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Chinese tech companies are just starting to go global, VC says

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CNBC’s Evelyn Cheng spoke to Ben Harburg at MSA Capital, the managing partner of the company, at the annual East Tech West retreat, held in Guangzhou’s Nansha, China. It took place Dec. 1, 2021. Harburg talked about Chinese tech firms’ plans to be global.

CNBC

GUANGZHOU, China — Chinese technology companies are considering expanding overseas much earlier in their lifecycles, a venture capitalist told CNBC — marking a shift in attitude among firms in the world’s second-largest economy.

According to Ben Harburg (managing partner of venture capital firm MSA Capital), this shift was prompted by China’s stricter regulation on technology and competitive pressure in some sectors.

Harburg spoke at CNBC’s annual East Tech West conference, Nansha (south China), and stated that “it’s also forcing Chinese businesses much earlier in its lifecycle to think about globalization.”

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Harburg stated that his venture capital company was working with mature social media and cross-border commerce companies a few years back. Today, however, companies at the early stages of their development in areas ranging from artificial intelligence and health care have gone global.

Harburg suggested that these Chinese businesses could be able to find success in emerging markets because of their business model, particularly in China.

He stated that Chinese business models were global best practices for emerging markets because they are more similar to the ways that the Chinese consumer have adapted with technology.

In the past, there have only been a few instances of Chinese technology companies finding international success. However, in recent years there have been more Chinese-based technology companies expanding their international business.

Beijing-based Xiaomi is now the third-largest smartphone player by market share globally — thanks to big gains in India. Chinese tech giant ByteDance’s short video app TikTok has a billion monthly users globally.

Chinese fashion label Shein has also caught on with young Western consumers.

Giants like AlibabaAnd TencentContinue to grow their international businesses.

Harburg suggested that perhaps there is a perception that this represents the peak of China’s entry into these markets.

But our opinion is that it is only the tip of a spear and there are many Chinese companies that offer financial, educational, and social services in emerging and mature markets.

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