Debunking China Myths: Is China’s tech power overrated?

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By CGTN’s Gao Songya

When the world’s leading ride-hailing service Uber sold its Chinese business unit to local rival Didi Chuxing, The Economist – the famous weekly published in England – described China as a “technological Galapagos island”, and Uber the victim after Google, Facebook and Amazon.

It means China, when it comes to technology, is still an isolated and overprotected market that doesn’t allow overseas players to join in and fuel competition.

Is that conclusion at all groundless? And how far could China’s tech power really get without copying products and business models from advanced foreign companies, or protective policies from the government?

410 million 'digital natives' push tech industry forward

A large population used to drive China’s economy through cheap labor. But it is now benefiting the country’s technology in a particular way.

Jeffrey Towson, professor of investment from Peking University, believes China’s tech giants can beat US companies “fair and square,” both within the domestic market and abroad.

Supporting his view is the large scale of native tech companies and consumers.

“When a company like Huawei, which has 170,000 employees and 70,000 of them are in R&D, that’s bigger than Cisco (a world leading IT company based in the US), which has 70,000 for the whole company, that’s incredibly difficult to compete with,” Towson said.

He also attributed the success of two Chinese-born smartphone apps, Mobike and Meitu, to their large user base at home.

Kitty Fok, managing director of IDC, calls those born in the digital era “digital natives.” She said the huge number of them starting to enter the management of China’s tech companies is affecting the whole industry.

New tech hubs and talents are emerging

China is nurturing more than one of its own versions of Silicon Valley, and not just in first and second-tier or developed coastal cities.

Hefei, the capital city of eastern China’s Anhui Province, is building up a “Voice Valley”, gathering companies focused on voice recognition and artificial intelligence. Guiyang, the capital city of southwestern Guizhou Province, has vowed to become a global big data center, which is drawing foreign investment already, including Apple.

The specialized tech hubs are all supported by and working with local governments, according to Fok.

Despite government support, new groups of labor and expertise have also helped China’s tech industry thrive.

“If we talk about gaming, we’d also be talking about artists, people coming from design schools and animation schools, of which there are a lot now. So there's population migration on top of government action – sometimes things just happen,” Towson said.

Lifting bans won’t necessarily let foreign players win

Let’s now argue against that opinion from The Economist – if the Chinese government drops censorship and restrictions on foreign tech companies, will they win?

Maybe it’s no longer about just a fair game.

Firstly, Professor Towson noted that China’s tech market is already “ferocious”, especially on mobile apps.

Secondly, cyber security is on top of the Chinese government’s list in terms of national security, and the foreign companies must not cross the line.

“Every country has its own government policies, so as restrictions, which is very hard for some of the international companies to understand how seriously they need to comply with the policies,” said Fok.

She also suggested that the foreign tech companies should know about China’s network connectivity and culture before they hop in.

“You need somebody local to tell you exactly what is the local culture you should adopt and how you can improve it,” Fok said.