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Look East | Copycat to Copied | EMQQ

For anyone trying to predict what the Internet may look like in the future, they may only have to look to an unlikely source – China.  Unlikely because, in the past, China has been accused of copying U.S. technology.  However, after years of being virtually walled-off from the rest of the world, the Internet in China has evolved to the point where western companies are looking to copy Chinese technology.

Copycat to Copied

Originally, much of the Chinese internet simply mirrored U.S. technology according to a New York Times video.[1]  However, the internet in China was virtually walled-off from the rest of the world through a network of filters and blocks known as the “Great Firewall of China.”  It operated more like an intranet than the internet, according to the New York Times. U.S. internet companies were shut out of China.

For virtually each U.S. Internet app, there was a Chinese equivalent.  However, as time passed, the technology of these Chinese companies began evolving in a way that differed from the way that U.S. Internet companies operated.  In the U.S., many companies operate distinct apps such as search, video, messaging, social media, etc.   

China, however, saw the creation of superapps, or apps that combined many of these functionalities into one larger app.

 WeChat - The SuperApp

WeChat is a prime example of a superapp developed in the relative isolation of the Chinese internet.  WeChat, a unit of Tencent Holdings (TCEHY) began as an instant messaging app but has evolved into much more.  Described as the Swiss Army Knife for the internet, WeChat can do just about everything online.  It is underpinned by its popular WeChat Pay payments platform which supports additional functionalities such as allowing users to shop, pay, order food, buy movie tickets and make restaurant reservations and doctor’s appointments, hail rides, find out how crowded their favourite restaurant is, and much more without leaving the platform. WeChat has even moved into education and healthcare.

It's All About the Data

According to the New York Times, WeChat has some 1.1 billion active monthly users (MAUs).  With one app having some many functions and users, WeChat has the ability to collect a staggering amount of data.[2]  For potential advertisers, this is a real treasure trove.

Looking to China

Western companies are now looking to copy some of the functionalities of Chinese Internet companies.  A Wall Street Journal cited Facebook founder Mark Zuckerberg as saying that he sees the future of the company in encrypted messaging, payments and other services – strikingly similar to WeChat.[3]   The amount of data that companies such as Facebook would be able to collect would be a bonanza for the company and for potential advertisers.

Potential Impediments to U.S. Adoption

Unlike most U.S. models, WeChat does not rely on advertising to make money.  Rather, its payment platform drives its financial model, according to the New York Times. WeChat users are not bombarded by the same volume of advertising as Facebook users.

Internet users, already concerned about privacy, may have greater reservations with companies having greater ability to track their every move and having access to such a vast amount of data.  There is no pretence or expectation of privacy in China.

Chinese companies were allowed to develop while shielded from competition from the outside world.  However, that would not be the case for U.S. companies where competition is far more intense.

Online payments have been widely accepted as a form of payment in China compared to the U.S. where credit cards are more popular. 

Summary

Western companies are looking at Chinese Internet companies as they look to roll out the next generation of products.  Superapps, such as China’s WeChat, are providing the roadmap for companies such as Facebook who are developing functionalities that are similar to their Chinese counterparts.  While impediments exist to full-scale adoption of Chinese business models, it is quite likely the internet of tomorrow may look different than that of today.  And it may look more eastern than it currently does.

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