5 Big Chinese Companies And Their U.S. Counterparts

By Ryan C. Fuhrmann | December 31, 2010 AAA
5 Big Chinese Companies And Their U.S. Counterparts

In a sincere form of flattery, Chinese companies look to American ones for development ideas and to emulate U.S. business plans. Downright copying does occur, but in many cases an original idea by another firm is altered to reflect unique Chinese tastes and local customs. Copying is also widespread in cyberspace, as the barriers to entry are low and the businesses are very scalable once created. In this space, companies have a habit of copying each other across the globe. (For related reading, check out Top 6 Factors That Drive Investment In China.)

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Below is a list of five large Chinese companies and the U.S. counterparts that have served as their inspiration. Given the giant and growing Chinese consumer market, these firms may be well on their way to growing bigger than their U.S. rivals.

  1. Youku.com
    Youku.com bills itself as China's leading Internet television company. The company was founded in 2005 and changed its name from 1Verge.com to Youku.com, making little mistake that the website is modeled after Google's (Nasdaq:GOOG) YouTube. As with YouTube, the primary emphasis is for users to view and share videos. YouTube was also founded in 2005.
    Youku.com estimates it has 40% market share in China, and the site has 203 million monthly unique visitors from homes and another 61 million monthly unique users from internet cafes. YouTube lists its usage daily and recently estimated 2 billion views per day and 20 hours of video uploaded on its site every minute.

  2. DangDang.com
    Dangdang.com is headquartered in Beijing and focuses on selling books online. It believes it is China's largest bookseller and offers nearly 600,000 titles, most of which are in Chinese. The company just went public in early December in the U.S. and is quickly branching into media products and general merchandise. In other words, it has ambitions to become China's Amazon.com (Nasdaq:AMZN), which has evolved into selling books and just about any other merchandise imaginable. With about $300 million in annual sales, the company still has quite a way to go to match Amazon's nearly $31 billion in sales over the past 12 months.

  3. Baidu (Nasdaq:BIDU)
    Baidu was founded in 2000 and serves as an internet search engine in China and Japan. The company is considered the equivalent of a Google or Yahoo (Nasdaq:YHOO), and it is as dominant as Google with an estimated 70% market share of the online advertising market in China. It increased its dominance once Google left the Chinese market and is also trying to free itself from Yahoo, which is a large shareholder in Baidu. In addition to search capabilities, Baidu offers social networking online and through smartphones.

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  1. China Mobile (NYSE:CHL)
    China Mobile is the dominant cell phone provider in China and, like Baidu, controls about 70% of the market. It is quite a bit larger than the mobile phone business units of AT&T (NHSE:T) or Verizon (NYSE:VZ) in the U.S. Recently the company listed 575 million subscribers, making it the largest in the world. Like AT&T, it saw a big boost to its business when it started offering Apple's iPhone last fall. The U.S. market is much more fragmented, with players such as Sprint (NYSE:S) and T-Mobile, as well as a growing number of pre-paid wireless providers. With sales of just over $70 billion over the last 12 months, China Mobile has a ways to go against AT&T and Verizon, which log more than $100 billion in sales annually. However, the American counterparts also have landline businesses and provide internet access. Sprint is a more direct comparison and only reported $32 billion in sales over the last 12 months. (For more information on phone companies, see A Look At Cell Phone Companies.)

  2. Huawei
    Huawei is the largest telecommunications equipment provider in China. It is fast after Cisco's (Nasdaq:CSCO) market share in the U.S. and worldwide, but it has had a tough time breaking into the U.S. market given telecom and communications networks can be a matter of national security. Additionally, Huawei receives a fair amount of government backing. It is also a private firm, which means financial data can be hard to come by, but recent estimates put it at around No.2 to No.3 in the world.

The Bottom Line
China is still just getting started with a capitalistic approach to building businesses and creating new markets for a burgeoning class of consumers. A good place to start for Chinese entrepreneurs is to look to the U.S. for ideas, but then customize them to local tastes and customs. The strategy is paying off big for the above companies and has resulted in firms that are now some of the largest in the world in terms of users and profits. (For an introduction to Chinese markets, see Investing In China.)

For the latest financial news, see Water Cooler Finance: Canadian Takeover And U.S. Tax Breaks.

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