Chinese tech companies are poised to pursue expansion in global markets and artificial intelligence (AI) in 2024, as indicated by UBS.
In the face of fierce competition from emerging rivals and short-video platforms domestically, China’s e-commerce giants are intensifying their efforts in international markets, noted Kenneth Fong, head of China internet research at the Swiss financial institution, during a presentation in Hong Kong.
Temu, a venture under the umbrella of Pinduoduo’s parent company PDD Holdings based in Boston, and Shein, originating from Nanjing, China, and now headquartered in Singapore, emerged as the top two most downloaded shopping applications on Apple’s US iOS store in the recent 30-day period, according to data.ai, an app analytics platform.
A Shein pop-up store in Ontario, California. Photo: Los Angeles Times/TNS
Expanding into overseas markets with competitively priced offerings could provide Chinese internet enterprises with opportunities for growth and valuation enhancement, as per Fong’s analysis.
The cross-border e-commerce sector in China recorded a total import and export value of 2.38 trillion yuan (US$333 billion) in 2023, marking a 15.6% increase from the previous year, according to preliminary estimates released by the State Council Information Office earlier this month.
Fong also emphasized that AI remains a focal point for Chinese internet companies in the current year.
Recently, Beijing greenlit another wave of large language models, crucial for training AI chatbots like ChatGPT, as tech giants and startups in China race to commercialize their AI innovations.
Nonetheless, these firms are grappling with the challenge of monetizing their AI endeavors, given the reluctance of Chinese consumers to pay for software services, Fong pointed out.
Why China lags behind in the AI race initiated by ChatGPT
The adoption of AI solutions is expected to be gradual as businesses strive to streamline operations and reduce expenses, he further explained.
Fong highlighted the difficulty in securing substantial investments for AI systems during economic downturns, as organizations are hesitant to allocate significant funds for such initiatives.
Amid ongoing concerns regarding China’s economic rebound post-pandemic and regulatory ambiguities, Chinese tech stocks have continued to decline in 2024.
The Hang Seng Index in Hong Kong, comprising around 80 constituents including major mainland tech players like Alibaba, Tencent Holdings, Meituan, and Xiaomi, recently hit its lowest point since November 2022.
Following Beijing’s recent commitment to bolster support for the “stable and healthy development of the capital market,” Chinese tech stocks have shown signs of recovery from their earlier downturn.
