#China has been at it for a year now.
Clipping the wings of its fast growing consumer internet industry.
It was #Alibaba last year. Then #Didi, #Tencent, #Baidu. Lately, #foodtechnology and #EdTech platforms are in the news for restrictions placed on them.
Enough evidence to speculate that there is some method to this madness.
One wonders: why would a growth-hungry country do something that seems so counter-intuitive?
I propose four hypotheses:
1. #technology :Re-prioritize investments
Consumer internet is sucking talent and funding away from other deserving areas in technology that are more strategic and better aligned to China’s ambition of becoming a global super power, e.g., defense R&D, Scientific and industrial Tech, Deep Tech, etc.
2. #business :Keep the control
The government does not have the same direct or indirect influence over consumer internet companies that it has on other large Chinese companies. Additionally, these companies are growing fast and becoming massive. Many Chinese investors in these companies are not strong supporters of the ruling faction within the Communist party; many of the investors are non-Chinese.
3. #society :Make more equitable
While China has the highest number of internet users of all countries, it also has a large part of population that is not yet a part of the internet economy. Income and wealth divide among the population is worrisome, and the gap has been widening over the years. Consumer internet companies do no good for people who do not have internet access – they may be contributing to further widening of the income gap and growing unrest in that segment
4. #politics :Pre-empt meddling
Consumer internet companies are increasingly becoming more capable of influencing public opinion and political outcomes. Governments across the world are doing their best to make them more accountable and neutral. While healthy democracies can withstand the time and patience it would take to tame these companies, China’s strict regime can ill-afford to go easy/slow on this topic.
Which one of the four seems the most credible to you? Take the poll.
What nuances I am missing? Tell in the comments.
#startup #growth #economy #investments