Tencent’s acquisition of a majority stake in US gaming start-up Riot Games, speculated to be worth more than $350 million, is being framed as the beginning of Chinese influence on digital globally by businessinsider.com whose headline reads “Here They Come”.
This is the biggest ever investment by a Chinese tech company in the US.
This is obviously good. The US tech ecosystem needs more exits, so deep-pocketed Chinese companies joining the list of potential acquirers for startups is good. And there’s no reason why China’s tech giants shouldn’t play globally when America’s do.
But plenty of people will point out that China has very protectionist policies when it comes to its own internet market. And people in general freak out whenever a Chinese company buys a Western one.
This deal should come as little surprise, and we can certainly expect to see more given that Tencent announced a $760 million fund devoted to gaming just last month. While other Asian-based firms, particularly in Japan, have invested and considered Western acquisitions and deal albeit often on a smaller scale.
Reuters on the Tencent gaming fund:
Tencent Holdings, China’s largest Internet firm by market value, plans to launch a 5 billion yuan ($760 million) fund to invest in online games, social games and mobiles games, the Shanghai Securities News reported on Tuesday.
With the emphasis beginning to be placed on Asia given the growth rates of internet access and activity, to have a company go the other way and invest from Asia into the US, just shows that Asia has developed in its own way, and is not simply following the lead of the west.
Still there are likely to be a great many, principally in the West/US, somewhat troubled by the notion that a company based in a market as restricted as China is mixing it in the ‘free’ western world, but frankly businessinsider.com is right to say that non-US involve provides a different angle and more opportunities for start-ups.
Perhaps most importantly, with Asia – and China in particular – such a key area of growth for the internet, those funded out of Asia, and China in particular, are in an ideal position to tap into the ‘Asian digital gold rush’ using knowledge from a successful market leaders whilst also being in a position to make a splash in their initial native market – Riot Games are, for example, keeping their US-based HQ.
And what of those concerning themselves with the prospect of Tencent moving into the US market, and related theories and conspiracies?
Why would they need to/want to make it in the US; they are already the third largest SW company in the world, and have the largest number of registered users in China?
There is still plenty of growth room in China for them, so I really don’t understand the reason for them wanting to spend tons of money in a highly competitive and expensive US market, where marketing costs are much higher and in many ways, more highly regulated than in China.
So while the Riot Games deal is a trail-blazer and certainly likely to herald future start-up money and investment from China in the US (and other western markets) it is a different scenario to Chinese firms trying to ‘crack’ western markets.
Who can argue against new sources of investment, different perspectives of success from proven businesses and, most of all, on-the-ground knowledge of Asian to tap its growing digital potential?
If this is what is coming after Tencent’s deal,