China's enterprises have long had a "wave of going overseas," but most of the mainstream applications have been consumer-oriented, such as e-commerce, gaming, and the internet.

However, the trend is changing.

The latest trend is that more technology and services targeted at enterprise applications are starting to expand overseas, and Chinese enterprises' overseas expansion has also evolved from exporting the Chinese model to exporting Chinese technology and Chinese experience.

For example, companies like Alibaba, Tencent, and Huawei have expanded their cloud computing, big data, and other businesses to emerging markets such as Southeast Asia, India, and Latin America, helping local enterprises achieve digital transformation;

Companies like Baidu and ByteDance have conducted in-depth cooperation with countries along the Belt and Road in areas such as artificial intelligence and online education, promoting the development of related industries...

Behind these stories is the fact that Chinese enterprises' overseas expansion is undergoing a critical transition from the foreground to the background, from business to technology and services, and from ToC to ToB.

However, the journey is never smooth sailing. How to deal with the stability and compliance of overseas policies, how to localize technology and services, and the most important question, why local customers should choose to cooperate with Chinese enterprises, are all necessary questions for overseas enterprises.

China's digital technology sails overseas

In the global wave of the digital economy, overseas markets are a significant piece of the puzzle for Chinese technology enterprises, and "going overseas" has become their new growth curve.

Taking Ant Group's AntChain as an example, since 2017, it has exported Ant Group's best practices and technological capabilities in the form of technology products to overseas markets, serving overseas customers' digital transformation. Representative products include security technology ZOLOZ, mobile development platform mPaaS, and Web3 technology service platform ZAN.

During the pandemic, many Southeast Asian governments chose to distribute subsidies online, but they lacked the ability for online identity verification and security risk control.

By leveraging AntChain's e-KYC solution from ZOLOZ, 5 million households in Bangladesh achieved remote account opening, allowing the government to distribute aid funds to these households through BKash, the largest local mobile payment platform.

Recently, AntChain expanded its overseas presence to Central Asia and signed a strategic cooperation framework agreement with Bank Center Credit ("BCC") Bank in Kazakhstan.

As one of the oldest and largest banks in Kazakhstan, BCC Bank will create a Super App for the first time with the help of Ant mPaaS, providing digital services related to cross-border trade to global and local customers. In addition to bilateral trade, tourists from China and Kazakhstan can also make online purchases and other transactions through the Super App.

Such an aggressive technology expansion strategy has brought tangible growth points to AntChain's business. It is revealed that in 2023, AntChain's overseas revenue from technology products increased by 300%. As of now, AntChain has collaborated with over 300 partners globally, serving more than 10,000 customers.

Chinese cloud vendors are also equally active in overseas expansion. On the one hand, it is due to the slowing growth of domestic cloud computing, which urgently needs to develop new markets.

To better compete, Chinese cloud vendors are willing to invest heavily. For example, in Southeast Asia, Chinese cloud vendors have more data center availability zones than overseas cloud vendors such as Amazon and Microsoft.

With significant investment in overseas markets in recent years, Chinese cloud vendors have moved from the initial overseas business development phase to the deep-water zone of implementing local strategies.

At this stage, cloud vendors are no longer simply launching one or two products and services but are engaged in local infrastructure construction, establishing local partner ecosystems, and localizing teams, adopting localized business strategies for each country.

Such efforts have also paid off. For example, in competition with AWS, Tencent Cloud gained customers' favor based on its advantages in the audio and video field.

Singaporean video software Belive migrated its video live streaming scenarios for mainland China and South American customers from AWS to Tencent Cloud in 2020, citing lower prices and higher support for regions like South America.

Huawei Cloud has also made breakthroughs with the accumulation of many partners. Currently, Huawei Cloud has developed over 42,000 partners globally, with over 5 million developers, and its overseas partner revenue has grown by more than 100% year-on-year.

It is not difficult to see that Chinese technology enterprises have accumulated rich experience in the past decade, possessing best-practice-verified, highly standardized digital technologies, which serve as the foundation for Chinese enterprises' technology expansion overseas and providing truly differentiated value.

Closer proximity to local user needs and more competitive prices have also given Chinese technology enterprises the capital to compete with international IT service providers.

Southeast Asia and the "Belt and Road" become the preferred destinations for overseas expansion

Breaking into the international market from China is not easy. Different markets have different soils and diverse needs. Africa focuses on accelerating infrastructure, while Asia-Pacific faces digital transformation challenges, and Europe and the United States have a high degree of cloudification, requiring stronger computing power and technology.

Currently, for Chinese technology enterprises, it is difficult to enter the European and American markets, but emerging markets such as Southeast Asia have become the preferred destinations for domestic manufacturers to expand overseas due to their early stages of digital transformation.

On the one hand, due to the cultural, linguistic, geographical, and time zone similarities between Southeast Asia and China, it is more convenient for domestic enterprises to expand overseas. On the other hand, the gradual opening of Southeast Asian national policies is also beneficial for domestic enterprises to expand overseas.

A report from the Huaxin Research Institute pointed out that Southeast Asia is one of the regions with the fastest growth in global internet users, with huge potential in the digital economy. However, at the same time, many countries are still in the initial stage of digitization, with imperfect infrastructure, insufficient supply of digital talent, and thin digital technology research and development, which restrict the rapid development of digital economies in these regions.

China, which has taken the lead in the development of the digital economy, provides a development model for emerging markets and exports technological practices from China overseas.

Regarding this, Li Guowei, General Manager of AntChain's International Business, also said in an interview that Southeast Asia's population is relatively young and has a high acceptance of digital transformation and online mobile transaction services.

In recent years, the internet and mobile internet penetration rates in these countries have gradually increased, a trend that is somewhat similar to China a decade or five years ago. Therefore, mature and proven industry solutions in China can be effectively brought to Southeast Asia.

It is not difficult to understand why cloud vendors such as Alibaba Cloud, Tencent Cloud, and Huawei Cloud have simultaneously focused their attention on Southeast Asia, setting it as their first stop for overseas expansion. AntChain has also repeatedly stated its commitment to continuously strengthening its overseas market presence, with the first step focusing on the rapidly growing digital demand in Southeast Asia.

With the construction of China's "Belt and Road" in recent years, Chinese digital technology service providers have once again found vast overseas markets.

For example, companies like Huawei and ZTE have actively participated in the construction of communication networks in multiple countries along the "Belt and Road" during their overseas expansion, promoting the construction of the information superhighway; JD.com has cooperated with the Indonesian government to establish "JD Indonesia," one of the world's largest cross-border e-commerce platforms, jointly fostering new economic growth points; AntChain has cooperated with BBC Bank, the largest and most mature economy in Central Asia, Kazakhstan, to actively promote financial digital innovation...

Through the "Belt and Road," Chinese technology enterprises have achieved many achievements in areas such as expanding internet infrastructure, promoting e-commerce, and jointly formulating internet standards with other countries, providing a wide range of digital technology applications to countries along the route, such as smart cities, smart logistics, and smart agriculture projects, promoting economic development in various countries.

According to a study by the US-based Bruce Foundation, the "Belt and Road" is one of the main ways for China to expand its digital technology exports and a direct manifestation of its "technology spillover".

It can be seen that Chinese technology enterprises have moved from Southeast Asia to countries and regions along the "Belt and Road," releasing their potential by finding broader markets and more opportunities.

Facing the challenges of technology expansion overseas

No matter how attractive the new overseas markets are, the risks of going overseas cannot be underestimated. Even technology giants like Alibaba, Tencent, and Huawei face localization challenges when expanding overseas.

Whether true localization can be achieved mainly depends on three aspects: local compliance, local teams, and local decision-making.

Due to the significant differences in basic understanding between domestic and international environments, it is necessary to delve deeply into local users to truly understand enterprise needs, which is often the most difficult aspect and requires joint efforts from Chinese technology manufacturers and enterprise customers.

Among them, local compliance is a fundamental issue.

Xu Zhidong, the Regulatory Vice President of Huawei's Asia-Pacific region, once spoke about the complexity of local compliance: "Compliance not only requires adherence to the laws and regulations of the host country but also attention to international organization conventions, international organization norms, EU laws, US laws, and customer and supplier management regulations. Even when doing business in the Asia-Pacific region, it is necessary to comply with EU and US laws."

At the same time, compliance risks are mainly divided into three categories: governance, business, and operation. Any failure in any of these areas will affect business progress.

Qi Xiaolong, the head of AntChain's mobile technology business, also stated that from a global perspective, data security compliance is the most important aspect. On this premise, one should then consider how to use technology to solve problems.

For example, AntChain has long deployed technologies in all sub-directions of privacy computing and has also deployed technologies such as cloud-native, blockchain, and AI, aiming to ensure various distributed data mining capabilities, decision-making capabilities, and optimal resource utilization under the premise of data security.

In addition, Qi Xiaolong believes that the differences in infrastructure in different countries are also challenges that must be faced in localization. How to use technologies such as cloud-native and multi-cloud management to shield the differences in IaaS infrastructure requires more standardized, flexible, and secure technology products to adapt.

In addition to being regulated by foreign institutions' policies and regulations, Tang Zhehui, the Deputy Managing Partner of Ernst & Young's Audit Services in Central China and the Managing Partner of the Hard Technology Industry, stated that the uncertainty and degree of differentiation in foreign regulatory policies caused by multiple factors are also major risks faced by enterprises going overseas, including risks brought about by political factors, social factors such as labor-management relations, ethnic religions, and cultural differences, and economic factors such as inflation, exchange rate risks, and tax risks.

Concluding Remarks

At a time when the growth rate of the domestic market has peaked, the competition for overseas expansion of to B technology and services has only just begun. Everyone is gearing up and making adequate preparations for the arrival of the true era of great voyages. Whether Chinese technology service providers can move beyond the Asia-Pacific region, truly participate in global competition, and sit at the same table with international top technology service providers, there is still much work to be done.

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[Original Reporting by Tech Cloud]

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