China’s internet market is booming like never before, and companies are eager to team up and grab more market share. Since 2012, more than 50 mergers have taken place in the tech space, with the value of these deals in the last year alone, surpassing the total seen over the last decade. This phenomenon is not accidental.
Mergers in China’s internet industry are skyrocketing. So far this year, there have been 10 cases already amounting to more than 100 million yuan, or about 17 million US dollars. Analysts say the trend is not accidental.
"We started to monitor mergers and acquisitions in the internet field from last year. Our data found more than 50 cases in this period, and the amount involved may surpass the total amount over the past decade." Huang Meng, Senior Analyst of Enfodesk said
Analysts say that most M and A zealots are big companies that want to tap into China’s mushrooming internet business. What’s more, growing competition is driving the need for diversification. For instance, Tencent - China’s largest listed internet company - has entered e-commerce already 10 years ago. And Baidu, the country’s top search engine, opted to offer more mobile and app services.
Analysts say companies are using M&As in a battle to win more market share from competitors.
"Mergers and acquisitions can buy some time. Mobile internet is getting so much attraction. For big players like Baidu, it could start from scratch with its technical know-how, its money, but it wouldn’t have enough time." Xin Haiguang, Internet Industry Observer said.
The rapid development of mobile internet also gives a boost to market sentiment. Data shows that almost 80 percent of mobile phone owners in China use their cell phones to go online. But so far no company has been able to find a suitable model to capitalize on this lucrative market.