But they are now second in the world in the number of people wired and accessing the intertubes.
August 2010 signified when China passed Japan as the second largest economy in the world. Two very important dates and points on the inevitable march to the day in which the economy supporting 1.3 billion people in China passes the 300 million-strong US economy.
I believe we can add June 2011, the day Chinese search leader Baidu took a majority stake in Chinese metasearch company Qunar, to the timeline that history will use to mark China’s rise to global economic supremacy
The publically available terms of the deal are that has bought a majority state in Qunar for $306 million. Previous funding rounds from Lehman Brothers, GSR Ventures Management, Mayfield Fund, and Tenaya Capita raised $25 million.
The deal will see founder and CEO of Qunar Fritz Demopoulos step down to be replaced by current chief operating officer Chen Chao Zhuang.
It is not the size of the deal that makes it substantive and a marker of historical significance.
There have been bigger deals and fundraising activities inside and outside China. And it is not the industry (search and travel) that makes this significant. There have been telecoms, manufacturing and industrial deals of greater significance.
This deal is a marker for two related reasons related to what it says about internet business in China.
Firstly, it is deal between two large search businesses born, grown and raised domestically.
They may have copied business models that were developed in America (Google in the case of Baidu, Kayak/Sidestep for Qunar) but through their growth, adaptation to local needs and ultimately this deal they have shown that the accusation of copycat is unimportant and irrelevant in describing the Chinese economy.
For every web, infrastructure or manufacturing market leader there is in the US, there are a dozen or more companies in China racing for that space. This deal shows that it is a waste of words and analysis to accuse China of being a copycat economy. Â A critical marker in the history books for China.
The second reason is that this deal finally proves that acquisition by a US company is not the natural exit for a Chinese Internet company.
The noughties/2000s was the period when US companies pushed into China and it seemed inevitable that US companies would buy their way into leadership while making scores of Chinese entrepreneurs very wealthy.
Expedia bought into eLong in 2004. In the same year Cendant (precursor to Travelport) launched a JV with local travel giant CYTS. In 2006 Travelocity bought out all of its airline co-shareholders to take 100% ownership of Zuji.
The theory was that locals would build it, Americans would buy it and the US would extend its dominance of the internet into the Chinese market. This deal (and others) kills this theory and is therefore an important marker in the part to Chinese economic leadership.
Congrats to Demopoulos and the rest at Qunar. Â This deal â€“ though small in terms of a $6.4 trillion dollar economy â€“ will resonate as an important moment in travel and online retail in China.