The trade relationship between China and the United States has many frictions. But at least one area is booming: Chinese startups looking to establish a presence in the West are spending billions of dollars advertising on services owned by some of the top technology companies in Silicon Valley.
Temuthe international arm of Chinese e-commerce giant Pinduoduo, is flooding Google with ads for cheap products. With an initial public offering on the horizon, fast-fashion retailer Shein is flooding Instagram with ads for low-priced clothing and accessories. And Chinese gaming and video streaming app developers are pouring marketing money into Facebook, X and YouTube.
Goalparent company of Facebook and Instagram, said in a call with analysts that China-based advertisers accounted for 10 percent of its revenue, almost double that of two years ago. In the last year, Temu has placed about 1.4 million ads on Google services and at least 26 thousand different versions of ads on Meta, according to the Meta Ad Library.
The increase in spending shows how interconnected China and the US remain, despite each country's vigorous efforts to become more self-sufficient.
Marketing Blitz Driven by Chinese Startups' Global Ambitions. At home, the economy is no longer growing as it has for years. An offensive against companies like the e-commerce giant Alibaba and the ridesharing provider Didi has also underlined the message that a company, no matter how successful, can be forced to submit if it comes into conflict with the Chinese Communist Party and its leader, Xi Jinping.
“There is a limit to the extent to which a company can grow in China,” said Andrew Collier, founder of Orient Capital, a research firm in Hong Kong. “Xi Jinping is very happy for Chinese companies to make money abroad, as long as they jump in the hoops inside China.”
But it's difficult to attract significant amounts of digital attention without paying Alphabet — Google's parent company — and Meta. Together, the two sell the majority of all Internet advertising via properties like Google Search, YouTube, Facebook, Instagram, WhatsApp and Messenger.
Most Alphabet and Meta products are not available in China. But they have such significant reach in the rest of the world that Chinese companies are turning to them.
Temu and Shein's spending “single-handedly” has raised the cost of digital advertising, Josh Silverman, Etsy's chief executive, said on a call with analysts in November.
Temu opened its site in the United States in September 2022. It is now available in 50 countries.
Bernstein Research estimates that Temu spent $3 billion on marketing last year. In a lawsuit filed against Shein in December, Temu said he served about 30 million daily users in the United States.
Shein, which entered the US market about 7 years ago, also continues to spend aggressively. It does not sell products in China, although it depends on Chinese sellers and the country's supply chain. He has published around 80 thousand ads on Google last year. On Meta, Shein has more than 7 thousand active ads, reveals the Meta Ad Library.
The spending is not limited to retailers. In recent months, Instagram has been flooded with addictive short drama clips. Each episode usually lasts one minute. The shows have titles like “The Double Life of My Billionaire Husband” or “30 Days to Marry My Husband's Nemesis.” These short dramas are popular in China and apps like Reelshort, DramaBox and FlexTV are competing to export them.
And a Hong Kong-based game developer called First.Fun appears to be filling Facebook, Instagram and X with ads to promote its game Last War: Survival. Sensor Tower estimated that the game generated $22 million in revenue last month.
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