Learn from Chinese New Media during the 2020s

[This November 2019 essay had been published in the Digital Deliverance newsletter but not been posted here before.]

Vin Crosbie at Tsinghau University, Beijing

The most advanced New Media in the world aren’t in the United States but in either of two East Asian countries. South Korea is frequently called ‘the most wired’ nation in the world: virtually all of its 51 million people are online or, as the home to Samsung, the world’s largest manufacturer of smartphone, interconnected wirelessly. Across the Yellow Sea from , South Korean, however, lay the world’s largest population of Internet and smartphone users, who have the world’s most unique and hyperactive New Media market. I believe that it will be from China that most of the world’s New Media innovations during the 2020s will arise.

I frequently encounter in Europe and the U.S. middle-aged or elder executives of media companies who’ve never been to China and so have a 1970s mindset that citizens of the People’s Republic of China still wear ‘Mao suits’ (Zhongshan: 中山装), commute en masse to work by bicycles, and have media that, at best, simply emulates western practices. These westerners are half a century out-of-date from reality. There also are westerners who’ve not spend more than tourist time in China and so believe that it cannot possibly have the most advanced New Media in the world due to the Communist Party’s heavy censorship. It’s certainly true that the Party’s censorship is oppressive and that its so-called ‘Great Firewall of China’ blocks citizens from accessing the best of western news media websites, Facebook, and many other sources of facts and opinions. However, more than 95 percent of the average Chinese citizen’s daily life isn’t about domestic politics or foreign news, the percentages as in western life.

Ironically, the insularity of the the ‘Great Firewall of China’, plus the formidable uniqueness of the Chinese language itself, have caused many technologies, particularly those involving smartphones, to evolve rapidly and hyper-competitively during this past decade. I think that many of those Chinese media technologies will soon start percolating through those governmental and linguistic ‘firewalls’ and begin to be adopted (or ‘Westernized’) worldwide during the 2020s, becoming platforms upon which many of the next wave of technologies for media will be founded. It is time that Westerners learn more about these.

I first became attuned to Chinese media technologies in 2000, when Andy Tribute, the international editor of the Seybold Report on digital media, invited me to tour Beijing media companies with him and to give a presentation at Peking University (yes, that university retains its old spelling). I’ve since been returning every few years to keep abreast of Chinese media technologies and to speak at Chinese conferences.

Furthermore, since 2007 at Syracuse University’s S.I. Newhouse School of Public Communications, I’ve taught the New Media Business course to more than 120 New Media Management master’s degree students from the China They’ve comprised nearly a third of my students during the past dozen years, their numbers increasing each year. During the past five years, two thirds of my graduate students have been Chinese.A few fellow faculty members at Syracuse University have asked me if it is difficult teaching a course in which a plurality of the students are from so different a nation than the U.S. Not at all, I tell them. The student mix of Americans and Chinese allows me to teach the best of both worlds, East and West, at the beginning of an era when each should begin learning from the other.

[As for the topic of censorship, my American and Chinese graduate students learn in a classroom on whose outside windows the words of the U.S. Constitution’s First Amendment have been permanently etched in letters two meter high. Most of my Chinese students express opinions ranging from dislike to hate for the censorship in their country. A few excuse it as necessary for keeping a nation that, however superficially homogeneous, consists of dozens of locally-spoken languages besides government-mandated Mandarin, and as many regional native cultures, from fracturing into political chaos. Meanwhile this year, they and my American students are discussing, among many other topics, whether Social Media services in the U.S. or western countries should ban political advertisements that are false. My students see the controversial issues of their own and each other’s nation.]

Upon what do I base my prediction that many Chinese media technologies will soon become adopted (or adapted) worldwide and platforms upon which many next wave of technologies for media will be founded?

Start with Chinese smartphone and 5G technologies. The Chinese telephony hardware giant Hauwei, already the world’s third largest manufacturers of smartphone handsets (after Samsung and Apple, the latter of which manufactures most of its handsets in China), is arguably the world’s most advanced firm at fifth-generation (5G) network technologies. The United States government is currently trying to block its allies, and other countries, from purchasing Hauwei’s 5G equipment, claiming that China could use it to spy on nations using it. (Why Google parent company Alphabet has revoked Hauwei’s license to use Android technologies in future handsets might instead be due to competitive, rather than national security concerns. At factories in China, Google manufactures handsets that compete with Hauwei’s.)

Likewise, Chinese smartphone apps, particularly those for e-commerce, messaging, and online payment technologies, clearly exceed the capabilities of those from North America and Europe. I estimate that most Chinese apps are already five to eight years ahead of Western competitors. For example, unless your smartphone uses the ubiquitous WeChat app linked to Alipay or JD, it’s almost impossible to travel eat, shop, or find entertainment within China. My Chinese students estimate that only five percent of transactions are now being done with cash in their country. They’ve largely had to become reacquainted with the concepts of cash and credit cards now that they’re studying in the U.S. One of my Chinese student pointedly noted that U.S. credit cards are a technology from the 1960s.

If the 18th Century economist Adam Smith’s concept of the ‘invisible hand’ of economics is true, then any superior technology, particularly if it benefits all involved, will start being used more widely. Besides the 300,000 Chinese students now studying in the U.S., 150 million Chinese citizens became foreign tourists last year, part of the 400 million middle-class Chinese who have disposable incomes for travel. They spent more money overseas last year than U.S. tourists did. The United Nations World Tourism Organisation (UNWTO) estimates that one quarter of the world’s tourists will be from Chinese. They all travel with smartphones equipped with WeChat, Alipay, JD, RenRen, Sina Weibo, and other uniquely Chinese apps whose versatility exceeds those of the West. They’ll want to use those apps abroad, just like they do in China, and merchants worldwide who want their business will try to comply. Although most Chinese apps today operate only in the Chinese language, the official language of only two nations – China and Singapore (where English and Malay also are official languages), Chinese app developers, like all other Chinese manufacturers, have begun to realize that the world, not just China, is their market and are beginning to offer their new version in more than just Chinese.

And let’s not forget Chinese history and culture in general, as well as ironically the heavy hand of government behind the censorship in China, can give Chinese media technologies some formidable competitive advantages. I’ll let Kai-Fu Lee, the American-raised former chief of Microsoft’s and Google’s tech laboratories in China and the author of the remarkable book, AI Superpowers: China, Silicon Valley, and the New World Order, describes how:

“I can tell you that Silicon Valley looks downright sluggish compared to its competitor across the Pacific. … China’s successful internet entrepreneurs have risen to where they are by conquering the most cutthroat competitive environment on the planet. They live in a world where speed is essential, copying is an accepted practice, and competitors will stop at nothing to win a new market. … Rather than following in the footsteps or outright copying of American companies, Chinese entrepreneurs began developing products and services with simply no analog in Silicon Valley. Analysts describing China used to invoke simple Silicon Valley– based analogies when describing Chinese companies—’ the Facebook of China,’ ‘the Twitter of China’— but in the last few years, in many cases these labels stopped making sense.”

Lee notes that the Chinese government’s dictatorial ‘command & control’ system can fund whatever technologies Chinese leaders think can give their nation competitive advantages:

“Putting all these pieces together— the dual transitions into the age of implementation and the age of data, China’s world-class entrepreneurs and proactive government— I believe that China will soon match or even overtake the United States in developing and deploying artificial intelligence. In my view, that lead in AI deployment will translate into productivity gains on a scale not seen since the Industrial Revolution. PricewaterhouseCoopers estimates AI deployment will add $ 15.7 trillion to global GDP by 2030. China is predicted to take home $ 7 trillion of that total, nearly double North America’s $ 3.7 trillion in gains. As the economic balance of power tilts in China’s favor, so too will political influence and ‘soft power,’ the country’s cultural and ideological footprint around the globe.”

This new AI world order will be particularly jolting to Americans who have grown accustomed to a near-total dominance of the technological sphere. For as far back as many of us can remember, it was American technology companies that were pushing their products and their values on users around the globe. As a result, American companies, citizens, and politicians have forgotten what it feels like to be on the receiving end of these exchanges, a process that often feels akin to ‘technological colonization’. …

“This kind of analysis, however, is the result of a deep misunderstanding of the dynamics at play in the Chinese market, and it reveals an egocentrism that defines all internet innovation in relation to Silicon Valley. … Layered atop this cultural propensity for imitation is the deeply ingrained scarcity mentality of twentieth-century China. Most Chinese tech entrepreneurs are at most one generation away from grinding poverty that stretches back centuries. Many are only children— products of the now-defunct “One Child Policy”— carrying on their backs the expectations of two parents and four grandparents who have invested all their hopes for a better life in this child. Growing up, their parents didn’t talk to them about changing the world. Rather, they talked about survival, about a responsibility to earn money so they can take care of their parents when their parents are too old to work in the fields. A college education was seen as the key to escaping generations of grinding poverty, and that required tens of thousands of hours of rote memorization in preparing for China’s notoriously competitive entrance exam. During these entrepreneurs’ lifetimes, China wrenched itself out of poverty through bold policies and hard work, trading meal tickets for paychecks for equity stakes in startups. …”

Combine these three currents— a cultural acceptance of copying, a scarcity mentality, and the willingness to dive into any promising new industry— and you have the psychological foundations of China’s internet ecosystem. … The most valuable product to come out of China’s copycat era wasn’t a product at all: it was the entrepreneurs themselves. … As a succession of American juggernauts— eBay, Google, Uber, Airbnb, LinkedIn, Amazon— tried and failed to win the Chinese market, Western analysts were quick to chalk up their failures to Chinese government controls. They assumed that the only reason Chinese companies survived was due to government protectionism that hobbled their American opponents. … They see the primary job in China as marketing their existing products to Chinese users. In reality, they need to put in real work tailoring their products for Chinese users or building new products from the ground up to meet market demands. Resistance to localization slows down product iteration and makes local teams feel like cogs in a clunky machine. …”

While foreign analysts continued to harp on the question of why American companies couldn’t win in China, Chinese companies were busy building better products. Weibo, a micro-blogging platform initially inspired by Twitter, was far faster to expand multimedia functionality and is now worth more than the American company. Didi, the ride-hailing company that duked it out with Uber, dramatically expanded its product offerings and gives more rides each day in China than Uber does across the entire world. Toutiao, a Chinese news platform often likened to BuzzFeed, uses advanced machine-learning algorithms to tailor its content for each user, boosting its valuation many multiples above the American website. Dismissing these companies as copycats relying on government protection in order to succeed blinds analysts to world-class innovation that is happening elsewhere. … In a market where copying was the norm, these entrepreneurs were forced to work harder and execute better than their opponents. Silicon Valley prides itself on its aversion to copying, but this often leads to complacency. The first mover is simply ceded a new market because others don’t want to be seen as unoriginal. Chinese entrepreneurs have no such luxury. If they succeed in building a product that people want, they don’t get to declare victory. They have to declare war.”

American policy analysts and investors looked askance at this heavy-handed government intervention in what are supposed to be free and efficient markets. Private-sector players make better bets when it comes to investing, they said, and government-funded innovation zones or incubators will be inefficient, a waste of taxpayer money. In the minds of many Silicon Valley power players, the best thing that the federal government can do is leave them alone. But what these critics miss is that this process can be both highly inefficient and extraordinarily effective. When the long-term upside is so monumental, overpaying in the short term can be the right thing to do. The Chinese government wanted to engineer a fundamental shift in the Chinese economy, from manufacturing-led growth to innovation-led growth, and it wanted to do that in a hurry. … Analysts dubbed the explosion of real-world internet services that blossomed across Chinese cities the ‘O2O Revolution,’ short for ‘online-to-offline.’

“The terminology can be confusing but the concept is simple: turn online actions into offline services. E-commerce websites like Alibaba and Amazon had long done this for the purchase of durable physical goods. The O2O revolution was about bringing that same e-commerce convenience to the purchase of real-world services, things that can’t be put in a cardboard box and shipped across country, like hot food, a ride to the bar, or a new haircut. … From there the O2O models became even more creative. Some hair stylists and manicurists gave up their storefronts entirely, exclusively booking through apps and making house calls. People who were feeling ill could hire others to wait in the famously long lines outside hospitals. Lazy pet owners could use an app to hail someone who would come right over and clean out a cat’s litter box or wash their dog. Chinese parents could hire van drivers to pick up their children from school, confirming their ID and arrival home through apps. Those who didn’t want to have children could use another app for around-the-clock condom delivery. …The market research firm iResearch estimated in 2017 that Chinese mobile payment spending outnumbered that in the United States by a ratio of fifty to one. For 2017, total transactions on China’s mobile payment platforms reportedly surpassed $ 17 trillion— greater than China’s GDP— an astounding number made possible by the fact that these payments allow for peer-to-peer transfers and multiple mobile transactions for items and services throughout the chain of production.”

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