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Year in Review, Looking Ahead

Download our 2020 year book

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Many talked about how Covid-19 really accelerated the Tech Takeover. As the disruptive year comes to an end, it is a good moment to take a look back and review the implications for Tech in China in terms of industry development, big tech, and start-ups.

Year in Review

It goes without saying that 2020 has been a year different from what anyone had expected. After discovering the novel coronavirus in the Huanan Seafood wholesale market, Wuhan City went into full lockdown from January 23rd. The rest of China followed briefly after. Given almost two months under quarantine conditions, the overall situation across the country recovered significantly from March onwards and has largely been under control since then.

As a result, the macro-environment turned out favorable for China. Indeed, China is set to be the only major economy to deliver GDP growth this year at around 2% compared to 2019. Despite an ongoing trade-war with the US and a global campaign against Huawei, China will also end the year with the highest share in exports to major economies ever (25%). Furthermore, foreign direct investment into China is expected to reach an all-time high this year. Meanwhile, the opening-up in areas such as financial markets continues.

In light of the disruptive events, the past year has been a period of rapid development for Digital China, penetrating ever deeper into many verticals. For instance, e-commerce reached 25% (up from 20%) penetration of total retail market for the first time, according to the National Bureau of Statistics. As a result, the market cap of giants like Alibaba ($750b), Tencent ($700b), Meituan ($220b), Pinduoduo ($170b) and ($140b) reached all-time highs. Furthermore, major next-generation Chinese Tech companies had their IPO this year, such as Beike (PropTech, $70b), Lufax (FinTech, $40b), Xpeng (Electric vehicles, $40b), JD Health (Digital Health, $30b) and Dada Nexus (O2O delivery platform, $12b), just to name a few. Yet, scandals like the Luckin Coffee accounting fraud also brought some degree of skepticism. So too, it was the year of homecomings, as companies like and NetEase picked Hong Kong for a secondary listing. Overall, in the record year for Chinese equity fund raisings (~$120b in total), there has been a major shift in Tech IPO destinations as - also due to the formation of Shanghai STAR board - many emerging companies picked Shanghai, Shenzhen and Hong Kong over options abroad. As a result, the majority of Chinese equity fund raisings happened in the Greater China region. Last, there were also more than 20 new unicorns created in China during 2020, bringing the total number to 230.

We believe the standing of China´s tech giants overseas reached new highs this year as TikTok created the first consumer success story made in China since new mobility-venture Mobike (2017) and smartphone-maker Xiaomi (around 2015). Then there was also miHoYo´s role-playing game Genshin Impact that became the second largest global mobile game launch in history. Furthermore, cornerstone events such as the announced and then canceled Ant Group IPO received extensive coverage abroad, showing a tougher regulatory environment for Big Tech.

2020 once again showed us the unbroken entrepreneurial spirit of Chinese founders, their ability to develop highly localized businesses and scale them into unicorns or even decacorns. In light of the events this year, we firmly remain bullish on two trends: 1) the superiority of digital business models over traditional counterparts, 2) the rising importance of China on the world stage as a source of inspiration and, at times, a competitive force.

To us, none of this comes as a surprise. When setting up China Tech Blog in 2018, we were puzzled about the scarcity of readily available English resources on the rapid developments in China. Indeed, in the West businesses and individuals had little to no awareness about miraculous growth and innovation happening in China. This gap in reporting ultimately motivated us to start China Tech Blog. Since our launch that fall, we published over 50 analyses and interviews and have helped tens of thousands of blog readers and LinkedIn followers to dive into topics ranging from comprehensive industry reports to in-depth company drill-downs.

Looking ahead

All predictions for the year behind us obviously turned out wrong, largely due to Covid-19. It is certain to say that Covid-19 will still be around for another few months, if not the whole 2021. So, is it even possible to make any meaningful forward-looking statements about 2021?

We believe it is for sure that Digital China will continue its advance into almost all verticals, accelerated by Covid-19. Our confidence is supported by mid-term policy outlines. Indeed, the 14th Five Year Plan (2021-2025) draft, laid out by the Central Committee, emphasized three technology focus areas. First, New Infrastructure (e.g., 5G networks, data centers, artificial intelligence, industrial Internet, Internet of Things, etc.) is seen crucial by the government. As a result, local governments will invest tremendously on building digital governance layers and provide more chances for private sector companies to grow in these areas. Second, emerging demand from Gen Z, elderly, and single consumer groups is set to push e-commerce consumption and accelerate the tie-up between online and offline. Third, new applications of technology, which built on fundamental R&D and deep tech investments, are set to benefit more B2B enterprises.

With the strong support from a policy point of view, we believe there will be tremendous growth opportunities for SOEs and private-sector companies alike as they seek new frontiers of growth. For 2021, we believe:

  • Big Tech will continue growing its outsize role in society but might face tougher regulation.
  • Major next-generation companies are lining up for a potential IPO such as ByteDance and Ant Group for a second trial, in Greater China and overseas.
  • The hottest trends of 2020 - such as the community-based group-buying with key competitors such as Xingsheng Youxian, TongCheng Life, Duoduo Maicai - will continue to attract large investments while creating new unicorns.
  • New exciting businesses are set to emerge in areas yet unknown to us but possibly in the B2B and Cloud space.
  • On the international stage, we are certain that TikTok as well as Genshin Impact will continue their success. With the global recovery from Covid-19 ongoing and lifting travel bans, we expect other businesses to revive their overseas business exploration efforts. We are sure that the interest in China is set to reach new highs as well.

We created this yearbook to give you an overview of our most important insights generated this year. You will find pieces on the developments in China's crucial technology verticals, milestones in big tech, and hot topics in China's entrepreneurship community. We hope you can take away some insights for your business or yourself. We firmly invite our interested readers to reach out to us for more detailed discussions.

After all and more than ever, we remain committed to our mission of making the non-Chinese speaking world more informed about the rapid, impactful and inspiring developments in the Far East. We are wishing our readers "Merry Christmas" and a good start into the new year.

The China Tech Blog team

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