China’s internet giants, from Alibaba Group Holding Ltd to Tencent Holdings Ltd, cut overseas investment last year amid a slowing economy, regulatory headwinds and geopolitical tensions, data compiled by a Chinese consultancy shows.
According to ITJuzi data, the total investment deals made by Alibaba, Tencent and Baidu will decrease by nearly 40% to 102 in 2023, with Tencent, known for its huge holdings in China’s internet sector, accounting for the largest number of deals. It was shown that it was reduced.
The social media and video game giant signed 39 investment deals with 37 companies last year, down from 95 and 299 in 2022 and 2021, respectively.
Web search and artificial intelligence (AI) company Baidu participated in 24 investment deals last year, down from 52 in 2021. E-commerce giant Alibaba, which owns the South China Morning Post, participated in 39 investment deals, down from 91 in 2021. , according to ITJuzi.
2021 was a turning point for Chinese internet companies, as the Chinese government launched a campaign to curb “unregulated capital expansion.” Amid a series of tightening regulatory moves, the country’s internet powerhouse, whose market size was once on par with its U.S. peers, has effectively halted its expansion.
Tencent’s investments last year were mainly related to enterprise services, healthcare and video games. Alibaba’s top picks are advanced manufacturing companies, with the Hangzhou-based company and its affiliates signing eight related transactions this year.
Alibaba, which is suffering from weak domestic consumption, has signed four investment deals in the e-commerce sector, three of which were made outside China.
AI has been another popular investment target for Chinese tech giants over the last year, as they race to build local rivals and promote OpenAI’s entry into ChatGPT.
Tencent and Alibaba are backing seven and four AI startups, respectively, to develop large-scale language models (LLMs), the technology behind chatbots like ChatGPT that can understand complex questions and provide human-like responses. did.
Last year, Alibaba’s internal research facility, Damo Academy, also launched a lab to recruit more than 100 postdoctoral candidates to work on cutting-edge fields such as AI and semiconductors.
Other big Chinese tech companies invested even less.
TikTok owner ByteDance signed five outside investment deals last year, while online shopping platform operator JD.com signed just two.
Meanwhile, Chinese smartphone maker Xiaomi emerged as the top investor by number of investments, with 82 deals during the year.
According to ITJuzi, in the same month, Xiaomi invested in three startups in the automotive and transportation industry.