Jacob Gunter & Rebecca Arcesati
In the Belt and Road Initiative’s (BRI) second decade, the focus is on smaller infrastructure projects involving new technologies, especially digital, that bring a good return on investment and promote Chinese firms overseas. The ‘Digital Silk Road’ (DSR), or the technology-focused leg of the BRI which exists alongside ports, rail, energy and roads, will therefore become more prominent, especially across the Global South. Not only are these key growth markets, but it will be important for China’s digital giants to expand overseas as they finish building out networks in China.
To better understand Chinese tech firms within the DSR, it is important to look at the factors pushing them overseas. Some, like Huawei and Bytedance, have been much written about. Here, we look at less well-known players in sectors such as undersea cables, AI, gaming and social media and ridesharing.
We found pressures for international expansion differed dramatically between consumer internet firms and China’s major players in the hardware and ‘real economy’ fields. Consumer-focused firms face a profit crunch in domestic markets that has sent them seeking growth markets elsewhere, whereas the hardware giants enjoy Beijing’s backing in the form of subsidies and project finance. At the same time, Beijing does welcome Big Tech investing abroad if that helps China dominate strategic technologies like artificial intelligence (AI), or at least generates revenue and profit that can be used to fund the right kind of R&D back home.
The importance of more “neutral” markets for China’s digital champions is growing as the tech rivalry with the United States has brought greater scrutiny of them in North America, parts of Europe and the Western Pacific. Besides, the domestic and emerging markets were often already more important. According to one analysis, for Huawei’s radio access network (RAN) business “any decline in European low-margin markets was offset in absolute terms by China and the emerging economies”.