China’s internet is flourishing inside the wall

China’s internet is flourishing inside the wall
The country shows how censorship coexists with vibrant ecommerce and entertainment
By John Gapper NOVEMBER 23, 2016

In Beijing’s old hutong alleyway districts, an inner wall faces the door to every courtyard house. The wall is there to stop bad spirits from entering the inner sanctum.

China’s internet has a similar design to its courtyard houses. The way is blocked to foreigners such as Google and, despite Mark Zuckerberg’s efforts, Facebook while Alibaba, Baidu and Tencent, the largest Chinese internet enterprises, have prime spaces. Cyber space is walled and divided.

A few years ago, China’s government seemed to be in conflict with the very nature of the internet, struggling to censor bloggers with millions of followers on Weibo, the Twitter-like service. Since then, it has shown that censorship can coexist with a vibrant online culture, as ecommerce and entertainment have taken over from political debate and the sharing of sensitive information.

Deng Xiaoping, its former leader, pioneered “socialism with Chinese characteristics”, the blend of market-oriented enterprise with central control that has underpinned its development. President Xi Jinping now has an internet with Chinese characteristics.

Visiting China last week, just after its annual November 11 Singles Day online sales spree, which this year attracted $17.8bn of orders, I was struck by how quickly its digital economy has evolved. We look to the US for online innovation but China has plenty of its own.

WeChat, the mobile messaging and ecommerce app owned by Tencent, is the most recent. Smartphones have spread fast, with 620m of China’s 688m internet users owning mobile devices, and WeChat has overtaken Weibo as its leading online network.

That is partly because it emerged at the right time. WeChat was launched five years ago and grew as the government cracked down on the use of Weibo as a tool for political dissent. In 2013, the stars of Weibo were netizens who drew attention to corruption and abuses of power, leading to a crackdown on the spreading of “online rumours”.

WeChat evaded the purge by being more private. It places an upper limit of 500 on the number of people in a group chat. Political and academic dissidents who could no longer share their criticisms with millions transferred from Weibo to WeChat, where they can converse in smaller circles.

Political debate has thus moved from the virtual equivalent of Tiananmen Square to private courtyards. The limits on freedom of expression undermine Chinese people’s ability to exchange information uncensored and unmediated, which is one of the internet’s benefits. But the compromise on censorship has unleashed innovation that has brought economic gains.

WeChat is more than a messaging network for users with controversial views: that is only a tiny aspect of its appeal. It carries a wide array of services for its Chinese users, many more than messaging apps such as WhatsApp or Facebook Messenger. It can be used for everything from hailing cabs, ordering food deliveries and buying cinema tickets to booking doctors’ appointments.

It is an ecommerce platform as much as a messaging app, with users able to pay for goods and services through its WeChat Pay service. “WeChat is like an operating system for China,” says Connie Chan, a partner at the US venture capital firm Andreessen Horowitz. “You can get through an entire day online without going outside it.”

China lags behind mature markets in the US and Europe in the quality of physical shops and availability of branded goods. This has opened a gap that is being filled by apps such as WeChat and by Alibaba, the leading online marketplace. Ecommerce is likely to account for 18 per cent of retail sales in China this year, compared with about 8 per cent in the US.

Health scares and lack of quality controls have led Chinese shoppers to distrust the goods in their stores. They can now buy global brands on WeChat from JD.com, the online retailer, and have them delivered, often on the same day, by one of its couriers. They have been liberated by ecommerce.

China’s internet has also become an entertainment medium. This is exemplified by Weibo, which dipped in popularity after the crackdown on political bloggers but has revived after being adopted by celebrities and aspiring celebrities to build personal brands and sell products. VIP bloggers now offer their millions of followers entertainment, not political insight.

Entertainment is often blended with ecommerce as with Singles Day, which Alibaba adopted in 2009 and has since turned into a sales extravaganza that easily outstrips this month’s Black Friday and Cyber Monday in the US. The build-up to the day includes online fashion shows and celebrity performances to encourage a sales frenzy.

There is something impressive in all of this. In a short time, China has become not only the world’s biggest ecommerce market but also an innovator in mobile services. Its companies mix messaging, payments and online retailing better than any US rival.

There is also something sad. China’s government has improved the material lives of citizens and brought them economic benefits while curbing their right to free speech. This is China’s internet, not the one outside the wall.

john.gapper@ft.com

Copyright The Financial Times Limited 2016. All rights reserved.


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