Chinese tech companies are just starting to go global, VC says

GUANGZHOU, China — Chinese technology companies are considering expanding overseas much earlier in their lifecycles, a venture capitalist told CNBC — marking a shift in attitude among firms in the world’s second-largest economy.

That shift has been prompted in part by China’s tighter regulatory scrutiny on technology as well competitive pressure in certain sectors, according to Ben Harburg, managing partner at venture capital firm MSA Capital.

“It’s also forcing Chinese companies much earlier in their lifecycle to think about going global,” Harburg said at CNBC’s annual East Tech West conference in Nansha, south China.

Harburg said that a few years ago, his venture capital firm was working with social media or cross-border e-commerce companies that were more mature. But today, early-stage companies in sectors from artificial intelligence to health care are going global or “thinking about plotting their globalization strategy,” he said.

Such Chinese firms could find that their business models work in emerging markets, in particular, Harburg said.

“Our view was that Chinese business models are global best practices, especially for emerging markets, because the way that Chinese consumers have evolved with technology is much more reminiscent of the way the next wave of consumers in India and Pakistan and Egypt and in Nigeria, and Brazil, will engage with technology,” he said.

There are only a handful of examples of Chinese technology firms finding success overseas in the past. But in more recent times, there has been a rise in China-based tech companies growing their international businesses.

Beijing-based Xiaomi is now the third-largest smartphone player by market share globally — thanks to big gains in India. Chinese tech giant ByteDance’s short video app TikTok has a billion monthly users globally.

Chinese fashion brand Shein has also caught on with young Western consumers.

Meanwhile, giants like Alibaba and Tencent continue to expand their overseas businesses.

“I think maybe there’s the perception that this is, you know, this is kind of the pinnacle of China’s expansion into these markets,” Harburg said.

“But our view is that this is just the tip of the spear, and that there is a long tail of Chinese built companies addressing financial services, education, health care, and other social applications in both emerging markets and even in more mature markets.”