How Chinese Companies Could Shape The Digital Economy

The World Bank notes that China’s population is almost at 1.4 billion people. With such massive human potential, the country has already established itself as an economic and industrial powerhouse. With the recent shift to the digitalization of its economy, we’re seeing more and more applications developed for smartphones coming out of China. In the past, the world’s electronic center was California’s Silicon Valley. Today’s globalized world is already seeing a shift away from the American-centric digital economy, with more consumers embracing affordable technology coming out of China. What does this mean for the rest of the world?

Chinese Tech’s Slow, Inexorable Rise

China’s industrial growth is a relatively new event and can be traced back a mere two decades. Prior to the 90s, China’s technological growth was severely hampered by its ruling party’s insistence on governmental control over all aspects of development. The 90s signaled a change in the party’s vision for China, and innovation started to happen. After their industrial boom (for which we can thank their billion-dollar-a-year export market) came their commercial boom. Electronics were easy to manufacture, and their production costs were so low that many western companies flocked to China to set up electronic plants there. 

If we fast-forward a few years, “the landscape of Chinese tech changed significantly”He observes. Thanks to massive investment by these Western firms, China developed its own home-grown talent and started creating its own tech and electronics industry, using what they learned from the West. However, the development and growth of the sector were significantly different from its counterparts in the West. The Interpreter mentions that Chinese app development focuses on an internet ecosystem separate and isolated from those in Silicon Valley, leading to a parallel branch of development.

The success of the industry within China is matched by their accomplishments outside of the country. Chinese electronic component manufacturers have produced consistently high-quality chips that compete directly with those in the West. Businesses like SmartSense Technology are notable for manufacturing CMOS image sensor chips that see use in many circuit boards. Affordable base price makes manufacturers that use the company’s chips to compete on a global market against Western companies such as Apple or Samsung. Apps are also seeing massive acceptance outside of the country. Apps such as PUBG and TikTok have seen millions of users in the West. However, other countries are taking note, and The BBC reports that India banned several Chinese apps for fear of stealing user data.

A Death Knell for Chinese Tech Startups?

The news about China’s monitoring of data through their local tech companies’ apps remains a concern. Yet, these setbacks aren’t likely to dissuade new companies, such as Avant Permanent Cosmetics, from entering international markets. Chinese companies are likely to continue banging on the door until someone lets them in. These businesses know the potential return they could make outside of the control of the Chinese Government. It’s unlikely that they’ll pass up the chance. Because of the number of new manufacturers that we’ll see entering these Western markets, Chinese tech is likely to shape our digital economy’s future. Whether this is a good or a bad thing is still a hot topic of debate.

Already Adopting Chinese Standards

Behind The Great Firewall, the internet is a lot different. Since they don’t have access to applications from the West, the populace relies on Chinese-made applications to sate their needs. With so much demand for multiple services, it’s not uncommon for some of these developers to evolve into “super apps.” A super app incorporates various services into a single application header. One of the most common pairings is social media and eCommerce.

You’ll immediately begin to spot some of the similarities between super apps and how companies like Instagram and Facebook are approaching business today. Tech Crunch mentions that TikTok announced they intended to partner with eCommerce platform Shopify to offer direct integration between the two businesses. This approach seems suspiciously similar to a few of the super apps behind the Great Firewall. However, as exciting as it is to see Chinese tech shaping the digital economy, there are things we must be concerned about.

Overbearing Moderation Incoming

The West considers itself an inclusive society and has gone to great lengths to ensure that it remains that way. Chinese firms are aware of our focus on inclusivity, but they consider it a suggestion rather than a hard rule. A recent report by The Verge mentions that TikTok’s promotion guidelines actively suppressed users based on their weight or subjective attractiveness to increase the popularity of their platform. This level of moderation and the standards used for it are alien to the sensibilities of Western audiences. The fallout of the uproar forced TikTok to localize its moderation policies for the West. However, this moderation is only the tip of the iceberg.

Chinese firms have a strict policy with the country regarding what data is allowed and what isn’t. Based on the population’s size, they can’t possibly expect to monitor all data that flows through their websites. Instead, they’ve developed sophisticated algorithms that allow sites to detect what would be seen as “illegal” traffic and squelch it before it brings the company into disrepute. The algorithms collect data from users and use it to learn about them, specifically. This approach is distinctly different from the Western method, where the algorithms are based on learning about the users’ likes and dislikes to feed them better content. TikTok’s popularity, for example, comes from embracing the Chinese algorithmic model of exploration rather than the West’s model of user satisfaction. More companies may begin experimenting with a Chinese-based discovery model because of TikTok’s success.

The Potential For Censorship?

Because social media and other websites are accountable to the state for their very existence, they must cooperate with the Chinese Government when it comes to content. Certain things simply can’t be said on social media in China because it goes against the ruling party’s doctrines. The West usually prides itself on free speech, but only when it comes to Government. Social media platforms are privately owned entities, and by adopting similar censorship tactics like Chinese firms, they could potentially shape discussions and opinions. While it may not happen, the potential for this type of control of information does exist.

The Future of Technology

Chinese companies make up most new businesses to enter international markets, but other emerging companies in Asia are keen to follow suit. If more Asian-based companies play a part in shaping technology, we may see a completely different digital landscape by 2030. Whether it’s a landscape we’re proud of or afraid of depends on what side of Chinese tech manufacturers chooses to embrace.