Orange is the new black: Can BATX be the new GAFA?
China is sometimes called the ‘world’s factory.’ Is it on its way to becoming the ‘world’s digital factory?’
The biggest and most successful companies in the world are tech companies and they have tremendous market capitalization. Last January, Alphabet has joined Apple and Microsoft in the ‘$1 trillion club’, a club exclusively made only of tech giants.
On the other side of the planet, in the Middle Kingdom, Baidu, Alibaba, Tencent, and Xiaomi have each seen their profits and market rise. They have rocketed to a combined valuation of more than $1 trillion. None of them is yet joining the ‘$1 trillion club’, but enough to threaten the U.S. based giants.
When I learned about BATX and their potential risk on GAFA, I was eager to learn more about them how they can change the game in their favor. I spent time reading many experts articles (Economists, Business Strategists, Marketers) but also non-experts (Bloggers, Redditors)
In order to move from good to great and to expand beyond the Asian market, BATX will need to to adopt three key strategies. Ultimately these three strategies will allow them to be real contenders to GAFA. Here are they:
#1 — BATX can win where GAFA are now losing
Google, Apple, Facebook and Amazon are with no doubt very successful companies. They developed great amount of innovation and have contributed greatly to the technology progress we are enjoying today. However and like every company, they have flaws.
BATX (Baidu, Alibaba, Tencent and Xiaomi) need to utilize these flaws and connect with their european and american customers through them. How can they concretely to that?
Amazon biggest weakness is its reputation of ‘retails killers’. In 2019, 9,302 retailers closed in the U.S. It’s a 59% jump from 2018 and the highest number since Coresight Research began tracking the data in 2012.
With Amazon’s expansion in all areas of retail, small specialized shops were unable to acquire, install, and adopt quickly technologies that can allow them to compete. This can be for example an opportunity that Alibaba can seize.
The most dominant online retailer in China, with its diversified portfolio of tech companies, can come after the European and American small and medium businesses. Jack Mao, Alibaba’s CEO, has all the resources, skills and stack to develop a platform that can help small shops defy Amazon.
Doing so can help him redefine his company’s brand as one helping small businesses. He can also contribute to shift the opinion on Chinese brands — moving it away from the ‘companies that steal data’ misconception.
#2 — They need focus on Design and Experience
Many experts and writers will agree that China hardware industry is one of the best and most efficient in the world. However, their design and customer experience need improvement.
Since the Chinese companies have a competitive advantage when it comes to production and hardware cost, they need to start playing catch-up on the UX and the design. Even if their design appeal to Chinese, they need to embrace the idea that non-Chinese customers has a different cultural preference and demand a much simpler, less dense design.
Xiaomi is a good example of a Chinese company that’s on the right track. The company has put minimalist design and user experience a cornerstone of its new philosophy. Xiaomi itself marketed its MiUi 11 a : ‘Know More About MIUI 11 With The Minimalist Design’.
By launching MiUi 11, Xiaomi grew +79% in the first quarter of 2020 vs. the same quarter last year. It is largely due to this minimalist design that some has been compared many times with Apple’s.
If Xiaomi achieves to offer a user experience that can compete with Apple’s and if Xiaomi can still great budget products across all the platforms (phones, tablets, connected devices, …) it can be a serious threat to Apple. It will prove to customers that the high-priced Apple products are not any more justified.
#3 — Africa can easily become China’s China
The trade between Africa and China grew to an all-time high of $201.1 billion vs. $72.1 billion between Africa and China. However, the Sleeping Giant has been heavily relying on mining and farming in the African continent which is making 79% of total trade. With the network it already has, China can easily seize the opportunity of expanding in the telecommunication, smartphone, and digital industries.
In 2019, Africa had a penetration rate of internet users of 57%. It’s the exact penetration rate that China ten has in 2009, ten years earlier.
Africa is also late in many aspects of technology use: internet payments, internet delivery, access to bank accounts, … Chinese companies like Tencent or Baidu can lead and support this transition as they did in China with WeChat, with Mobile Payments, and with the various banking solutions they crafted for their home market.
Google, Amazon, Facebook, and Apple have had stunning growth rates. They’ve built powerful businesses and occupy key market positions in many countries. there is little reason to believe that will change.
This article was not intended to undermine their leadership nor to promote Chinese companies. I saw as an opportunity to discuss GAFA’s potential weaknesses and how it can represent an opportunity for emerging global players (Baidu, Alibaba, Tencent, and Xiaomi).
