Trendlines: (The Original) House of the Dragon

Are we in the midst of a new Cold War? Based on predominant press coverage, you might think China is the new “Evil Empire” – it is nearly impossible to listen to or read positive commentary as it relates to China. For our June FTFL, we set out – as always from our growth tech lens – to explore the positive global contributions that China makes to the technology ecosystem.

We first studied China’s impact on a subject nearest and dearest to us: growth tech capital markets. While China-headquartered companies, buyers and investors account for less than 2% of US tech transactions, Chinese companies have taken the lead in one area where the US has been stagnant for some time: tech IPOs. 

Over the past 2.5 years, China has produced more Nasdaq tech IPOs than any other country – including the US. As Unicorns continue to sit on the sidelines, China is helping keep our tech IPO market afloat.

An obvious area of Chinese influence is manufacturing. Decades of “Made in China” have shaped global commerce and US trade policies. Of particular interest to us is solar manufacturing. It’s no secret that China dominates the global market for production of solar panels and components – see the IEA, Ember, and the Wall Street Journal. Per the Ember report, the number of solar panels China exported in 1H23 had a cumulative capacity of 114 GW – which equaled the solar capacity of the US’s entire installed base over the same time period. We dug into the data further, and this has been a consistent trend for at least the past 7 years. China is effectively exporting enough solar panels to replace every solar panel in the US each year – a dynamic that is even more amazing when you consider that the average life of a solar panel is 25-30 years.

US tariffs on solar imports from China started in 2012 and have been expanded multiple times since 2021. Cambodia, Malaysia, Thailand and Vietnam are now the leading exporters of solar panels to the US. Any guess where these manufacturer companies are headquartered?

Finally, we can’t ignore the outsized impact one Chinese tech platform has had on our culture. TikTok has become young Americans’ hub of choice for news, music, dance, fashion, food, entertainment and advice. Its usage stats are remarkable – 170 million US users, representing over half the population – but its growth is even more impressive. We compared it to another social media video platform that last took over youth culture.

TikTok’s growth has been meteoric compared to Snapchat, reaching 10M users in under 4 months, while it took Snapchat nearly 2 years to reach that milestone. 6 years post-launch, TikTok has doubled the user base that Snapchat did at the same age. 

Interestingly, Instagram (both TikTok’s and Snapchat’s biggest rival) took far less time to launch a competing product against TikTok than it did against Snapchat. Instagram Reels debuted a mere 35 months after TikTok’s international launch, vs. Instagram Stories, which appeared 61 months after Snapchat.

While the common narrative surrounding China mind-numbingly focuses on geopolitical tensions, we believe China’s significant and positive contributions to the global tech ecosystem are worthy of our affirmation. 

This article appeared in our June 2024 issue of From the Front Lines, Bowen’s roundup of news and trends that educate, inspire and entertain us. Don’t miss out on our Cross-Border Series; check out recent editions covering European Valuation and M&A Trends and Israel’s growth tech landscape. Click here to subscribe.