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Why are Chinese companies investing big in US start-ups?

Even though we live in the times of globalization, where information from all over the world is in the palm of our hand, we somehow always end up with information about what's going on in the West.

The East, however, is as powerful as any other part of the world, especially when it comes to tech. We might consider London and the Silicon Valley tech hotspots, but most of us are clueless to what's going on in Beijing, Tokyo or Hong Kong. When I say „big tech companies“, you're probably thinking Amazon, Google, Facebook, Apple, but you're most definitely not thinking Alibaba, Sina Weibo or Xiaomi.

But they're equally strong. And what's really interesting is that Chinese companies are investing TONS of money into US start-ups. And I'm talking more than $2 billion here (£1.3bn).

However, as Forbes' Fiyan Chen says in a report (opens in new tab), there is something strange about those investments, as companies seem to pour millions of dollars into start-ups that are “outside of its core business, not to mention its core country”.

“Many of the investments are bizarre on the surface, smacking of dumb money rushing in late in the cycle and driving up valuations for everyone. Why would an e-commerce giant (Alibaba) spend tens of millions of dollars on a start-up like Peel that’s outside of its core business, not to mention its core country?”

The answer is in the smartphone. The online world has been divided among the giants and everyone has its share of the cake. However, in the mobile industry, everyone is fighting everyone, and having strong partners in any field will be a bonus.

“Everyone is competing on everything,” says Kevin Chou, CEO of San Francisco-based mobile-gaming startup Kabam.

Sead Fadilpašić is a freelance tech writer and journalist with more than 17 years experience writing technology-focussed news, blogs, whitepapers, reviews, and ebooks. And his work has featured in online media outlets from all over the world, including Al Jazeera Balkans (where he was a Multimedia Journalist), Crypto News, TechRadar Pro, and IT Pro Portal, where he has written news and features for over five years. Sead's experience also includes writing for inbound marketing, where he creates technology-based content for clients from London to Singapore. Sead is a HubSpot-certified content creator.