China Model

"After spending years emulating Silicon Valley, the world’s second-biggest economy is now officially charting its own course." ~ Austin Carr and Coco Liu from Bloomberg

Extracted from 

Bloomberg (27 July 2021)

"The China Model: What the Country's Tech Crackdown Is Really About "

Since the late 1990s, China has emulated Silicon Valley’s approach to innovation. Aided by Western capital and a generation of Elon Musk-like entrepreneurs—many educated overseas—the country saw Chinese versions of EBay and Amazon (Alibaba), AOL and Facebook (Tencent), and Google (Baidu) rocket to success while the government took a permissive approach to their behavior and largely protected them from U.S. competitors. At first, Chinese companies replicated services that were unavailable in or not tailored to the country, but they’ve long ceased to be mere copycats of Valley rivals and now frequently outmaneuver the global competition. So-called super apps, including Tencent Holdings Ltd.’s WeChat and Alibaba’s Alipay, also created by Ma and team, handle everything from on-demand transportation to food delivery to paying utility bills—there’s nothing comparable in the U.S. These days, Apple, Facebook, and Snapchat are racing to mimic features of these and other Chinese apps, instead of the other way around.

Just as in the U.S., unfettered growth led to increasingly powerful tech companies and CEOs who, operating with surprising independence, weren’t afraid to flex their power. China’s biggest tech companies periodically forced smaller competitors to integrate with their platforms or pressured them to sell out. Ma and other titans became cultural rock stars. He even started dressing like a rock star at raucous Alibaba events, complete with a mohawk wig and leather jacket and guitar, and became vocal about societal issues.

Just as in the U.S., unfettered growth led to increasingly powerful tech companies and CEOs who, operating with surprising independence, weren’t afraid to flex their power. China’s biggest tech companies periodically forced smaller competitors to integrate with their platforms or pressured them to sell out. Ma and other titans became cultural rock stars. He even started dressing like a rock star at raucous Alibaba events, complete with a mohawk wig and leather jacket and guitar, and became vocal about societal issues.

Some see the crackdown on Alibaba and DiDi—along with actions against dozens of other tech companies—as long overdue. Andy Tian, who led Google China’s mobile strategy in the 2000s and is now CEO at Beijing social media startup Asian Innovations Group, says it will be “positive for innovation” and “competition in China will be fiercer than in the U.S.,” because smaller companies will benefit from policies that rein in the largest competitors.

Angela Zhang, director of Hong Kong University’s Centre for Chinese Law and the author of Chinese Antitrust Exceptionalism, says the intervention will reshape the tech industry in China faster than it could happen elsewhere. “The case against Alibaba took the Chinese antitrust authority only four months to complete, whereas it will take years for U.S. and EU regulators to go after tech firms such as Facebook, Google, and Amazon, who are ready to fight tooth and nail,” she says.

Lillian Li, founder of the newsletter Chinese Characteristics, deems the disruption “a rebalancing of the dynamics, redrawing the boundaries. I don’t think the Chinese government is out there to destroy tech giants.” After decades of an anything-goes ethos, she says, China wanted to remind its tech industry “what they can do and can’t do.”