China’s Tech Giants Signal the First Steps in a Bumpy Recovery
NY Times
23-05-19 14:54
Leading Chinese internet companies, including Baidu, Tencent and Alibaba, have reported double-digit revenue growth in Q1 2021 from the same period the previous year. However, the companies' futures remain dependent on China's economy. Even though the country is reopening economically, Chinese consumers' low confidence levels in job prospects and future incomes could dampen sales recovery. The companies are also involved in the beginnings of a makeover that involves new growth areas, such as artificial intelligence (AI), which is driving new AI cloud divisions. However, US rivalry and tensions are limiting China's access to crucial microchips needed to develop AI, while a lucrative pool of domestic customers (China's state-owned enterprises) are preferring to use government-backed providers rather than private cloud computing providers. This is alongside client losses due to non-product reasons and investor wariness as growth cannot be expected to return to previous decades' levels.