1. China exploits U.S. investment to conquer media
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 revenue to be made: Chinese tech companies can sell much more expensive ads to Chinese citizens using Chinese apps in the U.S., the world's largest and most mature digital advertising market, 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 ad technology.
- Investments give Chinese executives access and exposure to the best practices of Western corporate management style, as well as access to intellectual property that they can take back home.
- 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 influencing overseas Chinese, including through Chinese media in foreign countries."
What's next? U.S. lawmakers are weighing ways to clamp down on some Chinese investments and acquisitions in light of concerns that they could give America's biggest rival access to sensitive technologies that that are crucial to the U.S.'s economic and national security priorities, especially user data.
In the meantime, look for all of these companies to have a major presence at the Consumer Electronics Show, with sponsorships, speeches and showrooms.