Three Kingdoms of China's Internet

While China’s Internet is already dominated by power players in a way that the US Internet is not, investment bank CLSA sees further consolidation through lose alliances.

A recent report by the investment bank describes the evolution of China’s Internet as a sort of “Three Kingdoms”, the classic piece of literature about the fluid alliances between rival warlords in the early imperial era.

The three kingdoms, as defined by CLSA, are Baidu/Sina, Alibaba/Sohu and Tencent/Google. Each pair with meaningful synergies that may lead to further collaboration.

Baidu/Sina Faction
– Customer bases are complementary, offering cross-selling opportunities.
– Sina’s real estate portal has worked with Baidu to expand its reach through search.
– During the World Cup, Sina was said to work with Baidu’s Aladdin to drive traffic to its World Cup micro-site.
Next steps: The next cooperation may take place with Sina’s Weibo mini-blog, where Baidu could help Sina reach small companies looking to conduct social commerce and search. By CLSA’s assessment, this combination of search and social media would make Baidu/Sina the most powerful kingdom.

Alibaba/Sohu Faction
This collaboration combines the ecommerce powerhouse, Alibaba, and a dark horse in the search space. This fills a void in the ecommerce world, creating an online shopping search platform that has the most comprehensive product and merchant information.

Tencent/Google Faction
Last but not least, Tencent and Google. Both companies complement each other well where Tencent excels in customer experience on the front end and Google’s back-end analytics and ad-serving platform are top-notch.

While there would not likely be any mergers between these six players, CLSA expects further cooperation for them to gain: Speed to market; Access to new customers base; and Operating leverage in a shorter time frame.

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17 comments

  1. It would be great to see these companies in China step up to plate and loosen the strength of the firewall.

  2. Thomas Crampton

    Don't hold your breath on that one!

  3. Thomas Crampton

    Hey! How are you? But that is more than three Kingdoms! (I need to fit the world neatly into easy metaphors)

  4. This would be more interesting, certainly for me and my Chinese friends, if you said which faction represents which Warring State. I feel an infographic coming…

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  6. nathaniell

    This is a nice analogy but I think it's going to be lost on most westerners who have a very shallow understanding of what the “three kingdoms” is, other than the “three” part. How did alibaba get in there? I've spent some time on there and found it pretty much useless, and their interface was especially terrible.

  7. How did alibaba get in there? They are a huge property. On most days they account for up to 30 percent of Hong Kong's Internet traffic.

  8. Jimmy Tsai

    Tencent and google… dare not to imagine… what sort of kindom would that be?

  9. I fail to understand why the fictional alliances to Sina/Sohu/Google are added to the list. Profiling the actual kingdoms of the BAT (Baidu, Alibaba, and Tencent) seems far more relevant.

    Is there a link to the actual report?

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