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China’s internet giants go global

Tencent is leading the acquisition spree, with Alibaba a close second

 Print edition | Business
Apr 20th 2017 | SHANGHAI
THERE was a time, not that long ago, when China’s big internet companies were dismissed by investors in Silicon Valley as marginal firms with a tendency to copy Western products. Not any more. Today they are monsters with increasingly hefty international ambitions.

Alibaba, China’s biggest e-commerce group, handles more transactions each year than do eBay and Amazon combined. Jack Ma, its chairman, pledges to serve 2bn consumers around the world within 20 years. Tencent, which specialises in online games and social media, is now the world’s tenth most valuable public firm, worth some $275bn. Pony Ma (no relation), its chairman, wants China to “preside over the global tech revolution of the future”. But as the two firms become global forces, the third member of China’s “BAT” trio of internet giants, Baidu, an online-search firm that came to dominate the mainland market after Google left the country to avoid censorship, is lagging behind.

All three firms differ from their Western peers in important ways. First, Western companies usually prefer to focus on a few core areas, whereas Chinese internet firms typically try to do everything from cloud computing to digital payments. When this works, as with Tencent’s wildly successful app, WeChat, the results can be impressive.

Second, with the exception of political censorship, the internet sector in China is lightly regulated. Facebook, Apple and Google, in contrast, face increasing scrutiny. Chinese internet firms can achieve market domination of a sort that would attract close attention in other markets.

The third difference is that they can succeed on a rapid and massive scale because the state-dominated economy is so inefficient. Often there is not even a physical infrastructure to leapfrog—so-called third-tier cities, for example, often lack big retail centres. Nationwide there is one shopping mall per 1.2m people.

A huge home market has not stopped the trio from fighting bloody turf wars among each other. The outcome to this battle is rapidly becoming clear. Tencent and Alibaba are surging ahead; a series of own goals has left Baidu far behind. The common jibe about Baidu among local experts is that it is becoming the Yahoo of China, a once-dominant search giant that sank owing to a lack of innovation and a series of management blunders.

Its revenue growth fell to 6.3% in 2016, down from 35% in 2015 and 54% in 2014. The firm gets some nine-tenths of its revenues from online ads, but this income is plunging as marketers redirect spending from search ads on Baidu to social-media networks like WeChat and mobile-commerce platforms run by Alibaba. Meanwhile, Baidu is burning cash trying to keep its various big bets on artificial intelligence (AI), online video, virtual and augmented-reality technologies, and “online to offline” (O2O) services going. One of China’s most respected business consultants is pessimistic about its future: “There is very little chance they’ll be relevant in five years.”

Of the other two giants, Tencent is probably the most fearsome. It already has higher revenues and profits than Alibaba (see chart). Its value is set to climb as it ramps up advertising on WeChat (provided that does not provoke a backlash from users). Its main weapon against Alibaba is its stake in JD.com, the country’s second-biggest e-commerce firm, led by Richard Liu, one of China’s most aggressive and successful serial entrepreneurs.

JD.com has adopted an expensive “asset-heavy” business model akin to Amazon’s in America. Thus far, its vast investments in warehouses, logistics and couriers have not come anywhere near toppling Alibaba. But last year the company saw its revenues rise to $37.5bn, up from $28bn the previous year. Its share of China’s business-to-consumer market rose to 25% in 2016, up from 18% at the end of 2014. If Mr Liu’s investments in infrastructure start to pay off, much of Alibaba’s future domestic growth could be at risk.

That threat may explain why Mr Ma is not content with Alibaba’s overall 70% share of the local e-commerce market. In 2016 it spent $1bn to win control of Lazada, South-East Asia’s biggest e-commerce firm. In March Lazada launched a new service for Singaporeans directly to shop on Taobao, one of Alibaba’s two domestic e-commerce platforms (the other is Tmall).

Mr Ma last year persuaded the G20 summit of leading countries to endorse his proposal for an “electronic world trade platform” (eWTP), to make it easier for small businesses to trade across borders. Last month Alibaba launched a “digital free-trade zone” as part of the initiative, in Malaysia. This public-private partnership, which involves simplifying both logistics and payments, will help small merchants.

Mr Ma’s chief weapon for going global, however, is Ant Financial, which was spun out of Alibaba before the latter’s $25bn flotation in 2014 in New York. In China the unit offers services ranging from online banking to investment products; it even runs the mainland’s first proper consumer credit-scoring agency, Sesame Credit, which uses big data to work out the creditworthiness of punters. Ant already has more than 450m customers in China and is going overseas with gusto.

It has investments in local online-payments firms in Thailand, the Philippines, Singapore and South Korea. In America Ant is in a frenzied bidding and lobbying war with Euronet, an American rival, to buy MoneyGram International, a money-transfer firm. On April 17th Ant raised its initial offer for MoneyGram by over a third to $1.2bn, topping Euronet’s bid.

Tencent is also making bold acquisitions abroad. A consortium that it led spent $8.6bn to acquire Finland’s Supercell last year, a deal that turned Tencent into the world’s biggest purveyor of online games. Together with Taiwan’s Foxconn, a contract-manufacturing giant, the firm invested $175m last year into Hike Messenger, an Indian messaging app akin to America’s WhatsApp. It was also an early investor in America’s Snapchat, another popular messaging app, whose parent company Snap went public in March.

One reason for these purchases is that Tencent’s earlier efforts to promote WeChat abroad (including a splashy advertising campaign in Europe featuring Lionel Messi, a footballer) flopped. Established social networks such as Facebook and WhatsApp proved too entrenched to dislodge. They also did some copying of their own: once they adopted some of WeChat’s innovations, Western consumers had little reason to switch to the Chinese network.

Such investments have been in Tencent’s core areas, away from turf occupied by Alibaba and Baidu. Sometimes, the trio end up co-operating, if not by design. All three BAT firms are backers of Didi Chuxing, a ride-hailing firm with global pretensions of its own. But in other ways their domestic war is spilling into foreign markets.

India is one such battleground. This month, together with eBay and Microsoft, Tencent invested $1.4bn into Flipkart, a leading Indian online retailer. Alibaba and Ant together are reported to have invested nearly $900m in Paytm, India’s top online-payments firm; in February, Paytm launched an e-commerce portal akin to Alibaba’s Tmall to take on Flipkart and Amazon in India.

Elsewhere, Tencent unveiled a service last month that will allow firms in Europe to use WeChat to sell on the mainland. This will let them sell directly into China, avoiding red tape. Tencent also recently invested $1.8bn in America’s Tesla, a pioneer in electric and autonomous vehicles. That is a particular challenge to Baidu, which is betting its future on machine learning and AI.

Baidu’s push abroad is mainly a way to get access to talent in these fields. The firm has just started its first recruiting campaign at top American universities, including Stanford University and the Massachusetts Institute of Technology. It has a respected AI laboratory in Silicon Valley, despite the recent departure of Andrew Ng, an AI expert. But Baidu does not have the same firepower as Alibaba and Tencent. It tried but has failed to conquer foreign markets such as Japan with its search engine. This week it opened up its self-driving technology to rivals, as Tesla did in 2014, but it has a long way to go before it makes an impact in autonomous driving.

Grandiose BAT statements about global aims should be taken with a pinch of salt. It would be an error to neglect the profitable domestic market. Goldman Sachs, an investment bank, reckons that China’s online retail market will more than double in size by 2020, to $1.7trn. As Duncan Clark, author of a recent book on Alibaba, points out, whatever headlines Mr Ma and other internet bosses make with their overseas ventures, “it takes a lot to get away from the sheer gravity of China.” But at home and abroad, one thing is clear: China’s internet titans cannot be ignored.

This article appeared in the Business section of the print edition under the headline "Three kingdoms, two empires"

 

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This Is Officially the Best City in the World for Women Entrepreneurs

This Is Officially the Best City in the World for Women EntrepreneursThis Is Officially the Best City in the World for Women Entrepreneurs

When Aquila Leon-Soon was in the early stages of launching her startup, she was rejected for a loan by three different banks. She also knew that another funding option, venture capital, was not a realistic one: Black women like her only raise about .01% of the VC money pulled in by the average successful startup.

Luckily for Leon-Soon, she lives and works in New York City. Through resources provided by the city, she was able to find workarounds to replace the traditional avenues of funding, instead growing her business using government certifications, grants, and mentorship programs.

Happily, Leon-Soon's experience—she now runs her own consulting firm, Advance Talent Solutions—is not unique. —more any other U.S. city. In fact, Dell's new Women Entrepreneur Cities Index (WE Cities), released on Wednesday morning, ranks NYC as the world's best possible place to be a female entrepreneur. WE Cities measures a city's ability to attract and support high-potential female entrepreneurs—women who want to grow and scale their businesses. To create the ranking, research firm IHS partnered with Dell to come up with a scoring system and used it to rate 25 global cities. These cities were pre-screened for being generally entrepreneur-friendly based on previous Dell research, with the new WE Cities research providing an added gender lens.

"We wanted to find out why women-owned businesses scale better in one city than in another one," explains Elizabeth Gore, Dell's entrepreneur-in-residence.

The research team looked at 70 indicators that fell into five major categories—markets, talent, capital, culture, and technology—to come up with the scores for each city. Even the top places had "mediocre" scores: New York got a 58.6 out of a possible 100, the Bay Area was slightly lower with 58.3, and London got a mark of 50.4. "Even the best cities haven't cracked the code" for women entrepreneurs, says Gore.

Still, New York City is by far the highest scoring in terms of government policy, says Cris Turner, Dell's head of government affairs for the Americas. (The Bay Area, on the hand, is strongest in talent and technology.) "I really wasn’t surprised by the results given the amount of attention New York has placed on driving entrepreneurship," he says. That attention comes in three major forms: people, policies, and programs.

People

The city's digital director, its department of information telecommunication and technology commissioner, and its CTO are all women. Moreover, more than 70% of the 27 city agency commissioners are women. Having so many women in the city government "has been huge in changing the culture associated with women starting businesses," says Turner.

Policies

Since 2014, the mayor has launched a number of initiatives supporting female entrepreneurs. One example is a certification called Minority & Women-Owned Business Enterprises (MWBE), which gives special status to businesses owned by minority groups. Mayor Bill De Blasio's administration has made a commitment to award more than $16 billion to MWBEs over the next decade.

Programs

The list of city-based programs is long, but some of the biggest include Women Entrepreneurs NYC (WE NYC), which provides women entrepreneurs with free master classes, networking events, and mentors, and Tech Talent Pipeline, which attempts to reach the next generation through specialized training and internships for women in STEM fields.

Of course, the push to get more women to start businesses hasn't changed New York overnight, and the city that never sleeps continues to be a hotbed for male ambition. "At the end of the day, it's finance, construction, and those [industries] are still dominated by men," says Leon-Soon, who is both MWBE-certified and a member of WE NYC. Yet she remains optimistic that even that will change.

"We're doing something about it," she says. "The city's making moves."

“ The creation of a unique financial platform dedicated to the empowerment of women entrepreneurs and the people who invest in them . My team of young women is genuinely committed to growing our unique ecosystem of female entrepreneurs and driving meaningful change and innovation within their industries but also in their life "

Perfect the power of positive thinking, value love more and its power to change life . Chris Alexander .

Founder Brickell Capital Women Division – Crowd Funding Women Entrepreneurs. Funding Fashion and Social Influencers

Entrepreneurs
 Chris Alexander Chris Alexander

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Ten reasons you should consider buying Bitcoin in 2017

Jodi Edmunds 
In some ways, Bitcoin is just another currency: it has an exchange rate against other currencies, it can be bought, sold and it can be used to pay for things online.

Bitcoin is taking the financial world by storm. Here are ten reasons why you should consider buying Bitcoin.

bitcoin-future-of-money

1. The price
If you look at a graph of the Bitcoin price throughout its entire existence, the overall trend shows that it has only increased.

There are many people who believe the price will go up ten, hundred or even thousand-fold in the next few years.

Nobody can predict the future price, but the momentum, increased transaction rate of people using it, banks and companies investing in and using Bitcoin are all very healthy indicators.

2. Bitcoin is global
Bitcoin knows no borders. It can easily be sent from one Bitcoin wallet to another; across the room or across an ocean.

Since it is sent peer-to-peer, there are no third parties or borders to restrict the transaction. Bitcoin can be bought and sold in local currencies in almost every country in the world.

3. Bitcoin is good for businesses
Transaction fees levied by card processors and transfer fees charged by banks for international transactions can be significantly more expensive than the small fees charged for sending Bitcoin.

For example, merchants pay between 2-6% to accept online credit card payments, with high rates of credit card fraud. These costs are passed down to the consumer.

It costs a fraction of that to process a  Bitcoin payment and the chargeback risk is zero.

4. Bitcoin is fast
It takes one to two days to receive a bank payment from a different bank and up to a week (or more) to receive an international bank transfer.

Bitcoin transactions are instantly sent and are usually confirmed in under 30 minutes, no matter where in the world they were sent to.

5. Bitcoin protects your privacy
Unlike most other payments, to complete a Bitcoin transaction you don’t need to provide any sensitive information (which can easily be stolen or abused).

When you want to receive a payment, simply provide the sender with your Bitcoin wallet address. This address is a receive-only address: you’re free to distribute it (people can only send money to it and pay you, not withdraw from it).

You don’t need to send your full name, your physical address or your credit card number when making Bitcoin payments.

6. Bitcoin is transparent
All Bitcoin transactions that have ever happened are recorded in a ledger known as the Blockchain. This makes Bitcoin a great tool to follow the exact flow of money. This, despite early incorrect press, makes Bitcoin a terrible mechanism for facilitating crime and a great one for legitimate transactions.

Note that a Bitcoin wallet’s balance and payment history are publicly available, but the identity of the wallet owner isn’t.

7. Bitcoin is irreversible
If someone uses a stolen credit card at your store, the owner of the stolen card can simply reverse the charges with their bank (a process known as a chargeback).

Chargebacks and reversals simply aren’t possible with Bitcoin.

8. Bitcoin is decentralised
Bitcoin has no centralised control: no single company, person or government owns or issues it, so there is no potential central point of failure. A distributed network of computers work together to form part of the Bitcoin network.

This means that should one part of the network go offline, for any reason, Bitcoin transactions will continue to be processed and confirmed by the remainder of the working network.

9. Bitcoin can bank the unbanked
There are many people in developing countries without access to bank accounts. Others have bank accounts but can’t make international payments.

There is a possibility that Bitcoin wallets can become easily accessible platforms for people who are currently excluded from the traditional financial world, to store and transfer money.

10. Bitcoin is separate from the global economy
Traditional currencies are printed and controlled by central banks and governments.

Bitcoin is not affected by this in any way, meaning that it is not associated with other national currencies or the stock market. Because of this, it is possible that Bitcoin could benefit from the collapse of the economy.

So, as the traditional economy continues to collapse or remain unstable, Bitcoin becomes a safer place for us to put our money.

It would make sense for anyone worried about the state of the global economy to begin buying Bitcoin.

get-started-with-luno

Global
Avatar Jodi Edmunds
AUTHOR
Jodi Edmunds

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What is Social Credibility

Building social credibility via our social media networks allows us to nurture relationships, stay top-of-mind with the purpose of creating “sales time” with buyers at the right time. It is about positioning ourselves to have influence and high levels of perceived value with prospects or potential customers. It is not just about building up our own personal brand but also support the company’s brand online.

At a practical level it is about participating in online discussions on LinkedIn, Facebook, Twitter, Forums etc as well as writing and sharing content relevant to your customers. It also extends to being aware of industry trends, seeking referrals from clients and co-workers, and working every day towards being viewed as a subject matter expert in a given field. Social credibility is also constructed by connecting with industry experts, clients and potential prospects by engaging in social conversations. Most importantly, it involves developing influence in your market so you contribute valuable and relevant insights to your social sphere.

 

What does this mean in reality?

I have my profile photos updated across all social media platforms

I have a tag line(s) on my social profiles that resonates with my ideal customer

My profile speaks to the pain points of my ideal customer

I have articles, multimedia, videos on public display across my social accounts

I have genuine recommendations from clients and connections on my social media profiles

My activity reflects my personal brand and my social purpose

I have a bank of connections that I constantly add to and engage with

I follow influencers and companies within my industry

My company page is visible to all and is active

I am socially active consistently and not just because I need leads

I can be seen and found on multiple platforms with uniform messaging

How can your social credibility be measured?
Social Selling Index

Number of Social Connections

Number of Connection requests you receive weekly/monthly

Number of followers – you and your company

Number of profile views you receive

Number of conversations you engage with or start

Number of shares and comments (on your content)

Number of leads you generate as a result of building your social credibility

Number of “sales time” events you manage to secure with potential customers

Brian O'Connell Brian O'Connell
Course Facilitator • IMI

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