Internet Plus has been one of the main buzzword at GMIC Beijing, the Chinese equivalent to the MWC Barcelona, a huge tech event dedicated to mobile industries.
The foreign visitor I was can only be stunned by the omnipresence of this concept, which actually is China’s latest official plan to boost a decelerating economy through advanced digitalization.
On March 5th, 2015, Premier Li Keqiang unveiled the Internet Plus plan, “to integrate mobile Internet, cloud computing big data, and the Internet of Things with modern manufacturing, to encourage the healthy development of e-commerce, industrial networks, and Internet banking, and to get Internet-based companies to increase their presence in the international market.” (China Daily)
Rebooting China’s economy through an all-digital strategy
China recently hit its lowest growth in 24 years, expanding only 7.4 percent in 2014. Alibaba founder Jack Ma said “it is like a man’s height that can’t grow higher forever. When growing up, we will try to pursue more thoughts and wisdom.”
For Q1 2015, electricity was down 0.1%, trade fell 6.0%, and construction starts tumbled 18.4%. The country’s foreign exchange reserves plunged a record $113 billion in the just-completed quarter, and in 2013, net job growth was only 0.36% (and 0.37% in 2012), not enough when in the same time, almost 8 million students will graduate and enter the job market.
Internet Plus as the uberisation of the Chinese economy
Pony Ma, the founder and CEO of Tencent, is another big fan of Internet Plus: “The internet has opened new frontiers including internet finance, medical services and education that didn’t exist before. It should also be extended to traditional industries like manufacturing, energy and agriculture“ (SCMP).
The cabinet of Premier Li is counting on a broad user-generated market, as he intends to “Encourage hundreds of thousands of people’s passion for innovation, build the new engine for economic development… and encourage the general public to start their own businesses.”
A few years ago, Yiwu City in the Zhejiang province had made the headlines by being one of the first big “Taobao village”, from the name of this popular e-commerce website. Then, some 800 households started 2,800 online stores.
With 780 million broadband users, 555 million mobile users including 162 million 4G users as of December 2014, the government wants to bet on a broad uberisation of economy, where anyone can sell or buy its own products and services.
After Baidu and Alibaba, place to a new generation of Internet Plus entrepreneurs
On stage at GMIC, Alibaba head of mobile business Yongfu Yu gave another illustration: “For example, taxi-hailing apps can help save energy and cut emissions. Online appointments with doctors, telemedicine, and video lectures are also more convenient for busy people”
He stressed Internet Plus signed also “the end of an easy era“, where traditional internet entrepreneurs copying modules from the US would be replaced by new 24/7 servers, connecting everything together, and opening new opportunities for anyone, not just developers.
For him, Internet plus is about “restructuring supply and demand, creating a second spring for entrepreneur, more variance for customers“, and hopes it will create “a domino effect”.
Li Mingyuan, vice president at Baidu notes that localized services will be the new battlefield for Internet companies: “I think the Online to Offline services are a promising sector since they focus on people’s daily needs and can help people save time. The working population in major Chinese cities are probably the busiest people in the world today. So services that can be readily accessed at home have a big chance to develop.” (CRI)
A good example of how Internet Plus is changing the landscape of Chinese tech is with the merger of 58.com and Ganji. Those two websites have begun transforming from classified ad sites to a more comprehensive service provider.
Last year 58.com launched a mobile application that directly matches consumers and service providers for local services categories, such as house cleaning and manicure at home. “We recently launched a separate mobile application for 58.com Home services. The App does not just offer information, but a real person instead. You will see a nanny who comes to your home to provide services.”
Challenges on the Internet Plus highway
Even with (and because of) government support, things won’t be any more easy.
A first challenge to the Internet Plus plan is that, precisely, if it’s government-powered in China, it means going through all the ladder of central, provincial and local barons. Not a guarantee of seamless uberisation.
Another more contentious argument from the South China Morning Post edited in Hong Kong wants that “Beijing needs to address censorship before any new strategy can be expected to have an impact”, adding that “we all know the key thing about the internet is freedom. If Beijing misses the point and continues to censor access to information, Premier Li’s new Internet Plus strategy will probably just get more Chinese to shop online rather than have any significant and long-term impact on the country’s long-awaited economic transformation.”
While filtering a lot access to information is definitely no fun – even with a solid VPN – I’m not sure to see the relationship between Internet Plus and freedom of speech online.
Internet Plus roadmap: deregulation and a $4.4bn investment package
The first known step of the Internet Plus plan is a series of “reforms of industries monopolised by state-owned enterprises, restrict government intervention in the economy, lower the threshold for new technology and emerging industries, and boost competition by making the market more transparent and fair”.
To this “guidance”, a package of $4.4 billion is added to invest in startups and technologies which can help the plan move forward, increasing even more the already huge R&D spending in China – now biggest than the European Union at $311 billion in 2014 (vs $292bn for the Old Continent).
We’ll keep you updated on the roll-out of Internet Plus, hopefully with a second stay in Beijing for GMIC in 2016.