How Chinese Companies Make Their Money
E-commerce and tech companies have been branching out into different sectors around the world and Chinese business giants are no exception. According to the new China Mega Report by Chozan and Alarice, some Chinese tech giants now make only around half their revenue from their core business. This applies to Alibaba, Tencent and Meituan. Insurance company Ping An is a little more traditional and still makes around three quarters of its revenue from its core business. It started with property and casualty insurance in the 1980s and life insurance in the 1990s, but now also sells banking services and a small share of asset management and technology products.
Alibaba's share of e-commerce sales stands at 46 percent, not including the growing segment of international commerce at 11 percent. Like other e-commerce companies around the world, Alibaba now makes a significant share of its revenue from cloud services (also 11 percent), behind the obvious logistics services expansion (17 percent). It has also branched out into media & entertainment. The development is mirrored in what overseas competitor Amazon has been doing, albeit with its entertainment category being a little more advanced at around 8 percent of revenue (listed together with the Prime free delivery subscription revenue). Amazon's cloud segment also had a slightly higher revenue share at almost 19 percent most recently.
Similarly, tech company Tencent is making 49 percent of its revenue from gaming and entertainment, including popular apps. Fintech and business services, often seen as a natural addition to the app as well as the e-commerce business, already take up 31 percent of company revenue aided by the popularity of WeChat Pay in the country.
Delivery platform Meituan branched out into transportation and travel and still made 56 percent of its revenue from traditional food delivery most recently. While there are similarities to U.S. company Uber in this behavior (even though the company came from transportation and then added food services), the focus on hospitality and accomodation is different for Meituan. The company that emerged as a group seller has brought this concept back recently in its travel booking segment and also retains some other shopping concepts outside of food.