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China’s Business Innovation and Related Issues

March 2015

Senior Fellow, Jianmin Jin


China’s expanding netizen population brings with it both rapidly expanding Internet business and a significant impact on the country’s socioeconomics. At the industry level, China’s largest online companies—Baidu (search engine), Alibaba (e-commerce), and Tencent (SNS), also known collectively as BAT—have grown enormously in lockstep with their online markets. In addition to BAT, China has also seen the rise of many emerging Internet service vendors in online specialty areas. Financial transactions and investment deals done over the Internet have resulted in significant financial damage, however, and concerns have been expressed over the financial system being destabilized by “out-of-control” Internet technology. Furthermore, taxi hailing smartphone apps have spread, resulting in large numbers of unlicensed taxis flooding the market. Such issues have become popular topics of conversation, along with the risks and fairness of net business and potential threats to traditional industries.

The expansion of China’s Internet industry, the innovation of its business models, and related issues can be characterized thus: 1) Internet industrial policy aims to create private sector activity through liberalization rather than industrial development; 2) Innovative applications of the Internet, platform management, and consumer power are all used towards innovative ends; 3) Net technology is used to systematize the Chinese financial markets, e.g., a credit rating system and a system to organize the small loans market; 4) The existence of resistance groups and compatibility issues with traditional systems and customs cause problems. Recently, the fusion of China’s Internet technology and its real economy has accelerated, and the progress of its “Internet+” strategy (China’s take on IoT/IoE or Industrie 4.0) has garnered much attention.

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    The original Japanese text is here [1494 KB].