DECEMBER 22: The halberd gate and bridge building landscape of the Imperial Ancestral Temple, on december 22, 2013, beijing, china.
Deng Shuang, a 34-year-old mother of one, wants to share baby shoes she found on Taobao to a mom friend via WeChat. Instead of sharing it directly from Taobao to Wechat, Deng has to go through a very clumsy process: she has to copy an auto-generated Taobao link for the item and then paste it in WeChat before she can send it.
A small sharing barrier between two of China’s giant apps is no small deal, especially when millions of users go through this every day. But this is more than a technical loophole that can be fixed easily with updates: This is just one part of the walls China’s internet giants construct to guard their self-sustained gardens.
Most people believe the Chinese internet is one world unto itself, but few realize there are multiple separate, loosely connected ecosystems in China’s cyberspace. Competition in China’s internet world is not about individual tech companies anymore, it’s increasingly a contest among ecosystems.
Superapps and ecosystems
“US and European internet companies usually focus on one sector and try to be the best at it. Chinese companies, however, start by focusing and solving one problem, but over time they start to attack all the problems,” William Bao Bean, managing director of Chinaccelerator, told TechNode in a previous interview.
Chinese tech firms, especially early tech incumbents like BAT (Baidu, Alibaba, and Tencent), started from a vertical but with a vision to grow very big. This approach gradually developed into the “super app + ecosystem” model, where Chinese tech firms try to create expanded online platforms by leveraging the dominant status of their super apps.
Super apps, usually where the giants first started, serve as anchors to drive user engagement. Tencent, the parent of China’s former default messaging app QQ, continues its dominance in social networking with WeChat. Alibaba has its old turf in e-commerce with Taobao and Baidu in its search engine app.
The ecosystem surrounding a tech firm takes shape as its businesses grow; whenever a new trendy area develops, the ecosystem takes hold. Of course, the expansions still begin from the related business. Alibaba, for example, established Alipay to solve the payment problem of Taobao marketplace and Cainiao to tackle logistics issues.
Since each of the tech giants got their own areas in the early days, they were more or less out of each other’s way. Yet, as they’ve grown, their business inevitably started overlapping in a grab for new emerging markets until finally what we see is comprehensive competition on each others’ home turf.
When ride-hailing first boomed in 2013, Alibaba and Tencent invested in Kuaidi and Didi, two fastest growing companies in the area, respectively to set their food into the emerging market.
Baidu entered the battlefield by investing in Uber. The head-on competition gradually shifted from markets like ride-hailing—which at the time was more about getting users onboard their payment platforms—to their cornerstone businesses in social networking, payment, gaming,and mobile e-commerce.
While the tech powerhouses are turning competition in China’s tech world to their proxy wars, they also build an ecosystem to lock-in users.
Also Read: FinWise Summit HK navigates the AI and blockchain convergence toward a better world
Behind the Great Firewall, China has its own equivalents of services that are blocked in the country. Similarly, Chinese tech firms have gathered complete sets of proprietary apps and services under their wings to cover every aspect of users’ daily lives so that they can have their demands met without leaving the ecosystem: e-commerce, content, payment, social networking, gaming, education.