Shanzhai (山寨 — directly translating to ‘copycat’) is a term that gained widespread popularity in China in the late 20th century as a multitude of businesses made a fortune by copying Western businesses products, services or business models and having them protected internally by law.
While this concept largely defined the modernisation of some of Asia’s largest economies in this period, it is a concept that some have predicted may now soon be reversed and implemented in the West as products of Asia’s high-tech, government-funded innovation hubs continue to redefine what it means to live online.
The majority of people who stumble across this article will only ever have full access to 25.9% of the web. This is the proportion of all of the content on the internet that is English-language enabled.
Smartphone usage statistics are yet more confounding — half of all the world’s smartphone users are in the Asia Pacific, with 21% of this being represented by China (which has still only achieved slightly less than 50% mobile penetration) and 14% by India (a figure which is growing by 30% year-on-year).
The first stat given about the languages of the web means that three-quarters of the most important resource in the 21st-century Western human’s life consists of models, subcultures, media and memes that most will never have access to or understand. While this could easily be viewed as a negative, it is also important to consider the possibility of these three-quarters as a treasure trove of internet models and experiments that could allow those in the West to get even more out of their lives on the internet.
Thanks to the good fortune of living in a globalised world that gives us access to a multitude of bilingual researchers with an understanding of both sides of the internet, we can conduct a collective case study of Eastern internet models, habits and systems that have high potential in the West. For the purpose of clarity, this article has been partitioned into three sections — everyday conveniences, banking & buying — each consisting of an analysis of the divergence in internet business models in the relevant sector before delving into discussions around the practicality and feasibility of these models being adopted more globally.
As shown by the enormous success of TikTok around the world, the idea of currently unique Eastern models being hyper-successful and normalised on the Western internet is far from a pipe dream and is an idea that could unlock the next level of utility from the English-language internet — the question is whether governments and businesses will overcome some of their very reasonable qualms surrounding these models and adopt them.
Everyday Conveniences & Entertainment
In terms of the impact of Eastern models on everyday conveniences, the biggest difference to the East is the rate of digital adoption and openness to these models by consumers.
There are few fundamental discrepancies between how the East & West have ushered in digital enhancements to everyday conveniences and modern entertainment products such as ridesharing, grocery shopping, photo/opinion sharing, video streaming and the like. In many cases in these areas, Asian firms have been accused of operating next-generation ‘Shanzhai’ businesses — Didi mirrors Uber, Alibaba mirrors Amazon, Weibo mirrors Twitter and the list goes on.
However, while all of these models appear very similar, one aspect in which Eastern firms appear to have their Western counterparts covered is in the level of integration between the offline and online worlds in which all of these platforms operate. Part of the reason for this might be higher levels of digital engagement by the average user, but the higher level of attention that Eastern platforms dedicate towards weaving these worlds together can’t be ignored either. Some examples of this include Chinese restaurant-booking apps that enable their customers to play games while they wait for their bookings to open up and Taobao’s furniture testing centres that allow customers to try out all of their big furniture pieces before committing to buying them online.
Although some firms, particularly Amazon (bookstores & grocery), have had great success pioneering O2O (online-to-offline) businesses in the West, it is undeniable that work still needs to be done to achieve the same level of engagement to bring sophisticated, non-trivial O2O experiences into the mainstream.
A defining feature of online lifestyles in the East is the pre-eminence of ‘super-apps’ in people’s day-to-day digital activity. To provide some background as to how this became the case, at the time of writing only 32% of Chinese households had access to fixed-line broadband. In 2009, at a time when the mobile revolution was coming into full swing in the West with the release of the iPhone 3G and was only just beginning to surface in the East, this figure was a mere 8.7%. Hence, as major tech players such as Tencent were cutting their teeth, they were working with a digital landscape that was essentially a blank canvas with plenty of Western inspiration to draw from in terms of what services and links could be provided on the platform. By developing essentially the entire mobile app ecosystem, Tencent (through its social media app ‘WeChat’) has been able to capture the broadest range of services and ‘mini-programs’ on a single platform.
Nowadays, WeChat has over 1 billion monthly active users who use the app to shop, bank, chat, share, order and perform almost any other verb you can think of. This model is extremely user-friendly seeing as it removes the frustration of having different logins, loyalty programmes etc. and centralises it all for the ease of the user. For Western users, however, these user-friendliness benefits may be offset by starkly different approaches to user interface and user experience (UI/UX) from East to West. One quick comparative search on Baidu and Google will show this difference — web and mobile pages in the East are designed for the conveying of the most information possible, letting little digital real estate go to waste whilst those in the West are designed for clean, minimalistic and navigable appearance. It is this kind of discrepancy in UI/UX preference that would make super-apps like WeChat less appealing in the West due to the fact that, by their very nature, super-apps need to be designed for clutter in order to allow users to transition between starkly different programmes on the same platform.
One aspect of the Eastern super-app that is ripe for debate is the involvement of the public sector in the modern digital landscape. On the one hand, there is no question that Western companies and governments alike would be unlikely to allow a system with anywhere near as heavy censorship or firewalling as exists in many places in the East. However, Western governments may still be excited at some of the prospects presented by Asian governments’ use of super-apps as a form of delivery for both essential and auxiliary public services. Currently, the Chinese Government uses WeChat mini-programs to deliver over 200 such services. What if Western governments could use similar programs to centralise and modernise the delivery of similar services?
Banking
Chinese GDP is valued at US$14.3tn. Chinese mobile payments are valued at 2.5 times this figure. This extraordinary statistic is powered by a fintech revolution that has largely piggybacked off of the growth of the super-app ecosystem discussed above. Just as a lack of broadband penetration enabled Tencent to grab a chokehold on the Chinese mobile landscape, the paltry figure of 27% of Chinese citizens having personal bank accounts opened the door for China’s digital pioneers to build a financial ecosystem for the future as well.
The story of Western fintech is predominantly a tale of the unbundling of the traditional bank — smaller, individual services such as securities trading (Robinhood), money transfers (Stripe), peer-to-peer lending (Lending Club) and etc. that were previously provided by major banking institutions as auxiliary services were re-engineered to be better customised to the individual. As mentioned in the Chinese example above, the Eastern fintech story is very different as the offerings of ‘traditional’ banks were nowhere near as comprehensive in the first place, forcing the first-wave of tech giants to map out the personal financial services territory themselves. What this has resulted in is something of a leapfrogging of the credit card economy and a direct shift to mobile payments and financial services.
This approach to financial services has made the Chinese individual banking experience fundamentally different from that of someone in the West. Firstly, whilst banking is almost entirely confined to mobile it also feels much less centralised than the West. This can mostly be attributed to the mainstream emergence of digital wallets. This probably isn’t an unfamiliar concept to the Western consumer, but the breadth of application and utility of them in the East likely is. In many Asian countries, the digital wallet is the primary form of payment for goods and services purchased through mobile. A true leader in this area is the Indonesian ridesharing-cum-super-app GoJek, which provides all customers with a digital wallet that can run on a variety of forms of credit much like traditional transport cards such as London’s Oyster or Hong Kong’s Octopus cards, but operates exclusively through high-speed mobile payments.
While it may seem a minor convenience, the removal of payment processing times by having payments integrated in all digital stores and services has, in tandem with lack of bank accounts as mentioned earlier, made Asia the most fintech forward part of the world. This is a trend that only looks set to continue with further support from governments, something that is no more present than in China with the recent establishment of the digital Yuan.
Yet again, as in the section above, questions about privacy and invasiveness look to present limitations to Western governments and firms’ ability to fully adopt and leverage the potential of fintech developments demonstrated in the East. A key element that separates the Eastern and Western fintech ecosystems is access to data. Western social media firms have been granted access to every shred of a person’s thoughts and identity as expressed through their search curiosities and link-clicking behaviour for the sole purpose of advertising and user monetisation.
Financial institutions, however, have always been heavily prohibited from accessing personal data and using this for optimising the customer experience in the name of privacy and protection. This is a stark contrast to surveillance-heavy Eastern states, mainly China, where no unit of data is out of bounds and financial data collected by mobile payments and banking providers are used for a variety of purposes from the provision of welfare services to targeted advertising. In Western societies that sanctify personal privacy, such access to personal financial matters is unlikely to ever be widely accepted.
Buying
At the time of writing, the Chinese e-commerce market is the world’s largest, totalling a whopping US$1.94tn in annual transaction value (a figure that is growing at 27% YoY). Aside from the sheer dominance of mobile in the Chinese market as opposed to anywhere else, the success of this digital economy can be widely attributed to the pre-eminence of transactional models across all Chinese digital media in place of social, conversational or entertainment-centric models as more commonly seen in the West. One analogy that shows this is the manner in which ad-based, free services and platforms such as Facebook, Google and Reddit have superseded subscription or transaction-based businesses such as the New York Times or CNN in becoming providers of information for the Western consumer.
Whilst the Western media ecosystem would now feel naked without such free services that run on ad revenue, this model is largely foreign to the East (with some minor exceptions). Rather, assisted by the integration of fintech into social platforms, Chinese media tends to be much more centred around facilitating transactions from which platforms can rake in revenue rather than redirecting sales prospects to third-party vendors and taking revenue for the ads.
Whilst at the surface level this may appear to be little more than a matter of how platforms choose to make their money, it fosters substantially different online behaviour and social media ecosystems. Possibly spurred on by the success of Chinese e-commerce/social media hybrids such as Meituan, Pinduoduo and Xiaohongshu, many Western platforms have tried (or hinted at trying) amalgamating the two models discussed above.
All of Instagram, YouTube and Pinterest have successfully implemented social commerce features into their apps, but the results of such projects are too early to be indicative of the success of social commerce in the West. One thing is for sure though — the benefits of such an approach haven’t gone unnoticed on either side of the world.
Another consequence of this bifurcation of revenue models is that it has created starkly different digital marketing environments in these two parts of the world. This is a harsh fact that many Western firms have spent big budgets to learn the hard way. One unfortunate example is that of Burberry’s foray into Chinese digital marketing through a Chinese New Year campaign on WeChat. Following many of the typical stereotypes of European fashion advertising — stern faces, unique looking people in beautiful clothing and a litany of other quirks — went awry for Burberry when they were perceived in China as viewing Chinese New Year as a solemn occasion given the facial expressions of their models.
But it is not just cultural differences that separate digital marketing in these two poles of the online world. Given that it is almost taken as a given in the West that ads are the necessary price we pay for cheap entertainment, advertising on these platforms is limited to small but regular features on social media feeds.
In China, however, seeing as many of the super-apps have far fewer financial obligations to litter their feeds with targeted advertising content, brands have more pressure to bring themselves onto their target audiences feeds more organically. This then forces brands to come up with creative, engaging content that brings them to the top of the pile among other brands for the audience that they are competing for.
A stellar example of such emphasis on content creation is Chinese liquor brand Xi Jiu, who instead of spending extortionate amounts of money to get on to WeChat Moments (a very expensive form of banner advertising on Chinese social media) chose to partner with video streaming sites to produce five hour-long cooking live streams where they demonstrated popular Chinese New Year dishes that pair well with Xi Jiu liquor.
This focus on the importance of creating engaging, more useful content for digital marketing efforts is something that has gained a lot of steam in the West since the introduction of TikTok to the mainstream. TikTok does have an ads platform that works in a similar fashion to that on Facebook where businesses can pay for targeted advertising, however, the key revelation that TikTok has provided to masses of smaller businesses is that mass-scale advertising efforts can be made for free so long as you have the right content.
From online competitions such as Chipotle’s #Boorito challenge (where customers were awarded a free meal for posting in a scary costume accompanied by the above hashtag on Halloween) to more low-key, helpful product demonstrations such as Spikeball encouraging its users to post videos of them using the product, Western brands are beginning to discover that it doesn’t necessarily take millions of dollars spent on a slogan, logo and jingle to boost engagement.
The Verdict
In short, Western social media and miscellaneous internet businesses will undoubtedly take inspiration from the successes of their counterparts in the East. In many cases, as discussed above, many of the big players already have to some avail. That being said, there are some key differentiating circumstances that mean the Western online experience will never truly replicate that of online Eastern ecosystems. The first point is that today’s Western internet is the product of gradual growth from preceding online infrastructure that has existed in force since the introduction of business computing in the 1980s.
In the East, later timescales for economic and technological development meant that essentially the entire region made a direct transition to mobile, which in the future will be viewed as the origin point for their online environments.
Secondly, there are significant political factors at play that mean Western (and particularly American) businesses will be extremely resistant to adopting Eastern models. This can be most easily seen in the current conflict over TikTok’s growing influence in the West. There is a significant lack of trust in the West about the Chinese government’s involvement in local internet businesses and its intentions with regards to expanding their cyber capabilities in a civilian context.
These different political systems have also largely dictated the way civilians in these two digital poles behave. Eastern governments' greater levels of control over the discourse on social media platforms and other internet hotspots have contributed to much more transactional platforms, as opposed to more social and debate-heavy platforms like Reddit or Facebook in the West.
With regards to buying behaviours on such platforms, the reluctance of Western firms and governments to cede control over personal financial information will hinder their ability to achieve the same game-changing fintech developments as have been seen in the East where financial information has been widely socialised.
Furthermore, there will always be major cultural elements at play that will determine which aspects of Chinese internet business models will be replicated due to their possibility of undesirability to the Western user, whose opinion and behaviour will ultimately dictate the decisions made by the platforms that they frequent. Seemingly small things such as UI/UX preferences, the way algorithms determine which content is presented to users and how content is translated will all influence the everyday usability of these services and platforms to a significant degree.
Although these three points all indicate that it is unlikely for these Eastern models to catch on en masse in the West, it is still probable that it will become the dominant form of digital lifestyle globally.
This statement largely boils down to the point made about how original infrastructure influences the way entire nations behave online. 70% of the global population lives in developing countries, and whilst many Western firms like Facebook have achieved spectacular penetration in many of these countries, the reality is that the dominance of Chinese firms such as Transsion, Oppo and Huawei in offering digital infrastructure and cheap access to mobile telephony will have a massive impact in the way this 70% lives online.
Whilst the instinctive reaction for many in the West is one of fear over what this kind of infrastructure development means for the rise of China, the reality is that this development could come to mark the most exciting period of socio-technological development for the everyday lives of the vast majority of humanity. If it is anything like the rise of social media in today’s developed world, this next digital cycle will be extremely exciting to follow.