Tao Liu has moved to the strategic investment group at China-based e-commerce group Alibaba after Chinese investment rebounded last year.
Liu will back cloud softwae technology developers having spent the past seven months at sister company Alibaba Cloud making undisclosed technology investments in semiconductors and silicon, sensing, artificial intelligence (AI) and virtual reality.
Alibaba’s cloud services subsidiary, Alibaba Cloud, pledged $1bn in 2021 to an initiative to support tech startups and developers. The Project AsiaForward initiative is intended to support some 100,000 recipients over the next three years while also providing training for prospective software developers and linking entrepreneurs to venture capital investors.
Jeff Zhang, Alibaba Cloud’s president, said: “We are seeing a strong demand for cloud-native technologies in emerging verticals across the region, from e-commerce and logistics platforms to fintech and online entertainment.”
(A review of China’s CVC developments last year will be published next month in the World of Corporate Venturing 2022 by Kaloyan Andonov.)
After a quiet end to 2020 as Alibaba and its Ant Group affiliate suffered regulatory pressure, the company’s corporate venturing units have bounced back by the end of 2021 and helped China reach record investment activity last year.
VC investors put $129bn into more than 5,300 startups in China in 2021, higher than the market’s last record of about $115bn for 2018, according to data from investment database Preqin cited by the Wall Street Journal (WSJ).
The WSJ added: “Unlike in previous years, when most Chinese tech funding went to internet startups in e-commerce, the bulk of the money in the past year headed into areas that hew more closely to Communist Party priorities, such as semiconductors, biotechnology and information technology….
“The country’s new five-year plan labelled technology development a matter of national security and announced aims to increase spending on research and development by 7% annually — higher than budget increases for its military.
“The economic blueprint included plans to speed up development of technologies from chips to artificial intelligence and quantum computing, which officials hope can reduce China’s reliance on foreign providers or allow it to take the lead in advanced technologies.”
In addition, 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 VC firm MSA Capital.
Harburg added that early-stage companies in sectors from artificial intelligence to healthcare were going global or “thinking about plotting their globalisation strategy”.
Such Chinese firms could find that their business models work in emerging markets in particular, Harburg aded.
Xiaomi is now the third-largest smartphone player by market share globally thanks to big gains in India, while Tencent and Alibaba have also been investing more overseas.
New research by Harvard Business Review into “Xiaomi’s growth strategy suggests that the Beijing-based electronics giant has developed a blended approach, borrowing elements of both traditional ecosystem and CVC firms to create a broad ecosystem of strongly-supported partner ventures….
“Xiaomi structures its investments to incentivize innovation and build trust while still ensuring alignment, proactively fosters an ecosystem mindset throughout its organisation and takes a deliberate, measured approach to expanding the scope of its ecosystem over time.”
Other Chinese companies, such as Huawei, Oppo, and Vivo, are also pursuing strategies modelled on Xiaomi’s blended approach, HBR added.
