Looking for the next big thing in tech? Chinese companies like Tencent have been turning heads for years, offering investors a stake in China's digital revolution. But lately, investing in Chinese tech has felt a bit like riding a roller coaster.
While these companies tap into China's massive market of tech-savvy consumers and push boundaries in everything from artificial intelligence to mobile payments, they've hit some bumps in the road. Trade tensions with the U.S., shifting regulations, and COVID's aftermath have kept investors on their toes.
Yet despite the headwinds, Chinese tech still packs quite a punch, backed by government support for cutting-edge technologies and a huge domestic market hungry for digital innovation. Let's take a closer look at some of the top Chinese tech stocks to keep on your radar.
Chinese tech stocks
Alibaba (9988:HK) (BABA:US)
Alibaba Group Holding Ltd is an e-commerce giant and one of China’s largest companies by market capitalisation. The company controls around 50% of China’s e-commerce market each year. Alibaba owns the websites of many subsectors: Taobao is the equivalent of the second-hand C2C retail platform eBay, Alibaba Cloud is a cloud computing company, and Tmall is a B2C retailer for both Chinese and international businesses.
JD.com (9618:HK) (JD:US)
JD is Alibaba’s main competitor within China’s e-commerce and retail sector, and it is the second-largest online retailer in the country, controlling around 17% of China’s e-commerce market each year. JD invests heavily in its logistic network and development of artificial intelligence, charging third-party companies for its services in robotics and driverless delivery vehicles. It is a very similar provider to the online retailer Amazon, as a Chinese pioneer of fast delivery and a never-ending range of products.
Baidu.com (9888:HK) (BIDU:US)
Baidu Inc. is a technology and advertising company that specialises in internet services and artificial intelligence. The Baidu search engine is currently the 14th most visited website in the world. As well as this, Baidu is a global leader in cloud storage services with Baidu Wangpan, smart speaker development and online mapping with Baidu Maps, an equivalent of Google Maps. The coronavirus pandemic has had a negative impact on the advertising industry in general, and Baidu’s share price took a large fall at the start of 2020.
NetEase (9999:HK) (NTES:US)
NetEase, founded in 1997, is a major Chinese internet and gaming company based in Hangzhou. It develops and operates PC and mobile games, provides email and e-commerce services, and runs NetEase Cloud Music, a popular streaming platform. NetEase was previously partnered with Blizzard Entertainment (2008–2023) to distribute games like World of Warcraft in China. The company has expanded globally with development studios in the US, Japan, and Canada.
Tencent (700:HK)
Tencent Holdings Ltd is a conglomerate holding company within China’s tech industry. It is the world’s largest video game publisher and owns China’s top mobile messaging platform, WeChat. Tencent’s sudden growth could be attributed to the development of its own online payment service, WeChat Pay, which has almost equal revenue in digital payments as Alibaba’s own service, Alipay. It also holds shares in Tencent Music Entertainment, a digital music service, and Tencent Cloud, which is the second largest cloud storage service in the country after Alibaba’s own. It also has great involvement in the e-sports and gaming market, as it is a stakeholder of several major game publishers, and has ownership in a range of developers.
Chinese technology ETFs
An alternative method of gaining exposure to Chinese companies is through ETF investing. Exchange-traded funds are investment funds that hold a collection of underlying assets. An index ETF is often used as a benchmark for other indices of a specific sector, such as China’s tech industry. Some of the top Chinese tech ETFs are the Global X MSCI China Information Technology ETF, Invesco China Technology ETF and KraneShares CSI China Internet Fund ETF.
Conclusion
Despite recent volatility, Chinese tech remains a key player in the global market, driven by innovation, government backing, and a massive consumer base. While regulatory shifts and economic factors present challenges, companies like Alibaba, Tencent, and JD.com continue to shape the digital landscape. With advancements in AI, drones, electric vehicles, and more, China is not only keeping pace with the U.S. but, in some areas, surpassing it. Whether investing in individual stocks or ETFs, staying informed and strategic is essential to navigating this dynamic market.
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