The two biggest things Silicon Valley misunderstands about China, according to a top Alibaba exec

Alibaba divided

AP / Ng Han Guan

Alibaba is no Amazon copycat.

  • Brian Wong, Alibaba's vice president of global initiatives, thinks that Silicon Valley holds two major misunderstandings about China's tech market.
  • Contrary to belief, Chinese companies don't want to "take over" the competition but would rather integrate, according to Wong.
  • Wong also thinks that Chinese companies are perceived as copycats when they have developed major innovations around mobile payments and building online ecosystems.

Over the last several decades, China's technology industry has gained a reputation in Western media for being full of cheap copycat products. That view is wildly outdated, according to Brian Wong, vice president of global initiatives at Chinese tech giant Alibaba.

The major misconception Silicon Valley has about China, according to Wong, is that "it is a copycat technology market and that they don't have original ideas."
"It is very clear now that true innovation is emerging from these markets," Wong told Business Insider in a recent interview.

In particular, Wong pointed to innovations around e-commerce and mobile payments - two areas that Alibaba has dominated in China. For example, Alipay, along with its competitor WeChat Pay, is used by more than half a billion Chinese and has turned into a $16 trillion market. Most young Chinese people are already living a wallet-free and cashless lifestyle, using mobile payments for nearly all of their transactions.

Other innovative models pioneered in China include dockless bike-sharing - led by Alibaba-backed Ofo and Mobike, which was recently purchased by Meituan-Dianping by $2.7 billion.

Perhaps most innovative has been China's mass-adoption of ecosystem-based technology platforms. In contrast to American tech companies like Uber or Facebook, which perform one function extremely well (like transport or social media), China has tended towards applications that fulfill a variety of functions.

Alibaba's Taobao app began as an e-commerce platform but has expanded into travel booking, movie tickets, social networking, live-streaming, food delivery, and entertainment. Tencent's WeChat began as a messaging app but can be used for payments, taxi booking, bike sharing, and other features. Meituan-Dianping, which began as a food delivery and restaurant platform, operates in much the same way.The ecosystem model extends to China's mobile payments apps. Alipay's data and services is deeply integrated into Taobao while accounts are linked directly to a money-market fund (the largest in the world now at $230 billion), and consumer and business loan products. All of that data is fed into a "social credit" scoring business called Sesame Credit.

As William Li, the founder of electric car startup Nio, told Business Insider recently, "With the development of the social-mobile internet, the brand in the future will not be defined by product or services. It should be defined by the user base."

By necessity, Chinese tech companies have had to develop models and platforms that are effective for scales of hundreds of millions or even a billion people, Wong said. Even further, it's had to develop for an audience whose first contact with the internet will likely be with a smartphone.

"The capabilities, innovation, and creativity that is coming from China should be an inspiration to companies in the Valley about creating products that are relevant and applicable to emerging markets," Wong said.

A second major misconception that Silicon Valley has about China, according to Wong, is seeing China and the Chinese tech market as a "threat instead of opportunity." The "threat" narrative of China has been around for decades, dating back to the 1990s when China's economy was primarily based around low-cost exports, according to Wong.

But these days, the economy has begun to shift to a consumer-driven economy, a shift pushed in large part by President Xi Jinping and the Communist Party.

"That represents a massive opportunity for US companies to sell their products," he said.
But, Wong said, for those Americans wanting to seize the opportunity, it's on them to take the time to learn more about China and Chinese culture and "not in the standard Kung Fu movie and take-out Chinese food way.

Alibaba founder Jack Ma, according to Wong, constantly reminds employees that China is built around three philosophies - Daoism, which teaches about harmony; Buddhism, which teaches about tolerance; and Confucianism, which teaches about order. If you can understand the principles behind those philosophies, Wong said, you'll have a better grasp of why the Chinese tech market works the way it does.

"China is much more about integrating as opposed to taking over or competing in the traditional sense. They want to create and integrate," Wong said.

Get the latest Alibaba stock price here.