Monday, June 27, 2016

10 Chinese Companies You Should Probably Know About

Many of the most common household brand names in America are not American companies, and that’s been true for decades. When it comes to technological innovation especially — from cars to phones and every appliance in between — we’ve become used to huge numbers of goods coming from countries in Asia.

It takes time for large Asian companies to become household names in the U.S., but when they do land, they can make a big impression and stick around. Consider the trajectory of Honda, Toyota, and others from Japan: 40 years ago, their vehicles were widely-derided “econoboxes”; now, they’re celebrated household names. The same goes for Sony, which, from Walkman to PlayStation, has made its brand a household staple in entertainment.

In more recent decades we’ve seen the same course for Hyundai, Kia, LG, and Samsung, among others, from South Korea.

But to discuss tech, manufacturing, or international trade in this decade without mentioning China is to leave the biggest elephant in the living room of the world completely unaddressed. By any economic measure you use, China is enormous.

A huge percentage of all physical goods in the U.S. are made in China. As of March, 2015, China produced about a quarter of all the world’s manufacturing output — up from 3% in 1990. And sure, plenty of those businesses are relatively anonymous factories that do the actual assembly for high-tech American brands you know, like Apple and Microsoft.

But the physical making of stuff is hardly the only place where Chinese and American business interests meet. Chinese businesses from insurance to retail are crossing the ocean to do work here in the U.S., either under their own brands or by buying ones that are a little more familiar. And while short-term economic trends may make global business increase or decrease in the immediate sense, the long-term trend is toward more globalization, not less.

And so, to that end, here are ten Chinese companies — some more familiar than others, but all of them already doing some business in the U.S. — that may well join the “household names” list over the coming decade.

Alibaba

Founded in: 1999
Industry: Online retail / e-commerce
Similar to / competing with: Amazon, eBay, PayPal
Current value (market cap): $192 billion*

Alibaba first grabbed headlines in the United States with its record-shattering global IPO in 2014. The company has several different online portals. One, Taobao, is a Chinese online retail site not unlike Amazon or eBay. Another is Aliexpress, which is the same idea but global (you can shop and buy from it in the United States, in dollars). And then there’s Alibaba proper, which is basically a matching portal that lets you take bids to order any kind of custom wholesale product supply — like, for example, 280 pairs of ugly pants.

Need an airplane? 7,000 sweatshirts? 200 pairs of earbuds in eye-searing pink? Alibaba’s there.

However, being able to have basically anything made to spec means the potential for counterfeit and knockoff goods is sky high, and that’s the big challenge the company is facing today. Luxury and designer goods companies especially are less than thrilled with the company’s attitude toward knockoffs.

It’s also currently the target of an SEC investigation, though right now the investigation is exactly that — no allegations of wrongdoing have been made.

Baidu

Founded in: 2000
Industry: Internet and technology
Similar to / competing with: Google
Current value (market cap): $57 billion

You know how Google started as a search engine and is now everything from the world’s dominant phone operating system to an ISP to a self-driving car company? Baidu’s basically done that exact same thing.

The company operates a massive Chinese-language search directory, as well as dozens of other related web services (image search, legal search, maps a social networking site, a travel booking service, and so on). It also, like Google, makes revenue as a massive internet advertising business — primarily serving the Chinese market with Chinese businesses.

Baidu recently found itself under intense scrutiny in its home country over the practice of blurring the lines between genuine search results and paid ads. The problem was thrust into the spotlight after a college student with cancer died following the use of an alternative treatment his family found through a Baidu search. The link was not the result of an organic search, but a paid ad.

This week, Chinese regulators directed Baidu and others to provide only “objective, fair and authoritative results,” and urged them to clearly differentiate between paid links and organic search, and to limit the number of paid results provided on a single page.

Also much like Google, Baidu is positioning itself at the forefront of computer-driven technology on the roads. To wit: an ambitious plan to get self-driving cars on Chinese highways before 2020.

The company successfully completed a nearly 19-mile prototype run in Beijing last year, and there’s a lot of support for the idea: Chinese traffic jams and air pollution levels make the worst hours-long, smog-ridden delay in the U.S. look like a spring picnic in comparison. Autonomous vehicles in an AI network would likely reduce traffic levels, and at least let passengers do something other than honk the horn and gnash their teeth when volume still slows things down.

Dalian Wanda

Founded in: 1988
Industry: Real estate, property development, entertainment
Similar to / competing with: Disney, Universal (Comcast), Regal Entertainment
Current value (market cap): $223 billion

Wanda began as a residential property business, but has in the intervening decades diversified significantly. The company continues to own and develop properties worldwide but its biggest growth, over the past decade, has been into the film industry.

The company bought AMC Theaters, the largest movie theater chain in the United States, in 2012.

As of a few months ago Wanda also now owns Legendary Entertainment, probably best-known for producing Christopher Nolan’s Dark Knight trilogy and Inception as well as all of Zack Snyder’s action films from 300 to Man of Steel. The studio’s most recent film was Warcraft, a widely panned flop in the United States… but a complete smash hit in China, breaking records for American-made movies distributed overseas.

Wanda, like the House of Mouse, owns and operates theme parks that draw millions of guests. China is still largely an untapped market for Disney; their first mainland China resort, in Shanghai, literally just opened, on June 16. And yet the competition with Wanda — and the problem of international IP law and knockoffs — has plagued Disney since before the gates opened, when unlicensed Marvel stars and Disney princesses were spotted shilling for a Wanda park a few hours away last month.

Geely

Founded in: 1986
Industry: Automotive and transportation
Similar to / competing with: Honda, Toyota, Ford, GM
Current value (market cap): $37 billion

You probably haven’t ever seen a Geely (JEE-lee, not gee-lee) branded car on the road in the U.S., but globally the company performs well. Their motorcycles and passenger sedans / hatchbacks are popular not only in China but also in dozens of other Asian, African, Middle Eastern, and Pacific Rim nations.

However, that doesn’t mean you haven’t ever seen a Geely-owned car on the road, because you almost certainly have: the company bought Volvo from Ford in 2010.

As the New York Times wrote back in January, thanks to Geely and others, the Chinese auto industry may be poised to make that same transition in Americans’ perception from “junk” to “reputable” and onward even to “desirable” that Japanese and Korean automakers made over earlier decades. Volvo enjoys a strong reputation for safety and quality with U.S. consumers, and the purchase of the brand by a Chinese conglomerate has not dimmed it.

Until recently, none of those cars being imported to the U.S. were being manfuactured in China. However, as of 2016, certain Volvo models — as well as a few cars in the Buick and Cadillac (both General Motors) — are now being made in China and exported to the U.S.

Haier

Founded in: 1984
Industry: Appliances and electronics
Similar to / competing with: LG, Samsung, Whirlpool
Current value (market cap): $54 billion

Haier’s been making appliances — refrigerators and air conditioners, to start with — for decades. Though it’s one of the largest “white goods” (think: refrigerators, dishwashers, air conditioners, etc) suppliers in the world, it’s a newer entrant in North America.

In the ’90s and early ’00s the company started expanding into America, selling products under its own name brand and opening a production facility in South Carolina.

But Haier’s biggest move into the U.S. market came just this year, when it bought out General Electric’s consumer appliance business for $5.4 billion. So any good ol’ GE washer, dryer, or fridge you put in your house going forward is a Haier product.

Hisense

Founded in: 1969
Industry: Appliances and electronics
Similar to / competing with: Samsung, Sony
Current value (market cap): $21.5 billion

Hisense is a broad-based electronics company that manufactures and sells televisions, mobile phones, laptops, cable TV set-top boxes, PC components, and all that jazz. They also have global partnerships to make refrigerators and air conditioners. The company has been at it for 45 years, but their growing presence in the American market is more recent.

A pretty full line of Hisense-branded products is available on store shelves in the U.S., from Walmart to Lowe’s. You’re buying Hisense goods if you’ve bought a Sharp TV in the last year; the Japanese company sold their North America brand and factory to Hisense in 2015.

Huawei

Founded in: 1987
Industry: Telecommunications, mobile
Similar to / competing with: Samsung, Apple, HTC
Current value (market cap): privately held

Mobile is not so much the future as the present. And, well, also the future. In short, it’s the market everyone wants to be in — and Huawei is there.

Here in the U.S., Samsung and Apple largely dominate high-end phone sales, with a few other players poking around the edge of the Android market. (And someone somewhere probably has a Windows phone.) But Huawei has been making a big push in recent years to break into the global handset market, and their next target is the United States.

The company is planning to go from its current global market share of about 8% to a solid 25% in just five years, the head of the company’s consumer electronics division announced this month. And they’re going to do it very aggressively, targeting premium, luxury buyers in wealthy nations instead of widely distributing lower-cost phones.

As to whether they’ll be America’s next HTC (Taiwan) or Samsung (South Korea), well, as much of that depends on politics as it does on the actual goods. Huawei’s bold plans have attracted federal scrutiny over the company’s other international business deals, especially with countries the U.S. is, shall we say, not on strong terms with (like North Korea and Syria).

Lenovo

Founded in: 1984
Industry: Computers and electronics
Similar to / competing with: Dell, Toshiba
Current value (market cap): $52 billion

This company, more than any other on our list, is probably the one you have heard of, thanks to a 2005 deal with IBM.

That’s when Lenovo took over IBM’s personal computer business and started selling the classic ThinkPad, at the time one of the most popular laptops in America (especially for colleges and businesses). IBM had for decades been the name in personal computing, but by the turn of the millennium the market was more competitive and IBM was falling behind. (Readers of a certain age may remember the era when all non-Apple computers were described as “IBM-compatible” — that’s how big a deal IBM was in the ’80s and early ’90s.)

Still, the ThinkPad brand gave Lenovo an instant cachet as a contender in the laptop market, and the deal made Lenovo the 3rd largest computer-maker in the world at the time. Nearly a decade later, in 2014, IBM and Lenovo made another key deal and now the latter owns the former’s entire server business as well.

Lenovo also now owns Motorola, which it bought from Google in 2014. So in short, it’s already a big and growing presence in the American — and global — tech market.

Shuanghui International (WH Group)

Founded in: 1958
Industry: Processed meats
Similar to / competing with: Tyson Foods
Current value (market cap): $87 billion

Shuanghui International (rebranded in 2014 as the WH Group) is the biggest meat processor in the world. It specializes in pork products: if you can eat it and it comes from a pig, they sell it.

Their pork products have also been on American shelves for years, and you probably never noticed — because it’s got a good old-fashioned American brand name: Smithfield.

Shuanghui bought out Smithfield for $4.7 billion in 2013. At the time, it was the largest ever purchase of an American company by a Chinese one. The transaction attracted significant scrutiny and tut-tutting from lawmakers and industry, but still went through without a hitch. ‘

Meanwhile, Americans sure do continue to love our bacon (and sausage, and ham, and ribs, and…).

Tencent

Founded in: 1998
Industry: Internet, telecom, video games
Similar to / competing with: Facebook, Google, Valve
Current value (market cap): $1.6 trillion ($1630 billion)

Tencent is huge, and doesn’t quite have an easy American analog or competitor to point to. The company holds the Chinese distribution rights to all kinds of American and global media, including agreements with HBO, Sony, Warner Music, and the NBA.

The company also runs Chinese equivalents of both Facebook and Twitter, under the names QQ and Tencent Weibo. Most importantly, though, Tencent owns WeChat, which is, well, China’s everything app. The complete and total integration of the WeChat platform into every aspect of Chinese digital life is what Facebook Messenger is trying so very hard to duplicate in America.

Tencent is not as dominant in the U.S. as it is in China, but it does have many very large and strategic investments in one of the country’s fastest-growing industries: video gaming, especially big-budget blockbusters and competitive online multiplayer games.

Tencent is a dominant player in the world of eSports — which has only continued to surge in popularity since we last covered it in 2014 — thanks to their nearly full ownership of Riot Games. Riot is the studio behind League of Legends, which in 2015 drew an estimated 90 million monthly active players. They also own minority stakes in Epic Games (Unreal, Gears of War) and Activision Blizzard (Call of Duty, World of Warcraft).


*for comparison to American companies, some current values include: Apple – $526 billion; Google – $488 billion; Microsoft – $391 billion; Facebook – $323 billion; Walmart – $222 billion; Disney – $157 billion; Comcast – $150 billion.


by Kate Cox via Consumerist

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