China is a country that is keeps re-inventing itself all the time. It is hard to believe, as the media show China as a party monolith fossilized because of communist slogans. Chairman Mao, still alive over 40 years after his death, seems to be oppressively managing his citizens. There should be no room for changes in the country of the Great Chinese Brother, but nothing could be further from the truth.
The Chinese transformation has been going on for decades, but we will look at it from the end, that is from the latest issues. Let us take the Internet, namely online sales. The world has gotten used to a double-digit growth achieved by the Chinese. The number of new users grew astronomically, whereas smartphone screens attracted their owners more and more. On their e-commerce holiday on 11 November – the so-called Singles’ Day, the four “ones” in the date encourage people to buy gifts for themselves – Chinese Internet users were able to buy more than Americans for a few days of their own e-shopping peak season. In 2019, on November 11, Alibaba, an originator, earned USD 38 billion from sales, with the first billion achieved in… 68 seconds after midnight.
Soon afterwards, during the annual conference of Tencent developers, another pillar of the Chinese Internet, thought-provoking data was published. It indicated that the times of staggering increases would never come back. At the end of 2019, the so-called generation dividend ended, which for the IT market that is hungry for successes and profits meant that it was necessary to re-intent itself.
Hitting head against the Great Firewall of China
After years of growth, the Chinese Internet came to a wall. It was not about the Great Firewall of China, that is about limiting party censorship, but about saturation. In the first nine months of 2019, the number of new mobile Internet user grew by merely 0.01 percent (2 million against new 46 million throughout 2018). Interest in smartphones also slowed down. The time spent using smartphones rose from 5 hours 41 minutes a day on average in 2019 to merely six hours.
On the one hand, it is no surprise, as the day in China is as long as in the rest of the world and Chinese time is not made of rubber. One needs some time to sleep, work, and hang out with friends. However, it would seem reasonable to maintain the attention of the user who is clearly beginning to be fed up with the existing Internet.
The Chinese have never had problems with inventions. For centuries, the four most important of them were discussed: papermaking, compass, gunpowder, and printing. In 2017, in a survey for the Chinese press agency Xinhua, students indicated new four inventions: high-speed railway, mobile payments, bike sharing, and online shopping (they were called 新四大发明, literally “four new big inventions”). Creating another one in the new reality of mobile Internet seemed to be easy.
The Lipstick King
In this way, a new type of entertainment was created, combined with shopping opportunities – livestream shopping. Just like teleshopping but on the Internet. Austin Li Jiaqi became an absolute star of the new format. Although he is a man, he creates video reviews of lipsticks. His social media profiles are followed by 45 million people, Li’ record is 380 lipsticks tested on himself in two hours. The Chinese man is able to sell 15 thousand lipsticks in 15 minutes. As you can easily calculate, it makes a thousand lipsticks per minute.
Li, who was born in 1992, does not consider himself to be a celebrity or an influencer. He calls himself a BA (buying assistant), a shopping advisor. Sometimes, instead of the acronym, he also uses the Chinese phrase 导购 meaning the same. His career started quite accidentally. He used to sell lipstick at a L’Oréal drugstore, but at some point he decided to try in front of the camera.
At the beginning, he was not sure whether he wanted to do it, but his boss encouraged him to give himself three more days to try. The effort paid off, each subsequent episode was better, and now Li tells everyone: 再坚持三天, which means “try it for three more days.”
The “Lipstick King” likes recording, but at the same time he knows that he has no normal life for this reason. He cannot go to a party, a karaoke event, or a club. He claims that when streaming live, time starts to pass differently. Seconds seem to be like years. The longest that Li has ever broadcast live was 48 hours non-stop, it happened on November 11, 2018. His head was already sleeping, but his lips kept talking, as he admits in interviews. His fans told him to make a break, that they would wait for him anyway as much as needed.
Selling through live streaming is a deviation from the traditional model one customer – one seller. Li realizes that in this case, there may be ten, ten thousand, or even one million viewers and just himself alone. He does not know what he will be doing in the future, but he is sure that the way he does business will cause a huge revolution. Fans’ involvement is the key. Live stream selling in China is characterized by the so-called conversion rate, i.e. the rate of potential purchases made by the recipient, which is unprecedented in any other online trend. The e-commerce leader, Taobao owned by Alibaba, has conversion at the level of 32 percent during such streams. Nearly every third viewer decides to purchase something. On the mature American market of influencers reviewing products in their videoblogs, merely every fiftieth Internet user buys something.
The country of clones
Despite constant changes for many people, China still remains a country of knock-offs and junk. Some claim that even the four big inventions were not created by the Chinese, but they were successfully adopted from abroad. The Chinese Internet is approached with similar skepticism. Everything was to be imported from others and inspired by what they do.
Wang Xing is a model example of how any service could be copied and upgraded in China tirelessly. It is 40 years old, it comes from Fujian province, where the largest business empires in China were born. For centuries, this part of China on the south-east coast next to Taiwan has been predisposed to be a golden land to do business. Trade blossomed regardless of whether imperialist China dreamed about overseas journeys, like during voyages of Admiral Zheng He’s treasure fleet in the first half of the 15th century or when subsequent monarchs did not wish to host foreigners on their land. Wang Xing, like thousands of his fellow countrymen from Fujian, went to the United States and tried to write a doctoral dissertation at an American university. In 2004, he resigned, returned to China, and started experimenting with start-ups. Although he now admits that at that time he did not have the foggiest idea of what and how to do, every subsequent product of his was better and better.
As we are talking about the king of knock-offs, the Chinese clone of Facebook was the first invention. In 2005, Wang created a social network called Xiaonei (literally “At university”) for students. The number of users rose quickly, but Wang did not have the money to further expand servers and had to sell its website. Xiaonei was bought by Joe Chen, an investor, a billionaire, and a well-know person from the Chinese start-up world, for USD 2 million. The cooperation between the two gentlemen continued from fall 2006 and mid-2007. Wang left Xiaonei, which was subsequently renamed Renren (literally “All” or “Anybody”) and called a Chinese Facebook. Four years later, in May 2011, Renren debuted on the stock exchange and was said to have a bright future. Today, only several dozen millions of dollars are left after the old billions and a harsh lesson about how not to deal with a prospective social network.
However, the future of Xiaonei, known under a different name, was no longer Wang Xing’s concern. After switching to another project, he stated that it was only the end of the beginning of his path forward and in the second half of 2007 he offered… a clone of Twitter to Chinese Internet users. The website was named Fanfou, and the name referred to a saying from an old Chinese story about an official who asked about the health of another official in quite a convoluted way, as he was asking “Is he still alive?”. In Chinese, “fan” means food, “seal” means “yes or no”, whereas the old saying got a second life as a meme – it was assigned the phrase “Chi le ma?” with the same meaning rooted in the new culture, “Have you eaten already?”, used as a greeting. Thus, the archaic sounding Fanfou became the modern version of “How do you do?”. It was the second time Wang Xing had not been lucky, because the fast-growing Twitter clone was blocked by party censorship after less than two years. Beijing did not wish Internet users to provide one another with the news about the riots in Xinjiang province at the western border of the country vie the website, so the easiest way out was to switch off Fanfou. A year and a half later, when the blockades on the market were lifted, another Twitter clone, Sina Weibo, already reigned.
Undeterred Wang tried to copy something for the third time and launched Meituan, a clone of Groupon, in March 2010. At that time, the Chinese Internet was in a total frenzy of group shopping, everyone looked for the best deals, and tens of own mini-services were set up that fought for customers. They years of 2010 and 2011 went down in history as “The War of a Thousand Groupons” (in Chinese, this phenomenon was called “qian tuan zhan”), such struggles reminded Internet users of the legendary stories of “fighting kingdoms” from hundreds of years ago.
Reinventing the wheel
Clones in China are getting a new life, whereas domestic competition is not wasting time and copying successful copies. However, in order to go further, a stimulus is needed and it has been relatively difficult to find one. Letting Apple enter its market resulted in a boom in domestic smartphone companies. A few years later, the Americans found themselves on the margins consistently pushed out by the Chinese.
This is exactly what the authorities now want on the automotive market. It is known that electric cars are a prospective direction, but someone must pave the way, build supply chains, and show the Chinese what to combine effectively. That is why, in January, Elon Musk was dancing for joy on the stage in Shanghai when he was officially announcing that his company was entering the Chinese market. Chinese companies (there are about 500 of them) are waiting in the starting blocks. The market value is estimated to be at least USD 18 billion. NIO, which focuses on building relations with the customer thanks to salons of a new type, may be the most serious competitor to Tesla. NIO does not own any manufacturing plants, because production, according to the management, is only one of the layers in the car manufacturing process.
Those who regard the above examples as a natural course of events related to technological development have one last argument. China has a similar creative approach to its own history. They reinvent themselves on a cyclical basis, laying new foundations of its society on this basis.
It is difficult to state unambiguously when China was born and how true the oldest historical sources are. The authorities claim that their culture is at least five thousand years old, although only four can be documented. The monuments currently considered to be the most important symbols of the country were discovered in the 1960s by accident. At that time, everything that was old was being destroyed, the cultural revolution was raging. Educated people, who were lucky enough to have survived, landed in a province, and worked physically for years.
A horse, turtles, and fortune-tellers
After such destructions, a man of the new Chinese era had to be built. The note of nationalism was hit, emphasizing the Chinese character on the basis of belonging to the Han race. On 13 September 1969, a small bronze sculpture was found in the town of Wuwei in Gansu province. It presented a running horse that gave the impression as if it had been jumping into the air. Only one of the four hooves was in contact with the ground, which in the case of this figure was… a bird.
The “Flying Horse of Gansu” was unearthed from beneath one of the Taoistic temples together with a tomb of a general. The whole country was ordered to dig air raid shelters in case of an American attack, the works took place in Wuwei as well. No one was able to assess the findings because archaeologists were being re-educated. The horse sculpture was lucky because it was noticed in the Lanzhou warehouse, the capital city of the province, by Guo Moruo, one of the few “smatterers”, who had maintained a high position in the party authorities. As a famous poet, a historian, and a party member at the same time, he was showing another prominent art lover, a Cambodian prince Sihanouk, who was then in exile in China, around Gansu. It was the beginning of the 1970s.
As a result, the horse became a symbol of the Chinese tourist organization and remains one to date. Guo Moruo was also remembered as one of the specialists in the so-called oracle bones. These were cow shoulders or turtle plastrons, that is lower fragments of the shell structure protecting amphibians’ belly. Centuries ago, they were used to tell the future. Bones were touched with hot rods, whereas the resulting cracks – both their composition and the sounds generated by them – were used to make a prophecy. Its content was written down on the bones using the oldest form of Chinese ideograms.
After decoding, in most cases the prophecies read as follows: “There will be no misfortunes today” or “Looking at the cracks, the king said: Today, we an expect a storm”. Peter Hessler, a long-standing correspondent in China in his book “Oracle bones”, reminds us that after hundreds of years of being forgotten, bones with inscriptions were only used by pharmacists. It was believed that crushed shells would treat malaria perfectly. Wang Yirong, an emperor’s official who committed suicide death in Beijing after a foreign army had seized the city, was the first to track them down. It was 1900, the last Chinese Qing dynasty was declining and no force was able to resist the power of Western empires and Japanese soldiers.