HONG KONG: Baidu, Alibaba and Tencent dominate China’s internet to an extraordinary degree but continued success for any business operating in this area requires constant adjustment to government policy, according to a new report.
The China Internet Report, jointly published by the South China Morning Post, its tech news site Abacus and the US venture capital firm 500 Startups, highlights four overarching themes.
First is that China’s internet giants are doing everything, from e-commerce to content, and are present in almost every tech sector, either by investing in startups or by building it themselves.
Second, the huge number of people – more than 600m – using social media apps has created the basis of “Social+”, which the Post described as a new type of business model, “where different industries such as education, news and e-commerce are anchored by a social pillar that drives user engagement and growth”.
A third important aspect of China’s internet is how it is empowering the rural population. Over the past decade, internet penetration in rural areas has grown steadily from 7% to 35%.
Within the next two years half of all villages will be equipped with e-commerce capabilities; already there are more than 2,100 “Taobao villages” inspired by the government’s Internet Plus policy first unveiled in 2015.
That was designed to promote the integration of cloud computing, mobile, infrastructure and manufacturing into traditional business, and stimulate economic growth.
It also highlights the role of government in shaping the internet and China’s wider tech industry. In recent months state watchdogs have instructed quiz apps to stop asking “inappropriate” questions, demanded the delisting of apps invading privacy and ordered digital media platforms to address content that was “disrupting order”.
“Success or failure – especially for media or fintech companies – is contingent upon government approval,” the report said.
Abacus was even more clear on how government decisions can affect the online industry: “Any trend can disappear overnight – if Chinese authorities want it to”.
Sourced from South China Morning Post, 500 Startups, Abacus; additional content by WARC staff