Here's how Chinese tech companies began to go global

Key Points
  • China's tech barriers have come down in recent years, especially for homegrown companies expanding abroad.
  • Benjamin Harburg, managing partner of MSA, has been seeing tech's growth evolve over recent years and has several possible explanations.
  • "This is the world's second largest market and will soon be the world's largest market. Americans on average just do not know China."
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Chinese tech is going global

China's tech barriers have come down in recent years, especially for homegrown companies expanding abroad.

Benjamin Harburg, managing partner of MSA, a Beijing-based Venture Capital firm, and an investor in Uber, Didi Chuxing and Mobike, has been seeing tech's growth evolve over recent years and has several possible explanations.

"China sends 350,000 students to America every year. America sends about 9,000 to China every year. That's about the same we send to Costa Rica every year," Harburg said.

"This is the world's second largest market and will soon be the world's largest market. Americans on average just do not know China."

According to Harburg, China's global tech growth to boils down to three stages. First, when Chinese public tech companies, such as Alibaba and Tencent, went public.

Customers look at mobile phones in a Xiaomi shop in Beijing on November 7, 2018. (Photo by Nicolas ASFOURI / AFP) (Photo credit should read NICOLAS ASFOURI/AFP/Getty Images)
NICOLAS ASFOURI | AFP | Getty Images

Second, when Chinese private corporates started investing abroad, like Didi Chuxing investing in the ride-hailing company Careem in the Middle East.

And third, Harburg noted Chinese companies have been going global organically. For example, Xiaomi, which went public this year, recently passed Apple in smartphone units sold in the second quarter, according to data by IDC.

Meanwhile, it's become India's top smartphone market and recently announced it has plans to have 5,000 stores by the end of 2019.

"If you could make it out of the gauntlet of China, especially as an entrepreneur or as a business model, you're so battle-tested, that when you come into a more emerging market, one that's maybe a few years behind China in terms of its competitive landscape, capital availability, things like that, huge swaths of the market can be gobbled up relatively quickly," he said.

"I think we're just at the tip of the sphere in terms of Chinese companies going global."