The kingmakers of Chinese internet industry are three companies including Baidu Inc (ADR)(NASDAQ:BIDU), Alibaba Group Holding Ltd (NYSE:BABA) and TENCENT HOLDINGS ADR (OTCMKTS:TCEHY). These are the three firms with powerful presence and deep pockets and are both feared and loved by startups. The giants have the power to pick losers and winners among Chinese startups.
Tencent and the other two leaders are so dominant in Chinese market that they are termed as “BAT” and “Google of China.”, as they commands remarkable market share over search. Tencent holds a similar influence over social media. Alibaba is the dominant player in e-commerce. The firms are spending huge amount of funds to help them benefit from China’s shift to Smartphones. That turns them virtual leaders among startups. Some startups view monsters that crush startups, while others believe them saviors providing lucrative exit options.
The expert comments
Jack Ma, the Executive Chairman of Alibaba, said that in recent years, he read a lot about how Tencent, Baidu and Alibaba snatched all the big prospects for creativity, startups and innovation in China. Some people stated that with three big firms like BAT, they don’t have any opportunity to excel in the industry. Mr. Ma released those worries stating that no matter whether there are seven or three mountains, they will continue to excel and startups will have prospects to win too. They have always encouraged entrepreneurs to innovate.
Jesse Lu of startup Raven Tech said that venture capitalists were not willing to invest in his company as it would compete with the three firms, especially Baidu. The startup firm has since obtained investments of $15 million from U.S. and Chinese funds. Most of the startups are seen living in fear as ‘BAT’ were not into buying firms as they are today.