in Southeast Asia are expected to reach US$89.67 billion in 2022, an increase of 20.6% year-on-year, which is the region with the highest growth rate in the world. It is estimated that by 2025, the size of the e-commerce market in Southeast Asia will reach $234 billion. With the official entry into force of RCEP, the Southeast Asian market has been further opened, increasing the attractiveness of foreign investment in terms of investment access and tax incentives. For China's cross-border e-commerce, Southeast Asia's huge population base, gradually improving network infrastructure, and the growing demand of netizens are similar to China ten years ago, with huge imagination space, and it is easier to transplant the mature Chinese e-commerce model. However, the risk of e-commerce going to sea is not small. Under the circumstance that the political and economic risks of the destination are controllable, e-commerce going to sea is the best combination of the capabilities and experience of the mainland supply chain and Internet enterprises.

It is worth noting that at present, more and more cross-border sellers are seeking a new direction to lay out overseas, and independent stations have become a new choice. As of July last year, the number of cross-border independent stations in China has exceeded 200,000. Under such a model, Chinese merchants face global consumers directly, not only have greater independence and independent operation rights, but also help to achieve brand upgrading. The independent station represented by the unicorn SHEIN has become a representative of the trend of "birth and globalization" in the domestic e-commerce field.

Game out to sea: Growth is accelerating, and overseas research and development is key

In 2021, affected by policy factors such as anti-addiction for minors and the suspension of the issuance of version numbers, the revenue of China's mobile game market increased by 8% to 225.5 billion yuan, a major decline compared with the previous two years, and Chinese mobile game companies accelerated their going to sea. According to App Annie, 23% of the world's top 2000 mobile games come from Chinese mobile game publishers. At this stage, the main target markets for mobile games to go to sea have switched to developed countries such as the United States, Japan and South Korea, and the three countries have contributed about 60% of the overseas income of domestic mobile games.

The development of the game overseas industry chain has been quite mature, and the division of labor has been deepening. Game types are mainly concentrated in SLG, MMO, shooting and elimination, and the profitability of games going to sea mainly comes from product monetization and traffic monetization. According to the collaboration process, the participants in the game overseas industry chain include developers, publishers, channels (or distributors) and so on. Among them, the developer is responsible for the planning and development of the overseas game, and the publisher is responsible for the operation of the overseas game in the overseas market. The key to the global competitiveness of overseas game companies lies in the ability of game research and development. Earlier, Chinese game companies participated in some of the research and development of global AAA masterpieces, and now Chinese games have taken the initiative to set up R&D centers overseas and absorb global technical talents, so the level of game research and development has gradually converged with the global mainstream level.

In the environment of slowing industry growth and limited domestic traffic, overseas business has become the second driving force for the development of most game companies. On the track of game going global, game companies create "born and globalized" products through the overseas layout of localized research and development. As the two major game giants in China, Tencent and NetEase have made great efforts to invest and research and development overseas. Tencent actively invested in the layout and set up a research and development team in North America. Jackalope Games, a subsidiary of NetEase Games, was founded in Austin, Texas, USA, which is also NetEase's first North American studio.

Mobile Payment Goes Global: "Diversified Localization" Strategy

Mobile payment is a business card of China in the era of digital economy, and it is also the main field for Internet companies to go overseas. In the past few years, China Mobile Payment has taken root in the Southeast Asian market, witnessing a region skipping the card era.

In this field, the main overseas is Tencent (WeChat Pay) and Ant Group (Alipay). Since WeChat Pay is not an independent APP, its overseas participation stems from the popularity of WeChat itself overseas and Tencent's investment or acquisition of wallets in some Southeast Asian countries. Ant Group has built more than 9 local wallets in India, Pakistan, Bangladesh, Thailand and other Asian regions through investment + technology co-construction, and implemented the "diversified localization" strategy to serve the local market.

During the epidemic, Southeast Asia's digital economy has grown against the trend, the coverage rate of mobile payment has also increased greatly, and the number of e-wallet users has soared. Its future market space is huge, and it is expected that by 2025, the number of mobile wallets used in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam will reach nearly 440 million, an increase of 311% over 2020. However, this regional payment market is also facing new challenges of small and scattered e-wallets and fragmented consumption scenarios.

Based on the early investment and long-term construction in Southeast Asia, Ant Group launched the Alipay+ cross-border payment and marketing solution in 2020, supporting hundreds of digital payment methods including e-wallets and mobile banking, etc., building a cross-border payment capability of "one-point access, one-through", covering more than 1 million offline merchants, helping more than 10 e-wallet users in Asia, and realizing a one-stop cross-border consumer experience of "see Alipay+".

Similar to SHEIN, Alipay+ represents a new type of global species: mobilizing the resources and value chains of the global market from the needs of overseas markets, and emerging in the era of "birth and globalization".

According to local conditions, seek the way of "foreign kings"

The above-mentioned mobile payment, games, and e-commerce going overseas are just the epitome of China's Internet entering the "birth and globalization". In the current complex international environment, it is indeed more difficult for Chinese Internet companies to sail out to sea and achieve "big waves of gold panning".

But in a broader sense, it can be understood that because the Internet has a natural global connectivity, the "texture" of china's Internet must be tested by global benchmarking, and "going to sea" is almost a must.. The key is the course selection.

As Kearney's Global Consumer Insights report reveals, the new generation of consumers is showing three significant trends in attitudes and behaviors: brand trust, social influence, and personalized experience, so it is becoming increasingly unworkable to adopt a one-size-fits-all "global integration" business strategy for all markets according to the "traditional way".

According to the characteristics of different waterways, take precautions, adapt to local conditions, pioneering and innovative, insight into the real needs of overseas markets, through global resource allocation, launch "born and global" products and services, may be the "foreign king" way of China's Internet galloping in the global market.