Why 2013 isn’t going to be a good year for tech in China

It’s no secret that I’m pretty pessimistic about 2013. Just a week ago, I said it would be the worst year ever for China tech. But I want to delve deeper into the reason that 2013 is going to be terrible: it’s something I call the wall.

Contrary to what you might think, ‘the wall’ doesn’t refer to just the Great Firewall, although that is a part of it. It is the term I have been using in my head to describe the technological, political, commercial, and linguistic wall that China has been constructing between its own internet and the outside world. Censorship is a big part of that, but it also goes much, much deeper.

Obviously, the blocking of VPNs and the ongoing blockages of foreign services like Facebook and Twitter will do a lot to keep Chinese net users segregated in 2013, especially given the recent revelations that despite some claims to the contrary, there are very few active Twitter users in China.

Regulations and isolation

But there’s more to censorship than just the technology. The new real-name internet law not only gives ISPs more power to delete “illegal” content, it will also serve as an impetus for greater self-censorship, and I expect Chinese users will take fewer risks and say less interesting things on the internet in the coming year if they know their ISP has their name and ID number on file. In 2013, Chinese social media sites will become less introspective and more superficial, which discourages international communication (beyond the sharing of cat pictures).

China’s ongoing territorial disputes are also creating a political wall that makes it difficult for Chinese tech companies to move beyond China. While there are some examples of internationally successful Chinese companies, that is getting harder, especially in Southeast Asia where many local governments are annoyed by China’s increasing assertiveness in territorial disputes. And if you think the fight over some pointless rocks in the ocean doesn’t affect the tech industry, think again — Vietnam just banned a very popular Chinese multiplayer game from operating in the country because of an in-game map that depicted disputed territory as belonging to China. Expect more of that sort of thing in 2013.

Language and suspicion

There are linguistic bricks in the wall, too. Obviously the relatively large difference between Chinese and English has played a big role in keeping net users separate, but Chinese companies haven’t helped much either. Sina Weibo, for example, has been around for several years now and still doesn’t even offer an English interface (though there is an English iPhone app). Renren, which has been around far longer, doesn’t have English either. The fact that China’s biggest social media sites don’t even allow for the possibility of non-Chinese-speakers signing up says a lot about the degree to which China’s internet has become estranged from the rest of the world. There’s no reason to think that’s going to change in 2013 either.

Commercially, we have already written quite a bit about how Chinese companies are having trouble expanding abroad. There are lots of reasons for this, but one of the biggest is that some of China’s first international tech companies have behaved badly or been shoddy enough to put people off. Consequently, other countries are viewing Chinese companies with increased suspicion, and given the political tensions in the air, that’s only likely to get worse in 2013.

The field of ecommerce doesn’t appear to be immune to the Wall, either. Chinese companies hold the vast majority of the domestic ecommerce market, but outside of the mainland, Taiwan, and Hong Kong, they have practically nothing. And while social ecommerce is an up-and-coming market that Chinese firms like Sina are beginning to exploit, there’s no sign that this will result in any increased interconnectivity either since China’s social media platforms are more or less China-only and most foreign social platforms are blocked.

Mobile

The one area of tech-related commerce that seems untouched by the wall is mobile, where Chinese and foreign devices and apps compete both domestically and internationally, with a relatively free market. But with Huawei and ZTE attracting increasing attention for their connections to China’s government (and Iran’s repressive regime), interest in Chinese brands abroad will likely drop a bit this year.

Domestically, the once-free app marketplace is due for some regulation, and while it’s not clear yet exactly what will happen, insiders fear the move could block some foreign apps from competing in China while weakening Chinese-developed apps in the global marketplace by slowing them down. If it works out that way — and we’ll find out sometime this year if it does — everyone loses, and the wall grows higher still.

Outside of the mobile sector, China’s VPN ban and protectionist practices have made it into one of the worst countries on earth for foreign tech companies to try to enter and compete in. Whole industries (like social media or console games) are effectively banned, in part to leave room for domestic competitors on whom the government can exert more control.

This allows for quicker domestic development initially, but it stifles competition, pushes entrepreneurs away from developing globally relevant web products, annoys other countries, and ultimately is yet another way to ensure that when Chinese users get on the web, they’re seeing something completely different than virtually everyone else in the world. At present, it seems that in many cases Chinese tech companies and foreign governments aren’t even understanding each other on the most fundamental levels.

Cultural difference, in and of itself, is not a bad thing. Moreover, I am cognizant of the fact that if China’s internet was the same as the internet everywhere else, I’d probably be out of a job (so I suppose really I’m just another brick in the wall). Still, though, I am concerned by how big the wall is becoming. Commentators have long been joking that China’s web isn’t the internet but rather an intranet, but I fear there will be more truth to that joke than ever in 2013 as political tensions and backwards regulatory policies present fresh challenges to international communication and competition in the tech arena.

This article by C Custer originally appeared on Tech in Asia, a Burn Media publishing partner.