A Shift in Strategy for Chinese Firms
At the recent Staking Summit in Istanbul, an event that brought together hundreds of individuals involved in staking practices in the crypto ecosystem, two exhibition booths stood out from the rest. They belonged to Tencent and Huawei, two Chinese tech giants that have been making waves in the web3 space.
A Discreet Presence
The two companies’ formal corporate banners seemed somewhat incongruous amidst a backdrop dominated by twenty-somethings clad in trendy company hoodies and giving out well-designed merchandise. Next to engineers, marketers, and business developers deeply entrenched in staking, these Chinese tech giants appeared as if they didn’t quite fit.
Staking involves pledging crypto assets, such as Ethereum, to protocols in exchange for returns. The borrowed assets are subsequently used to validate transactions in blockchains implementing the ‘proof-of-stake’ method.
A Growing Presence in Crypto Events
In the past year, several Chinese tech giants have been popping up across crypto events worldwide. They show up either as official sponsors or assume a more discreet presence simply as attendees. This move is part of their strategy to carve out a market share in the nascent web3 space.
A Web2-Web3 Nexus
Chinese tech giants’ participation in crypto sits at the crossroads of web2 and web3 thanks to China’s widespread ban on cryptocurrency trading and initial coin offerings (ICOs). While these companies are touting their computing resources to web3 startups, they’re doing so in a way not dissimilar from how they’ve been selling cloud services to companies in more established tech verticals.
Cloud Expenses
Companies building or leveraging decentralized networks have relatively insignificant cloud expenses. A mid-sized enterprise in web2 might spend over $1 million on cloud computing, but a company considered mid-sized in web3 would only be spending in the low hundreds of thousands of dollars, according to several attendees at the event.
Undeterred by Limited Ticket Size
Despite the limited ticket size, Chinese cloud providers have ventured into crypto. As underdogs in the global cloud market, they are far more proactive and accommodating with customers because they lack brand recognition, especially in the West.
Competition Through Pricing
As such, they compete by offering cheaper or better services. Beyond providing cloud infrastructure, Chinese firms have also been involved in areas that are more removed from their core products, putting them in competition with crypto-native firms.
Building Blockchains for Enterprise Use
Some players offer node-as-a-service business. Blockchains, which are decentralized databases that store and encrypt transaction data, are run on distributed nodes. These nodes can be expensive and complex to maintain, so companies like Huawei offer a node hosting service for developers, an appealing solution to enterprises that want to build decentralized applications but lack the technical sophistication to do so themselves.
Partnerships with Respected Projects
Tencent and Alibaba have also acquainted themselves with respected projects to ramp up their reputation in the industry. They’ve formed partnerships with notable blockchain companies, demonstrating their commitment to expanding their presence in the web3 space.
A Strategic Move
This shift towards web3 represents a strategic move by Chinese tech giants to diversify their offerings and tap into new markets. By investing in cloud infrastructure and forming partnerships with respected projects, they aim to establish themselves as major players in the web3 ecosystem.
A Growing Trend
The increasing presence of Chinese tech giants in crypto events and their willingness to invest in web3 startups are indicative of a growing trend. As the web3 landscape continues to evolve, these companies will undoubtedly play a significant role in shaping its future.
Conclusion
Chinese tech giants’ entry into the web3 space is a strategic move that seeks to establish them as major players in this emerging ecosystem. With their investments in cloud infrastructure and partnerships with respected projects, they’re well-positioned to capitalize on the growth opportunities presented by web3 technologies.
