Hey all, Robin here—I hope you enjoyed my last Substack on Andrew Bosworth. Today, we’re going to be doing a deep dive into China’s Metaverse ambitions, key companies, and what history can tell us about the future of the Metaverse in censorship-heavy countries like China.
How Chinese companies see the Metaverse
Chinese companies see the Metaverse and more broadly Augmented and Virtual reality as the next step in the internet’s revolution in a similar light to the majority of western internet companies.
This is remarkably similar to how they saw the internet - they saw it as something that they could bring to China and expand on in their own ways given the confinements of the communist party. However, Chinese firms deviate from their western counterparts in how they see it developing.
Meta sees their place in the Metaverse as being like an older mentor that can guide and help foster their version of development. Chinese firms, on the other hand, see it as more of a “crap, we need to control this immediately to ensure our future survival”.
The Chinese internet is drastically different from what we in the west may call the “internet” in the sense that no one really outside of China uses many of these services; they are strictly tailored for the Chinese public and the few instances that are global (ByteDance’s TikTok is essentially a carbon copy clone of Douyin but with a language change). This stands in contrast to our western internet companies that are global enterprises like Google, Uber, and Facebook.
Companies in China —generally—develop for the Chinese market, and the Chinese market is drastically different than the western market which is why I am predicting that we’ll have two different Metaverses forming in the future:
The Western Metaverse - pioneered by Meta and eventually a large scale DAO for a true decentralized Metaverse.
The Chinese Metaverse - pioneered by Tencent and eventually the centralized government augmented with artificial intelligence for the ultimate dystopian nightmare.
How the government sees the Metaverse
The govermment sees the Metaverse in a similar way to the internet; downplay it publicly but encourage its development.
On December 9th, a representative of China’s central bank (PBOC), left an article in China daily that warned about the purchase of virtual land since they claim it is a “scam” and “rife with money laundering” so it must be heavily monitored to prevent crime, but we all know that money laundering is such a minuscule part of what the Metaverse is and what it could be.
These are largely empty words that do not signify much of anything other than the CCP’s desires to control the Metaverse with surveillance which means that they consider it as a threat and know that they must control it.
Furthermore, the government is no stranger to dabbling with the virtual to push political objectives.
As recently as 2020, China has created a virtual singer named Luo Tianyi who has performed online for millions and “physically” in concerts as a literal holographic projection that has filled massive stadiums in China.
Luo is a collaboration between the communist youth league and an unknown Japanese company as its youth ambassador.
The Youth League has described her goal to inject the youth with “positive values” and “correct thinking” according to newspapers.
Read between the lines here and it’ll tell you everything you need to know about China’s metaverse ambitions.
The CCP’s stance on the internet and what that can tell us
New forms of media always promise to empower the powerless and the Metaverse is not different. It’s the single largest transformation of media in human history that is analogous to Gutenberg’s printing press for the possibilities that it opens up.
However, this doesn’t mean that it’s a magic bullet that can stop censorship—if anything it makes it incredibly easy to censor, and that is why the CCP loves it more than any other innovation.
President Bill Clinton said in 2000,
“censoring the internet is like trying to nail Jell-O to the wall”
Yeah, he was dead wrong because China managed to freeze the Jell-O and superglue it to the wall along with many other countries.
China was very hands off on internet censorship until 2012 - which is what lead internet commentators around the world to say that the CCP would fall.
China has realized that they have no reason to fear the internet—the internet is their best friend and the best gift god could ever give them. The internet has helped propel China to be the world’s second largest power, and has given Chinese internet companies a quiet dominance in the developing and even the first world with apps like TikTok.
So, China created the great firewall and got straight to work by employing censors at Weibo (tl;dr Chinese Twitter) and this quickly spread all across the internet.
It’s likely that China will take this stance domestically and also internationally with their nascent interest in helping bring the internet to the developing world (especially latin america).
Before I close the book on this section of the Substack, I thought that I should impart you all with a quote and a story.
In the CCP paper liberation, an anonymous supporter of the government in 2012 remarked,
“He who wins the battlefield of the internet will win the war.”
Now, what war was this writer referring to is unknown, but it was likely an ideological awakening in Chinese society over corruption and scandals.
In China, the party likens the internet to that of an ancient legend.
There was a mythical ancient emperor named Great Yu who managed to tame a huge river in Chinese legend. The Great Yu learned from the failures of his predecessors who instead opted to dam the river, but the dam always broke. Yu was wise and opted to dam and channel the flow of the river into various places. It was through this channel approach that he was able to control the river and not have China flood.
What do you think the river-water represents in 2021?
Baidu jumps into the Metaverse
Baidu is one of China’s many tech titans. With a 53 billion dollar market cap and their hands in almost every tech field from AI, search, cloud, maps, and advertising, Baidu is essentially the Chinese version of Google Maps.
On November 15, 2021, Baidu released Xirang domestically in China.
It’s essentially a really primitive virtual world that really isn’t a Metaverse. You can walk around this virtual world called “the land of hope” and at best sight see galleries that host art.
It sucks, but it’s an important first step for the Metaverse in the Chinese market.
Tencent - Gaming’s biggest quiet kingmaker
You’ve probably never heard of Tencent if you live in the west ; however, Tencent is the world’s most valuable social media company.
And hell you’ve probably never even heard of WeChat if you don’t live in China. They’re China’s main “super-app” that aggregates every digital need you could ever want.
But have you heard of Tesla, Uber, Reddit, Roblox, and Discord just to name a few?
I’d imagine you have, and Tencent is one of those few companies that has bet on them early and seen absolutely impeccable returns.
Tencent is a key shareholder of Roblox, and is their key, strategic partner in bringing Roblox to China which they formed in 2019.
Roblox China has not been the hit that Tencent or Roblox were expecting since China has created new rules to limit the time that minors can spend on video games.
However, just because Roblox China is a loss now doesn’t mean that Tencent’s large stake in Roblox is worthless—if anything, it’s a key indicator that the Metaverse is not going away to attract the attention of Tencent.
I’ve been following Tencent for some time and their investments into American companies typically reflect two things:
Category Makers (firms that create industries).
Key gaming companies (ex: Supercell (creators of Clash of Clans) or Discord).
Metaverse companies just happen reflect two of those key things.
Looking towards the future
This post is supposed to be an introduction to the Metaverse’s arrival in China, and doesn’t cover a lot of the nitty gritty details; however, I’ll be covering those more in the future. As the Metaverse develops on a global level, various countries will try and stake their claim in it - and just like the internet, the metaverse is not a silver bullet to bring freedom to the world.
Many countries like China will seek to channel its growth towards their own political goals like with Luo, and you should expect these countries to heavily monitor and control their metaverses in a centralized fashion that is far worse than anything Ernest Cline’s Ready Player One could ever dream of writing.
China’s Metaverse presents a massive opportunity to investors with VR products growing at an incredible 46.2% CAGR (compound annual growth rate) between 2020-2024.
The east (including China) is one of the world’s biggest gold mines right now, and as the Metaverse grows, there comes massive opportunity bringing virtual worlds to them.
However, it’s a bit early right now to think that Asia will be wearing VR headsets.
How will it happen? Who will win? Will China turn their Metaverse into the great propaganda the world has ever seen?
We’ll have the pleasure—and possibly horror—of watching.
Thank you for reading, do good in the world, and remember to stay innovative!
Disclaimer: This is not financial advice in any way shape or form. I’m literally just an angry and angsty bird writing down my thoughts on the future and technology. Mom said the tendies would be done in 5 minutes but it has been 20.