The Warning from China

The Warning from China

As US Congress debates on the way forward for its IT utilities like Facebook and Google, there is a warning sign from China: Tencent has overtaken Facebook on market cap. This has a big implication – if you break Facebook, wounding it, and denying it  economies of scale, it would struggle globally, against Chinese firms like Tencent. Unlike the old industrial firms which were bounded by geography, and easily regulated, web firms are both local and global.

The unbounded and unconstrained web, anchoring near-zero marginal cost, rewards big firms through a positive continuum of network effects. WeChat failed in Africa because of WhatsApp; cripple Facebook, it would win. Europe is not in the midst as it has used law to cage its innovators, and the region is not expected to produce any global web challenger, leaving the prize for U.S. and China. The success of TikTok should remind leaders that users are driven by different things: fun and scale, even if the product was baked in China. Yes, do not think they will not join because the product was Chinese!

Do not score an own goal please!

  • Tencent’s market capitalization has surpassed Facebook’s following a huge rally in the Chinese firm’s shares this year.

  • The gaming and social media giant’s market cap stood at 5.15 trillion Hong Kong dollars ($664.50 billion) at around 3:07 p.m. Singapore time. Meanwhile, Facebook’s market cap totaled $656.15 billion as of Tuesday’s close.

  • Tencent shares have rallied around 43% year-to-date, compared to just over 12% for Facebook. That has added around 1.53 trillion Hong Kong dollars ($197.74 billion) onto Tencent’s value.

The ICT Utilities US Congress Convergence And the Challenge of Regulation

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One thought on “The Warning from China

  1. The more your products and brands are known globally, the more you are respected as a nation; you haven’t won if you are not winning on economic front, big brands give you that!

    Both Google and Facebook are investing massively in undersea cable infrastructures, to win markets of the future, but for those who don’t know how wars are won without firing a single shot, it’s charity…

    The US doesn’t need to be reminded that China is waiting on the wings, to dominate any space where any of its flagship corporations is decimated; the brands also serve as nation’s pride, nobody wants to come second. Europe is regulating itself out of competition, so would at best become a refined version of Africa, nothing more.

    My headache now is that Africa is only mentioned on the consumption side, and never on the production side; so it’s about figuring out what we could throw up there, so that whenever the big guys are invited for meeting on how to manage their excesses, we will have a brand intimidating politicians across jurisdictions.

    From 1st to 3rd revolutions, Africa was very late to the party, in this Knowledge Economy, with relatively low barriers to entry, we need to show that there are brains in all the big skulls we carry around.

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