In a presentation at last week’s Web 2.0 conference, Morgan Stanley Internet analyst Mary Meeker did her annual data dump, quantifying the Web’s growth in dozens of ways. (You can watch a video of the presentation here, although it frustratingly does not show the actual slides, which you can find here). One data point in particular really stood out for me. In 2003, the combined market capitalization of China’s publicly traded Internet companies was $5 billion. Today, it is $50 billion.
Of course, it’s not just Chinese Internet stocks that are going gangbusters. Floyd Norris at the NYT points out that, of the top 20 most valuable companies in the whole world as measured by market cap, 41 percent are Chinese, surpassing the 38 percent represented by American companies. Contrast that to 1999 when U.S. companies represented 77 percent of the top 20. And in 1989, it was Japan that dominated with 73 percent of the list. Maybe the China bubble won’t pop until China hits at least 70 percent and a Chinese Internet company is on the list. Or maybe it will deflate over time as more Chinese stocks become available to investors, who are currently fighting over a limited supply of shares.
(The Chinese companies on the list today include Petrochina (which has a larger market cap than GE), the Industrial and Commercial Bank of China (which is more valuable than Microsoft), China Petroleum, China Life, and China Construction. The only Chinese technology company on the list is China Mobile. Google doesn’t even rank in the top 20.)
I don’t get why companies based on a website, that employ somewhere between a hundred and a thousand people or so are worth more than companies with a lot of infrastructure, like manufacturers, China or elsewhere. It’s also kind of strange that Google needs 15,000 people or whatever the number is to run its website. I think it’s a bubble, it just doesn’t make sense, here and in China.
Impressive!
China’s technology push is amazing. I hear they’re coming up with a way to give you lead poisoning over the internet!
Bubble again? I still remember the year of 2000….most of internet companies in China closed, but as matter the fact, more than 50% are good. there’s a site called eguo.com, they offer 24 hr deliver service, whatever you need, even a coke, wherever you live even at suburban district, they could deliver it in an hour.
Give some credit to Alibaba.com which is getting listed on Singapore Stock Exchange Today.
http://www.meetingflex.com
where did you read this? In a fortune cookie?
China government has banned computers use in universities, does that marked should be trusted ?
In under 50 years from now, China will be the world’s biggest economic superpower. Possibly something to be scared of?
Not very surprising perhaps. Cheap labour, Big Market (for companies like Industrial and Commercial Bank of China, since China is most populated country in the world), it being manufacturing hub along with control of chinese currency by Chinese Government have all contributed to such boom in Chinese companies valuation.
One of the more significant China tech IPOs is Alibaba Group, and I personally believe it is inflated. I posted some comments along with some charts that show their flagship website’s viewership is actually on the way down.
Two charts are at the bottom of this post – http://thechina...y-worth-us71bn/
Wow now that is scary. I can’t believe China is growing that fast. I read a statistic that says China is growing by 4 people for every person in USA. I hope we can keep up with growth like that.
This may be relevant:
http://www.yout...h?v=pMcfrLYDm2U
I wonder how much “Market Cap” the USA has put on the books in the same time frame?
so where’s the analysis? I thought this site was about adding a layer….
The reason China is starting to become a major force is because all the real wealth is in manufacturing, yet the money lords in the west have long abandoned their manufactures, while taxing them out of business, and at the same time giving tax breaks to the financial services markets.
Plus china knows how to cheat to get traffic from the search engines.
as do these people
http://www.link...association.com
The reason China is starting to become a major force is because all the real wealth is in manufacturing, yet the money lords in the west have long abandoned their manufactures, while taxing them out of business, and at the same time giving tax breaks to the financial services markets.
Don’t a lot of people wish they spoke Chinese right now? haha
Don’t you think that Baidu is going to acquire Google some day?
> In 2003, the combined market capitalization of China’s publicly
> traded Internet companies was $5 billion. Today, it is $50 billion.
but that doesn’t mean it’s a 10x increase from 2003 apple-to-apple,
because back in 2003 a few of those companies making up this $50B
were not included (for they were either non-existent back in 2003,
or not publicly traded back in 2003).
Eg., in 2 weeks’s time, there’s one more addition: alibaba.com, thus
adding to this $50B, just as an example.. Rgds, /ac.
Interesting, considering China is not a democracy, and the mass majority of its population is still starving. With the inbalance of wealth distribution, any less oppressive government could well lead to a civil war in China, causing market turmoil.
If these are solid companies, no problem. I assume Sarbox and other compliance rules are applicable?
i was just checking the Chinese telecommunication companies .. and boy they look very similar to QCOM in 1999 .. especially CHL China Mobile .. although it looks like the bubble is going to explode at any moment .. it hard to predict the exact price .. any one knows if there is any ETF for Chinese Internet companies? i don’t want to miss the put opportunity!
Train of thought seems to be missing here: you first start with Internet companies but then take to Oil and Finance. Comparing Google and Microsoft to the top 40 list is stupid – they are in a different industry!!! Just it would be stupid comparing Bank of China with Sohu.com! What’s next, an article on comparison of Chevron with Google?
Market Cap of Chinese stocks is now larger than Japan’s. But hardly can you pick any multinational chinese public companies from the stock list. The whole country is in a stock frenzy, everyone from retirees to gov. officials are pouring their savings into stock market. There’s even a pop song dedicated to this frenzy, dubbed “I won’t sell my shares even I have to die”. All the stocks, good or junk, are pushed higher round by round. Even the companies who have no business activities anymore. It’s definitely a once in a century opportunity for investors who know when to quit.
The interesting thing about this phenomenon is that it’s not only US investors participating in the China boom, but actual Chinese citizens who, with the highest savings rate in the world, are opening up their piggy banks to get in on the ride.
Interesting
now if mark and mike have their way, facebook will be #1 by end of 2009!!!
I’ve had a variety of discussions about China…but here’s an interesting theory presented by a friend:
China is creating it’s own middle class. In do time, so long as they continue to usurp American wealth, they could essentially replace the need for the American consumer with their own consumer class. They only need to replace 300 million consumers using their population of 1.3 billion. If successful, they would then remove the currency peg and snatch up U.S. assets on the cheap.
There are a few wildcards. The Chinese are inefficiently using natural resources, which could lead to scarcity issues. Of course, there is also potential for political instability.
It seems like China is a bubble. Nothing grows this fast without coming down. I also think the lack of democracy in China will block growth. You can’t have a creative, innovative society with government control. Look at what China is trying to do with the Internet. Once you stop blocking information you reduce innovation.
There are a bunch of good article on this at:
http://www.best....html/tag/china
One guy sold all of this China Mobil last week, convinced the bubble was reaching a top.
Look at the actual profit numbers of some of these chinese companies compared with their valuations, in many cases they hardly have any profits and extremely high valuations (remind anyone of 1999?). There is definitely a bubble in a lot of the listed companies right now. I think China has a bright future ahead but you still need to invest with common sense.
One forgets that innovation in the western societies are extremely hampered by laws and regulatsion (like RIAA/MPAA/American Government) etc.
China have been free to create amazing technologies and internet websites because they have extremely lax laws around copyright and patents. I dont fully agree with this but i would prefer the lax environment versus what you US have now with patent lawsuits and MPAA/RIAA lawsuits!!
@7 Adi Moga -> “China government has banned computers use in universities, does that marked should be trusted ?”
No they haven’t. I’m living in China now and I’ve been to a number of universities in a number of cities and they ALL have computer labs. One university even had access to Wikipedia.
31 – I think that’s a bit of a naive view of things. P.S. the US isn’t the only country that has regulations and laws, in fact most do. There isn’t anything “innovative” about copying IP, steeling code or illegally distributing copywritten material, period. Personally I think the RIAA/MPAA need a kick in the ass, and the patent system needs an overhaul, but they are there for a reason. I’m not saying chinese companies can/do not innovate, but I am saying the reasons you are giving are complete rubbish.
@32 Hero Doug – but do you know that Chinese government also ban rss feeds?
comment on slide 20: Internet Market Capitalization
I don’t understand why the following companies are considered as internet companies.
China Digital TV(if Cisco considered as internet company, then it is)
New Oriental Education(only 1% revenue is from internet)
Home Inns(hotel chain),
Acorn(TV shopping)
Kingsoft( enterprise software like SAP)
Those are the most valuable companies on the list. If not counting them, the number will decrease a lot.
Too bad normal everyday citizens aren’t benefiting from this extreme wealth… though the “executives” at the Communist Party seem to be doing quite well… I saw a castle of one that was absolutely amazing.
Jon
I’ve been living in europe for more than 10 years and just been back from there in June 2007 and have decided to continue staying here for many years. I can tell you what china is really blocking on the internet, for those of you who’s thinking that china is hermetical hope this helps anyhow:
- FEW western porn websites which don’t have chinese language, XTUBE.com is accessable. But MOST EVERY porn sites which have chinese language version no matter hosted in where.
- BBC and CNN and all other news/tech/gateway/forum sites I know are able to access (used to be blocked before 2003 once when I was in china, but now many of them is ok to access again) unless they have articles in chinese language AND are **GUIDING, INSTIGATING CHINESE PEOPLE TO** against the china govt.
- 3 world largest entertaining (or so) websites are blocked: world largest image sharing website: Flickr, world largest video sharing website: YouTube, and world largest blogging website: Blogsopt (some people in china can access blogspot, but I can not at this time).. Yea, absolutely, this s*cks!!
I can say that’s all (if I have missed anything, please add it up).
I personally feel okay with all of these, i am a web designer and coder and I’m able to visit every website which is useful for me with very affordable monthly broadband connection fee. I pay all my bills here in beijing directly via the internet or some with my cell phone credits, i call food directly on the internet, and i of course also buy a lot of things on the internet too. I check my gmail use my cell phone on the metro, and I don’t know, I am just happy with these because everything of these was just a dream for me when I was in greece for last ten years.
China is not as bad as what I was hearing when I was in the west, i came back and I indeed was shocked by the change, I believe most of you will be the same if you ever think and try to visit here.
I’m telling what I know, of course you can say it’s full of bias.. Or maybe based on what you read from your local medias that every chinese people is brain washed, so take my words for just reference or just for fun and do more researches. But I don’t think I’m patriotic, or I’m brain washed since I’ve been out of this country since my high school, I hate and am disappointed with too much things here in this country as you people, but compare to my life in greece, i’m too happy here.
[EDIT]
(amending) – FEW western porn websites which don’t have chinese language are block, even XTUBE.com is accessable. But MOST EVERY porn sites which have chinese language version no matter hosted in where are blocked.
(adding) – Some Google and Yahoo image search results are blocked, Google cached pages totally blocked, Yahoo cached are mostly NOT blocked.
Of course, the Chinese domestic stock market has boomed over the past year, going up over 100% in 2006 and going up over 100% this year. The Shanghai Composite trades around 60 times price to earnings – and that’s an aggregate covering not only tech firms, but banks, manufacturers, mines, etc. This extraordinary rise was principally caused by companies and government departments investing spare cash which was previously in bank accounts, bidding up the market; now retail investors (your average man in the street) seeing the rise are buying stock (once again your small time investor comes to the party late and gets screwed by the big boys).
Chinese company market capitalisation is not something I’d focus on when looking at long term trends.
What are you if you are 1 in a million in china?
An exact copy of 1300 other people.
@37 Tor, how’s the air quality in Beijing compared to where you lived in Greece?
@40, what that really means is that everything is relative. Being 1 in a million in the west is not as significant when compared to the east…
@41 nemrut: that’s obvious, the overall air quality in greece is of course much better than it is in beijing… people here can only dream to have a blue sky as nice as in greece, this is the truth. greece is indeed great great for life, relax, slow, sea and summer, but the exclusionism, racism and bureaucratism are almost every foreigner who lives there is experiencing, take a search on athensnews.gr and you will find tons of their local english reports, that’s a pity of that beautiful place, which made me finally left from there.
Thanks for sharing. The comments show that there are a lot of misunderstanding about the China and the China internet space by international business people.
Sure, there is inequality in wealth distribution, there is possibly bubble in real estate and stock valuations, there is no public health program, there is over supply of university graduated students, there is population resulted from the massive build up of the manufacturing base and many more problems.
However,
1: There is also a growing number of middle class (defines as someone with a household income of more than 50,000 RMB which in real purchasing power to be more than 33,000USD in the US). The private car ownership in China is growing at 30% or more every year which also resulted in the worst traffic jam in the world.
2: The Chinese are getting online and the internet population is growing at 30% of more every year and there are still 100 million or more people to grow. So the trend is going to continue for a very long time.
3: The government is determined to fight the corruption and bring balance to the society.
4: Enterperureship is thriving in China with government strong support (China calls itself the socialists but yet it is the best capitalists in the world)
Mark Tu
1. Theres no “cheaters” in the international stage, there are only winners and losers.
2. What you see on western media is about as unbiased as soviet propaganda, of course you don’t realize it because you’ve been feed with it since birth, but its easy to tell the similarity if you actually lived in both countries for 10 years.
3. Reality speaks infinitely more than literature, there’s no point arguing about interpretations or truthfulness of an article, if you really care investigate it yourself, say, by paying a visit.
Welcome to the global market. Currency trading is the next boom.
mmt said:
“You can’t have a creative, innovative society with government control…”
This is typically arrogant baised statement!
Innovations come from dynamic and competition, and there are more than enough in Asia!
You only watch it with your biased view! You are a typical westner brainwashed people! I know this, coz I’m also living in the west world!
And by the way what about the financial crisis now in the west?
It’s blue-eyed dream to say there must not be a governmental control!
What abaut the US economy now?
China Bubble? What about the biggest bubble of the whole history in the US???
Dreamer, dreamer … Just seeing other mistakes, but not the own!?