In 2003, when I first travelled to Tokyo from my newly furnished home in Shanghai, Japan was a technologically isolated ‘Galapagos island’ way ahead of the world. On arrival at Narita Airport, I rented a SIM-card to connect to speedy local networks. In a few years, my Shenzhen-made iPhone and China Mobile 3G card effortlessly roamed in Japan. Everyone anticipated the coming 4G miracle. Global technology, combined with China’s added agility and affordability, flooded most Galapagos islands. Fifteen years and many grey hairs later, few people I meet question China’s progress in innovation and digitalisation. Its internet connectivity hiked from virtual zero to around 50%—well behind advanced economies in percentages, but far ahead in user numbers. Apps rule over gadgets now, and China creates world-class ones like WeChat and TikTok. But like Japan before, China struggles to convert the world to its own technological solutions and vision. Do we witness the emergence of another Galapagos?
WeChat: the risk of connectivity
“WeChat is China’s most popular messaging app with a monthly user base of more than 1 billion people”, CNBC wrote last year. “But it’s unlikely that you would have used it if you live outside China”. That is a fair assessment: most foreign users are Chinese people abroad. WeChat owner Tencent keeps its user data secret, but around 100 million overseas Android downloads suggest international user percentages in unimpressive single digits. What went wrong? Foreign politics is not to blame: impending restrictions in India, the USA and elsewhere respond to bans on global apps in China, while Tencent has run government-aided global push campaigns for over a decade. Even international tech bloggers praising WeChat avoid it as their primary tool. Most of its users connect to local Chinese services like food, retail, banking and paying utility bills, but similar beginnings didn’t stop AirBNB and Grab from going global. Beyond all that, WeChat’s global weakness is its alleged strength: it is more than just an app.
WeChat’s international rise and stall wasn’t accidental. Tencent, originally a game maker, is a state-appointed leader in markets like messaging and ride hailing. In exchange, government bureaus get real-time data access. Grown into a giant under protection, in 2012 WeChat was deemed ready to go global via national outreach efforts known today as Belt and Road. Overseas users surged, but also posed risks. Like payment platform UnionPay before it, the app allowed Chinese travellers access to foreign currency and information, who could thus circumvent domestic restrictions. Neither could Beijing provide WeChat with international protection similar to the state-run banking, retail and service sectors at home. Finally, government data access undermined WeChat’s credibility abroad. Before India and the US pushed back, willingness to create a global star had already cooled. “We don’t have a plan in the next three years to do a payments wallet outside of China, except Hong Kong and now also Malaysia”, a 2018 article quotes a Tencent executive.
Zoom: the risk of exclusivity
WeChat missed two lessons that Silicon Valley still learns the hard way. One: people ditch apps they cannot trust. Two: they trust apps their friends use. As Covid-19 hit the world, another firm started collecting the cash that Tencent left behind. Zoom, a conference app by a Chinese American immigrant entrepreneur who formerly worked for Webex, was winning the virtual zero-sum war for eyeballs. When Zoom breached the infamous Great Firewall via local servers in Mainland China, both the USA and China claimed victory. A generous sign-up policy for Chinese users catapulted numbers and inspired further innovation. Cross-Wall partnerships previously severed by government blockages reunited. But when Zoom casually started routing international calls through the newly added Chinese servers, the spectre of The Party suddenly appeared at the party. Further blunders cast a shadow of censorship on the app. Corrective measures proved too little, too late.
Zoom today perseveres in Mainland China on borrowed time after a recent announcement that soon, it would only be available to closely monitored users through local third-party apps. Zoom’s lesson is one of exclusivity: with an expanding list of China’s trade-war adversaries and alleged offenders, no business can stay neutral and reap the benefits. Zoom founder Eric Yuan tried hard: the app’s looming withdrawal from China isn’t censorship but self-censorship, initiated by the firm itself. Public self-criticism can be a way to redemption in the People’s Republic, but this time it wasn’t enough. In today’s polarised China-US relations, both sides force businesses to take sides, throwing users, investors and the public between a rock and a hard place. Restrictions emerge unexpectedly, from the black box of Beijing: since it was announced, the impending ban has been a Damocles’ sword over netizens. This way, no prominent tech firm can build passable digital bridges between the warring factions—including China’s own national champions.
TikTok: the risk of uniformity
Chinese dark-horse firms with admirable business models and no state help are collateral damage to recent trade wars. Alongside Huawei’s public humiliation, drone maker DJI gained global dominance including American defence contracts. Similarly, TikTok avoided the ‘Made in China’ label slapped on WeChat and became a top-5 global social medium. 2020 may throw both firms prey to a China-US tech war with deeply ironic methods on both sides. Beijing demanded backdoor access to Apple, Google and Yahoo solutions for years, but denies American bidders access to TikTok’s code. Whether a US tactical victory is worth pulling the plug on American users is yet unsure: Beijing already did the same to most social apps in China. But social media is fickle: TikTok may simply become the next discarded SnapChat. The trade war’s digital front raises vital issues, for instance whether firms and countries should imitate an unfair adversary’s methods. But Beijing’s national legislation to protect the know-how of a private firm’s teen video sharing app has very specific reasons.
As China’s leaders are aware, Tencent founder Pony Ma, Alibaba’s Jack Ma and even Eric Yuan owe their brilliance to the relative ideological, political and economic liberalisation of the era known as ‘reform and opening’ between the late 1970s and early 2010s. They fantasized, innovated and invested with their gaze on Japan and the United States beyond the Eastern horizon, tolerated by the Party’s loosening leadership. They harnessed a fresh inflow of foreign goods, ideas, opportunity and investment from Wall Street, globalised Hong Kong and Taiwan, and firms like Japan’s Softbank. But that was an unscalable miracle. Subsequent generations grew up under internet restrictions imposed since 2007, strengthening political and ideological uniformity and the emerging social credit system that keeps outliers in check. To think, dream, speak and act like China’s reform-era founders would pose significant political risk today. Beijing introduced its new Technology Export Controls to protect the gains of that golden age, aware of a cooling innovation curve similar to that of the nation’s GDP growth.
The future: connection or isolation?
Predictors of China’s technological dominance often assume that it will keep rising at a consistent speed—a method known in economics as extrapolation. But as China’s economy matures and cools, such assumptions are increasingly illusory. Its early risers skyrocketed for decades exactly because they developed entire industries from virtual zero: Huawei for telephony, Alibaba for marketing, Tencent for virtual connectivity. Some technology gaps will continue to inspire break-neck growth: China’s number of bank accounts by a thousand inhabitants is on par with that of Sub-Saharan Africa. Other sectors will plateau: the rate of Chinese citizens who own mobile phones is similar to that of Japan and France. In areas where fast growth is crucial, China will continue to bet big and seek international know-how: Beijing’s ‘Thousand Talents’ campaign and shopping spree for technologically advanced foreign firms proves that much.
China’s ‘digital Belt and Road’ rests on similar extrapolation: assuming that the nation’s emerging soft power attracts global fandom to its technological vision. American tech attracted international talent, investment and users that way. China’s digital strategy is characteristically high-risk, with limited success so far. Politics will keep interfering with the global competitiveness of Chinese social media. The China Dream’s charisma is too weak to make foreign users bother with another app. Meanwhile, secrecy over data, protocols and intentions continues to taint Chinese digital tools. Despite their advanced technology, Chinese apps have failed to engage global users on all three levels: head, heart and gut. Impending restrictions on WeChat, TikTok and Zoom are merely political symptoms of such complex dynamics. The future is unsure. In one possible scenario, the Chinese tech sector learns to manage the risks and delivers, as promised, tools that connect worldwide users. In another, a much larger, vibrant but isolated Galapagos will emerge.
Picture credits: Hootsuite