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Illustration: Rebecca Zisser / Axios

Chinese internet giants like Tencent, Baidu and Alibaba are ramping up investments in U.S. tech and media companies. They're also building data servers and acquiring ad tech businesses in the U.S. that can help them monetize media engagement from citizens living in America, like students or tourists.

Why it matters: There's a misconception that the Chinese push into the Western media tech market is to target new American users or to compete directly with U.S. tech companies. In reality, they're looking to expand their Chinese user base abroad and make money from Chinese expats who would rather use their own social, messaging, and commerce apps in the U.S.

There's a lot of ad revenue to be gained by targeting Chinese citizens using Chinese apps in the U.S., which is by far the largest and most mature digital advertising market in the world. Chinese tech companies can sell much more expensive ads to their audiences in the U.S. than they can in China.

  • Size of digital ad market in US: $83 billion
  • Size of digital ad market in China: $50 billion

Humphrey Ho, managing partner at Hylink, China's largest independent digital advertising agency (and the only one that's not state-run), says his firm estimates that the number of Chinese citizens traveling to the U.S. will jump from four million unique visitors to 10 million by 2021.

Investing in the U.S. ad tech landscape is a major priority for the Chinese internet companies, which tend to lag behind the U.S. in their ad technology. "You can expect a lot more of these investments to be made in the near future now that the ad tech landscape has consolidated in the U.S.," says Curt Moldenhauer, China Inbound Deals Leader at PwC.

  • Investments give Chinese executives access and exposure to the best practices of Western corporate management style, which tends to be much flatter and more welcoming of group decision-making.
  • They also give Chinese companies access to intellectual property that they can take back home to better compete with tech giants there.
  • There's also a political focus on Chinese expats, Axios' Bill Bishop notes. "Beijing has a set of policies and institutions that are focused on working with and influencing overseas Chinese, including through Chinese traditional media in foreign countries."

What's next? U.S. lawmakers are weighing ways to clamp down on some investments and acquisitions in light of concerns that they could give America's biggest rivals access to sensitive technologies that that are crucial to the U.S.'s economic and national security priorities.

They're also worried about giving Chinese companies access to data about U.S. citizens through some targeted acquisitions. The most notable example of this happened in November, when U.S. regulators killed Chinese private equity firm Orient Hontai's proposed $1.4 billion acquisition of U.S. marketing firm AppLovin for concerns about data security under a foreign owner.

In the meantime, look for all of these companies to have a major presence at the Consumer Electronics Show in Las Vegas this week, with sponsorships, speeches and showrooms.

Go deeper

Updated 3 hours ago - Energy & Environment

Thousands without power as "hazardous" winter storm lashes East Coast

Satellite imagery of the Northeastern U.S. taken by NOAA on Jan. 17. Photo: NOAA

A major winter storm lashed much of the East Coast Sunday and Monday, causing widespread power outages and disrupting travel over the holiday weekend.

The latest: Authorities in North Carolina confirmed that two people died in a car crash and that they responded 600 vehicle accidents during the storm on Sunday, per the Washington Post.

Texas abortion law remains in effect after appeals court ruling

Pro- and anti-abortion protesters outside the Supreme Court as arguments begin about the Texas abortion law on Capitol Hill in November. Photo: Jabin Botsford/The Washington Post via Getty Images

A U.S. appeals court transferred a challenge to Texas' law banning most abortions after about six weeks of pregnancy to the state supreme court in a 2-1 vote on Monday evening.

Why it matters: The 5th U.S. Circuit Court of Appeals' decision means the country's most restrictive abortion law can remain in place for the time being.

5 hours ago - World

At least 2 dead after Tonga volcano eruption and tsunami

A satellite image of the explosive eruption of the Hunga Tonga-Hunga Ha'apai volcano on Saturday. Photo: UNICEF/NOAA

At least two people are confirmed to have died in Tonga following the undersea volcanic eruption that sent tsunami waves toward the island nation and across the Pacific over the weekend, officials said Monday.

The big picture: Officials reported major damage along the western coast of the main island of Tongatapu, where the capital, Nuku'alofa, was covered in ash and dust, including on the runway of the airport. A New Zealand Ministry of Foreign Affairs spokesperson told Axios over the phone that two people had been confirmed to have died in the disaster.