Collectively known as the BAT, China's giant technology companies that dominate search, e-commerce and mobile messaging in their home market are going global. The United States is their primary shopping place to diversify and build out their brands. The hunt is on to acquire or buy into fast-growing young companies in a broad range of the hottest tech sectors, such as virtual reality, fintech, social media, video games and mobile apps.
As tech innovations unfold, China is stacking up to the United States as a leading force. Global tech industry leaders indicated, in KPMG’s tech innovation survey, the United States and China are the world’s dominant tech epicenters with the greatest potential to develop disruptive technology breakthroughs that will have a global impact. The strong showing for these two mega-powers is relatively consistent with earlier KPMG surveys, although this year’s poll reflects a slight uptick for China—25 percent compared with 23 percent the prior year.
Though other countries have made significant strides in innovation development, the U.S. and China continue as the most promising markets for technology breakthroughs that have global impact, according to KPMG's 2017 global technology innovation report. Given their country ranking, it's not surprising that cities in the U.S. and China are expected to make up six of the Top 10 innovation hubs, outside of Silicon Valley/San Francisco, over the next four years.
Last year, for example, Microsoft researchers proclaimed that the company had created software capable of matching human skills in understanding speech. Although they boasted that they had outperformed their United States competitors, a well-known A.I. researcher who leads a Silicon Valley laboratory for the Chinese web services company Baidu gently taunted Microsoft, noting that Baidu had achieved similar accuracy with the Chinese language two years earlier.
Last year, India had the most graduates of any country worldwide with 78.0 million while China followed close behind with 77.7 million. The U.S. is now in third place with 67.4 million graduates, and the gap behind the top two countries is widening.
On a deal-by-deal basis, some foreign direct investment from China is a net positive for the U.S. economy. But at least one-third comes from Chinese state-owned enterprises, and it is likely that considerably more is guided and supported by the Chinese government as part of an “indigenous innovation” strategy that employs mercantilist policies and specifically targets sectors that are strategically important for U.S. national security or economic leadership.
China’s largest chip maker has announced it will invest $30bn to build a new semiconductor factory, as the world’s second largest economy seeks to reduce its dependence on foreign technology. The state-owned Tsinghua Unigroup will open the facility in the city of Nanjing in eastern Jiangsu province, where it will mainly produce chips used in consumer electronics such as cellphones, cameras and computers, according to a statement posted on the company’s official website.
It's been six years since Google left China, and the world’s second-largest economy remains a tough market for multinationals. Fellow tech giants Apple, Microsoft and Facebook continue to battle with regulatory hurdles, censorship, intellectual property challenges and other restrictions.
A White House report has warned that Chinese industrial policies pose a real threat to the US semiconductor industry. The report, submitted before US President Barack Obama by the President’s Council of Advisors on Science & Technology (PCAST), argues that the US semiconductor industry needs to innovate and run faster in order to mitigate the threat posed by Chinese industrial policy and strengthen the country’s economy.