Online shopping giant Alibaba, China's answer to Amazon, is testing the waters in Germany by acquiring Berlin startup Data Artisans for a reported €90 million ($103 million).
This latest deal illustrates a growing trend for China to buy innovative technology rather than develop it. The Berlin startup is a pioneer in stream processing of data — that is, analyzing data as it comes in rather than waiting for it all to be saved. Stream processing is going to become increasingly important as the Internet of Things and artificial intelligence applications require more real-time data processing.
This acquisition alone is nearly equal to the €100 million Chinese companies invested in German startups in 2017. Last year, Chinese stakes totaled €300 million, according to Dealroom.co, in companies including online bank N26, travel platform Go Euro, and fintech firm Finleap.
The Data Artisans announcement comes just a week after entrepreneur Marcel Münch told Handelsblatt he expected Alibaba to soon start investing in German startups. Alibaba, along with Tencent and Baidu, are giant Chinese companies ready to aggressively expand in Europe.
Data Artisans founders Kostas Tzoumas and Stephan Ewen said they felt they could develop their business much more quickly by joining forces with Alibaba. “Both companies share the same values and goals,” they told Handelsblatt. An alliance with the powerful Chinese company will bring “undreamed-of potential.”
China is determined to be the global tech leader. It has committed to spending €130 billion on artificial intelligence by 2030, a sum that makes the German government’s pledge of €3 billion for AI look tiny.
The exchange goes both ways. When Ping An, the world’s largest insurer, took a €41 million stake in Finleap in November, CEO Ramin Niroumand found that Finleap had a lot to learn from the Chinese company, which has unparalleled expertise in AI and blockchain technology.
In addition to snapping up startups, Alibaba is building a logistics hub in Belgium as part of its €13 billion investment in international expansion over the next five years, Münch said. But he suggested the Chinese retailer could get a jumpstart by acquiring German e-commerce giant Zalando and its 25 million customers.
The Chinese expansion in Europe is concerning to some critics. Venture capital investor Klaus Hommels says China's advancement “is the unavoidable consequence in the face of the lethargy that we have shown in digital innovation.”
The biggest risk is loss of control as their increased financial involvement puts the Chinese in charge of corporate governance and decision-making. “We lose sovereignty over the truth,” Hommels says.
Stephan Scheuer is co-head of Handelsblatt's feature and people's desk. Miriam Schröder covers startups. Darrell Delamaide adapted this article into English for Handelsblatt Today. To contact the authors: [email protected], [email protected]