What are the special advantages which Chinese Internet companies in China have compared to Internet companies in other countries?

Apart from the political context that other answers have mentioned, Internet companies benefit from the existence of a very large amount of unsolved and pressing problems that needs to be adressed in the country.

Comparatively, many important issues that required tech in the West were solved with pre-Internet solutions. A good example is the payment system. In the West, cash was largely replaced by chip cards decades ago. In China, the relatively low penetration of cards allowed Internet companies to address cash control directly with their own Internet-based solutions.

Besides the quantity of issues that requires attention, what makes China’s problems so interesting for Internet companies is two things : 1) they are shared by very diverse kind of people and 2) most of these people are on the move.

The constant movement of people in China requires communication solutions. Mobile phones are known as the “first urban purchase” for any migrant in China. The adoption of Internet technology has been largely driven by the need to stay in touch with remote family members or friends. What better opportunity for internet companies than a billion people needing to communicate?

Chinese Internet companies have the advantage of having to support highly diverse and versatile life experiences. One thing that makes Chinese companies like Tencent stand out from their western counterparts is that they serve a billion of totally diverse people, from almost illiterate farmers in remote mountains to the highest spheres of China’s urban elite. In comparison, Facebook serves a billion users that is mostly composed of 25-40 years old urbans from main cities over the world. Tencent users may actually look much more diverse if you look at their socio economical extraction, despite a (very) relative cultural homogeneity.

This focus on serving “vertical” segment of population - instead of a more “horizontal” approach of user development prefered in Western startups - allow Chinese Internet companies to define and attack larger problems. By doing so, they create a path for their tech to become not only a daily habit but an important constituant of social stability - and therefore make themselves irreplaceable. That is why internet companies in China are so closely tied to the government : they recognize and embrace their role as builders of the key infrastructures of the new Chinese society.

Finally, one thing often considered as a disadvantage for Internet companies is that their products are too localised - “too Chinese”. Western commentators love to state that most Chinese Internet tech is unfit to export, because it was not “globally designed”. I believe that this is largely a fallacy. Main reason for an existing tech to be adopted is because 1) it is available at a cost you can afford and 2) it already solves a problem similar to the one you are having.

For a long time, many countries have followed the path of development of the USA. Issues they were encountering were often framed as similar to the ones identified in the USA, driving the adoption of US solutions (yes, I am talking about Europe, Philippines, etc). The transformation of China during the last decades has required tech companies to walk unique paths and develop entirely new tech solutions to face entirely new problems.

As more countries will try to reproduce China ‘s experience (with incentives from large Chinese investment programs), they will encounter difficulties and issues closer to what China has faced, leading them to adopt similar technologies and policies. For the Internet, it will include copying GFW, data regulations, payment and credit systems, trust systems, hi tech industrial clusters, etc. The Chinese companies have already became references for many in the developing world, and this tendency will only increase as the USA continue to shift from a model that should be followed to one that needs to be avoided.

To sum it up, Chinese Internet companies have the incredible advantage of being part of today China’s historical momentum, and contribute to shape one of the largest and most transformative experience on earth at the time of this writing.

This text was originally published in quora.

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