786774 Jingyou Zhang Master
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COPENHAGEN BUSINESS SCHOOL A COMPARATIVE STUDY ON CHINESE COMPANIES’ PATHS TO BUSINESS ECOSYSTEMS —Cases of Alibaba, Tencent, Geely and Haier MSc in International Business Jingyou Zhang SUPERVISED BY DE115385 Peter Ping Li 16. Sep. 2019 Abstract Purpose - The aim of this research is to explore and compare the development paths of Chinese companies to business ecosystem model, using four cases of both internet companies and traditional manufacturers, namely Alibaba, Tencent, Geely and Haier. Approach - This thesis used both chronological sequences and four-approach method, viz. investment, incubation, innovation and internationalization, to present four cases’ second-hand information collected from both online and offline sources. After checking within-case models, Group A could form a cross-case synthesis: companies in internet business sector, however Group B did not reach a consensus. Finally, case-comparison method was used to compare Group A (internet companies) and the other two cases in manufacturing sector. Findings – Internet companies and Geely & Haier have different development paths to ecosystem business model. The internet firms are more advanced in BE than manufacturers and spend less time in moving to next stage. For internet companies, incubation and innovation are the most important, while investment and internalization are the key contributors for Geely and Haier. Acknowledgements Firstly, many thanks go to my supervisor, Peter, who always supports me. In the beginning, he helped me to find this interesting topic to dig inside. He is a pioneering scholar in this research filed. He sent me some useful reading materials and paid time and efforts to reading through parts of my work. He gave me so much professional guidance and detailed advices, which all benefitted to improve the quality of my thesis. I offer my sincerest gratitude to Peter. Secondly, I dedicate this thesis to my dearest parents Ruixia and Junmin, who always understand and care about me. They were quite considering and gave me a lot of comfort and support when I felt worried and nervous. They always stand by my side. I were afraid that I could not finish my assignment, if without their company. I really appreciate that what they have done for me. Contents 1. Introduction ..................................................... 8 2. Research background .............................................. 9 2.1. A rising but special Market: China .................................. 9 2.2. Four driving forces of BE’s emergence in China ...................... 10 2.2.1. Entrepreneurship and venture investment ........................ 10 2.2.2. Internet penetration and digital empowerment .................... 12 2.2.3. Expansion of urban middle class ............................... 13 2.2.4. Dynamic but regulated environment ............................ 15 3. Literature review ................................................ 16 3.1. An emerging terminology: business ecosystem ....................... 16 3.1.1. What is business ecosystem? .................................. 17 3.1.3. The paths to business ecosystem ............................... 19 3.2. The explosion of Chinese internet industry .......................... 21 3.2.1. Governmental support ....................................... 21 3.2.2. The booming internet sectors ................................. 23 3.3. The transformation of Chinese manufacturing industries ............... 24 3.3.1. “Made in China 2025” ....................................... 24 3.3.2. The shifting manufacturing sectors .......................... 25 4. Methodology ................................................... 26 4.1. Theoretical background of case study .............................. 27 4.1.1. The boost of case study ...................................... 27 4.1.2. Strengths and weaknesses of case study ......................... 28 4.1.3. Strategies to have quality research ............................. 28 4.2. Research framework ............................................ 29 1 4.2.1. Case selection ............................................. 30 4.2.2. Data collection and analysis .................................. 33 5. China’s New Digital Ecosystems of Alibaba & Tencent ................. 34 5.1. Case study of Alibaba ........................................... 35 5.1.1. Alibaba Group’s overview.................................... 35 5.1.2. Alibaba’s twenty-year journey to build an ecommerce ecosystem ..... 36 5.1.3. Alibaba’s four-approach analysis .............................. 42 5.2. Case study of Tencent........................................... 46 5.2.1. Tencent Holding’s overview .................................. 47 5.2.2. Tencent Holding’s roadmap to a digital ecosystem ................. 48 5.2.3. Tencent’s four-approach analysis .............................. 52 5.3. Interim comparison ............................................. 56 5.3.1. Four steps to a business ecosystem ............................. 56 5.3.2. Four approaches to a business ecosystem ........................ 58 5.3.3. Cross-case synthesis for internet companies ...................... 61 6. Chinese manufactures’ new trend to business ecosystem ................. 62 6.1. Case study of Geely ............................................ 62 6.1.1. Zhejiang Geely Holding Group’s overview ...................... 63 6.1.2. Geely’s three steps into a mobility ecosystem..................... 63 6.1.3. Geely’s four-approach analysis ................................ 67 6.2. Case study of Haier............................................. 71 6.2.1. Haier Smart Home’s overview ................................ 71 6.2.2. Haier’s roadmap to an open and interconnected ecosystem .......... 72 6.2.3. Haier’s four-approach analysis ................................ 78 6.3. Interim comparison ............................................. 81 6.3.1. Geely’s & Hair’s steps to business ecosystems .................... 81 2 6.3.2. Four approaches to a business ecosystem ........................ 83 6.3.3. Geely’s and Haier’s similarities and differences ................... 86 7. Comparative case analysis ......................................... 87 8. Conclusion ..................................................... 88 8.1. Key findings .................................................. 88 8.2. Limitations ................................................... 89 8.3. Future research ................................................ 89 9. Bibliography ................................................... 90 3 Figures 2.1 Netizens and internet penetration in China 13 3.1 An evolving process of business model 20 3.2 Business ecosystem’s life cycle 20 4.1 Four approaches to BE 32 4.2 Structure of data analysis 33 5.1 Alibaba’s core ecosystem 38 5.2 Alibaba’s extended ecosystem 40 5.3 Alibaba’s complex ecosystem 42 5.4 Tencent’s new-born ecosystem 49 5.5 Tencent’s evolving ecosystem 51 5.6 Tencent’s diversified ecosystem 52 5.7 Alibaba’s four steps to an ecommerce ecosystem 57 5.8 Tencent’s four steps to a digital ecosystem 58 6.1 Geely’s dual-core Auto ecosystem 65 6.2 ZGH’s hierarchical structure 67 6.3 Haier’s three phases of economic shifts 73 6.4 Haier’s open and interconnected ecosystem 77 6.5 Geely’s three steps into a mobility ecosystem 82 6.6 Haier’s four steps into an open and interconnected ecosystem 83 4 Tables 3.1 Selected recent authors of BE 18 4.1 Case studies in this thesis 31 5.1 Alibaba’s four-approach summary 59 5.2 Tencent’s four-approach summary 60 6.1 Geely’s four-approach summary 84 6.2 Haier’s four-approach summary 85 5 Abbreviations aka also known as AI Artificial Intelligence B2C Business-to-Consumer BAT Baidu, Alibaba, and Tencent BE business ecosystem C2C Consumer-to-Consumer CAC Cyberspace Administration of China CCP China Communist Party CFIS China Federation of Internet Societies CEVT China Euro Vehicle Technology Centre CRGT China Railway Gecent Technology Co. DBE digital business ecosystem FDI foreign direct investment fin-Tech financial technology G1 Generation 1 G2 Generation 2 GDP gross domestic production GE General Electric GCV Geely New Energy Commercial Vehicle Group GEM Global Entrepreneurship Monitor IPO initial public offering JV joint venture KKR Kohlberg Kravis Roberts & Co. L.P. LBS local based service M&A merger and acquisition MIC Made in China MNE multinational enterprise PC personal computer R&D research and development SME small and medium sized enterprise 6 SOE state-owned enterprises TEA total early-age entrepreneurial activity WTO World Trade Organization ZGH Zhejiang Geely Holding Group ZZJYT zi zhu jing ying ti 7 1. Introduction In this era of information and big data, disruptive technologies contribute to some new emerging start-up, however my lead to the failure of giant companies (Christensen, 2000). Some companies pursued for new solutions to survive in this market. In detail, corporations thought differently from the perspectives of value creation, customer experiences, as well as industry boundaries. Then concept of business ecosystem (BE) came down to the ground, and got more and more attention. Comparing to tradition business model, ecosystem business model has flexibility, stability, adaptability, sustainability (李平&杨政银，2018). To gain first mover advantage and more in the long run, some leading companies have already started shifting their business models from the traditional product or industry-based business model to an emerging ecosystem business model (Accenture Strategy, 2018). A health BE is where players