Contemporary Collapsology
Image by Heidi Rewell on Flickr

The end of the world is an ancient theme, prevalent in mythology, religion and arts throughout the ages. In recent years, we have witnessed rising popularity of this theme, albeit a secularized version, in popular media. Furthermore, we do not only tremble at the thought of the Apocalypse anymore: now, it is welcomed and even aspired to. Analyzing and understanding this emerging paradigm of “collapsology’ will reveal some of the deep structural transformations of our socio-cultural fabric and our perception of the current state of economic and political systems.

Observations

  • In his book Collapse: How Societies Choose to Fail or Succeed, historian Jared Diamond defines “collapse” as “a drastic decrease in human population size and/or political/economic/social complexity, over a considerable area, for an extended time.” (p.3) His book analyzes the collapse of various historical civilizations and identifies five influential factors: climate change, hostile neighbors, trade partners that provide alternative sources of goods (and services), environmental problems, and society’s response to these risks. Of course, the last of these factors is the only endogenous factor, and often revolves around the short-term interests of those in power and those who own the means of production and the long-term needs of society at large.
  • There is growing interest, especially in France, in “collapsology”, which is a movement that favors a collapse of current socio-political structures, because human history is full of collapsing civilizations that in turn became fertile ground for new ones. Mostly driven by climate change, this school urges us to turn our “current collapse” into a positive one, in which we actively build new economic, political and social systems (e.g. small-scale bio-regions, economic models not based on growth) that are attuned to the finitude of the earth’s resources and foster living in harmony with nature.
  • In his book Capitalist Realism: Is There No Alternative?, theorist Mark Fisher sees capitalist realism as the “widespread sense that not only is capitalism the only viable political and economic system, but also that it is now impossible even to imagine a coherent alternative to it.” (p.6) He attributes this idea to two cultural critics of “late capitalism”: Frederic Jameson (who famously said that “it is easier to imagine the end of the world than the end of capitalism”) and Slavoj Žižek (a Marxist philosopher who uses movies and popular media to explore hidden ideologies and capitalist hegemonic dominance in post-modern societies, e.g. The Pervert’s Guide to Ideology).
  • Three years ago, we wrote about the historical recurrence of periods of “crises” and that according to the book The Fourth Turning: An American Prophecy, we are in the midst of a twenty-year crisis period that started with the 2007 financial crisis and morphed into a broader socio-political crisis. Steve Bannon, Trump’s former Chief Strategist of the White House, was heavily influenced by these ideas and endorsed Trump as he saw him as the only person that could leverage this period of crisis to “drain the swamp” in Washington and lay the foundation for a new socio-political system (i.e. a “High”). Even after Bannon was ousted in August 2017, he has continued to support Trump for this reason.
  • A recent study shows that the fundamental political demarcation in the UK is no longer the “left-right” divide but the “centrist-anarchy” divide. Those in the anarchist ideological camp, comprising up to 40% of the population, have low trust in government, business and media and hail from both the left and right. Similarly, another study shows that both the far-left and far-right share a common urge for chaos, “sharing motivations associated with ‘chaotic’ motivations to ‘burn down’ the entire established democratic ‘cosmos’” (p.1). Their shared longing for chaos and anarchy is best illustrated by the hugely popular meme “some men just want to watch the world burn”, an expression from the movie the Dark Knight that refers to the Joker: a personage that wants to spread chaos and anarchy because “the only sensible way to live in this world is without rules”.
  • In the 1960s, ethologist John Calhoun performed experiments with mice to study the effects of population growth on individual behavior. By setting up the mice in a “utopian” environment, with plenty of food, no enemies and housing, he observed that initially the mouse population grew exponentially. However, as the space in the “mouse utopia” became increasingly socially defined, some groups of mice showed new behavior, such as extreme aggression as well as narcissistic isolation. In the end, the mouse population shrank significantly, due to a declining birth rate as a result of lower breeding and a higher death rate caused by increased violence. Calhoun dubbed this “extinction phase” and social breakdown the “behavioral sink”, and used it as a metaphor for the fate of man living in an overpopulated world by referring to the biblical Book of Revelation. Similarly, the Human Voluntary Extinction Movement defines its purpose as follows: “Phasing out the human race by voluntarily ceasing to breed will allow Earth’s biosphere to return to good health. Crowded conditions and resource shortages will improve as we become less dense.”
  • We have written before about the reinvigoration of the horror genre, with horror movies considered indicators of what (literally) keeps society up at night. One extremely popular sub-genre is the zombie genre. Although zombies look fearsome, many zombie series and films are not actually about zombies themselves but about the quest to rebuild society after the collapse of civilization due to zombies. 

Analysis

A few weeks ago, we explored three posthumanist paradigms. However, we didn’t discuss the most radical version of post-humanism: a scenario in which humans go extinct and our current societies and civilizations collapse. This “collapse” is an ancient theme, explored in many religions (e.g. the Last Judgment present in all Abrahamic religions), myths (e.g. the flood myth found in many cultures around the world), literature and arts (e.g. the movie 2012 (2009) that was part of the 2012 phenomenon driven by the eschatological end of the Mayan calendar). Fantasizing about the Apocalypse is making a comeback in our contemporary culture, philosophy and media. But why?

One could claim that collapse is an intrinsic “directionality” of reality. In physics, the process of “entropy” implies that any closed and stable system will eventually dissolve into more chaos and disorder. This not only holds in physics but also in social sciences, such as in the process of “creative disruption”, in which new innovations make old technologies superfluous and destroy their socio-technical system, periods of hegemonic shift, in which new challengers undo the geopolitical order of the previous hegemon, or from one generation to the next, as youngsters generally want to do things differently than their parents and grandparents and dream of creating a new society. Currently, we could be witnessing such seismic shifts in various parts of our society and culture, as systems move from an “old” phase to a new one. For example, the next technological revolution could be in the making, driven by improvements in AI, the fact that the end of America’s hegemonic cycle is nearing as China is on the rise, and the approaching new generational cycle, in which Gen Z embodies the Artist archetype (with corresponding characteristics), while new utopian visions of society are emerging that transcend our capitalist system of production and consumption (i.e. post-growth economies and post-materialist consumption).

Fantasizing about the Apocalypse is making a comeback in our contemporary culture, philosophy and media

In this sense, the “collapse” is just a phase in cyclical movements and a continual process of rebirth and decay, growth and collapse that is found all around reality. But collapse as a phase has both a negative and a positive side. On the negative side, the phase of collapse means that the destruction of our current political, economic and social systems. On the positive side, collapse is followed by the “post-Apocalyptic world”, in which man has the opportunity to rebuild his world, culture and civilization. And it is this positive part that has gained much popularity in recent years. So what is it that we long for in the post-Apocalyptic world?

First, there is a deep and fundamental belief that society’s systems are “broken”: social mobility is declining as inequality is mounting, politicians seem unable to harmonize polarized society and partisan politics cannot overcome society’s biggest challenges (e.g. climate change, affordable housing or healthcare for younger generations), many fear losing their “bullshit jobs” or don’t even like their job (e.g. 84% of workers are not fully engaged in their job) while others have to keep working to make ends meet (the Yellow Vests’ slogan is: “The end of the world, the end of the month, same struggle.”). Exactly this feeling that change cannot be accomplished within the system and that therefore the system should change, is what unites far-left and far-right voters. Indeed, this dystopic feeling (i.e. the belief that there is no alternative to the current state) shows that extremist parties in our current system are on the same page with respect to collapsology.

Second, there is more and more longing for personal agency and meaningful political engagement. As we increasingly inhabit abstract and complex systems (e.g. modern bureaucracies, multinational companies, global cities, international social networks), we feel that we no longer belong somewhere but anywhere instead (see David Goodhart’s book The Road to Somewhere). As such, many post-Apocalyptic media content shows us a world in which small communities have real interaction (e.g. The Walking Dead), and in which we have a tangible impact on our political systems. Furthermore, this could be a requirement for turning our nascent ecological collapse into something positive (e.g. city foodscapes).

Lastly, modern technology provides us with more freedom, but can distort our natural rhythms and possibly suppress our biological inclinations. As such, we increasingly feel out of touch with natural and concrete life: we no longer possess the skills to survive outside highly domesticated areas (e.g. cities, smart homes), which is a deeply-rooted psychological need, and are becoming increasingly detached from nature (which also causes mental problems). This problem is exacerbated by ever-increasing population growth that not only puts pressure on our resources but also on social and political spaces. Calhoun’s mice experiments show that increasing social and political density can induce social division and conflict, which we’re experiencing with rising extremism and increased social isolation. Calhoun likened this to the First of the Four Horsemen of the Apocalypse, who is said to embody the Antichrist and to induce the destruction of a corrupted world. Similarly, to a large extent, digital technology and big tech now define our social and cultural spaces and increasingly mediate our relation to the living world and social spaces. This gives us new ways of relating, but also leads to different social behavior, such as hate speech or less ethical online behavior. As such, Scott Galloway has dubbed Alphabet, Amazon, Apple and Facebook the Four Horsemen of the Apocalypse due to their unbounded power in all parts of our everyday lives. In contrast, post-Apocalyptic worlds, in all their brutality and destruction, force us to take matters into our own hands, work the land for food and survival, rebuild new societal structures and communities from the ashes of the previous civilization, and gain an immediate relationship to the world around us (i.e. not mediated by digital technologies). This could help explain the popularity of survival series (e.g. Ultimate Survival, Naked and Afraid).

Many of the “romantic” imperatives and latent wishes of the post-Apocalyptic world are already coming to us in less violent and dangerous forms. For example, in leisure, we want to live closer to nature, e.g. by camping and a #vanlife. In economics, we perceive the rising (or returning) cult of craftsmanship as an attempt to gain more control over our own means of production and denounce the “abstract labor” that is prevalent in post-industrial or late capitalist societies. Politically, new forms of “counterculture”, such as cryptocommunities, bottom-up and local cooperatives, as well as terrorism and rising fundamentalism, are increasingly rebelling against the system and wish to overturn it. Lastly, from a philosophical perspective, transhumanism tries to overcome the current “human condition” by either letting humans go extinct or transcending man’s limited physical and mental capabilities to create new societal structures in line with evolutionary (e.g. Kevin Kelly’s technicium) or sustainability imperatives.

Implications

  • The Apocalypse as a subject is on the rise in films, series, but also in videogames in which the aim is to retreat from society and venture into new worlds. Negatively, this is because apocalyptic games offer “sustained escapism from our own reality”, writes Alfie Bown in his book The PlayStation Dreamworld (p.40). But on the positive side, videogames like The Legend of Zelda: Breath of the Wild, Neo Scavenger, or The Forest depict a world in which gamers can interact in a deep way with the environment and practice survival skills.
  • Collapsology could become a defining feature of the “formative experience” of younger generations, which would render new value patterns and ideas about the Good Life. In the model of The Fourth Turning, “Crisis” (i.e. Collapse) will be followed by a “high” period (i.e. the post-Apocalyptic world), which will value strong institutions and social conformity, with a solid pragmatic problem-solving worldview. Theoretically, Gen Z’ers are then likely to become more socially conservative and less liberal, which is already visible in their more prudish and materialist lifestyles, declining tolerance of minorities and increasing wish for authority to make others behave as they wish.

 

The implementation of 5G is important for the upgrade of Alibaba & Tencent’s services

5G is the next generation of ultra-fast wireless technology, offering faster data rates, reduced latency, energy savings, cost reductions, higher system capacity, and massive device connectivity. It is expected to power industrial applications such as smarty city infrastructure and the industrial internet, but can also impact consumer services. For example, 5G will enable Tencent’s gamers to seamlessly stream PC and console-quality games on their smartphones without sacrificing processing power or battery life. For Alibaba’s short-video platform Youku, a 5G connection would mean that users can send high-resolution 4K video within a few seconds.

In fear of dependency on Western hardware, Alibaba has set up a semiconductor division

Resembling the States’concern, both Ma’s have outspoken their fear of western depencency when it comes to core technologies:

Alibaba’s Ma:

If we do not master the core technologies, we will be building roofs on other people’s walls and planting vegetables in other people’s yards.

Tencent’s Ma:

[China]’s digital economy will be a high-rise built on sand and hard to sustain if we don’t continue to work hard on basic research and key knowledge, not to mention the transformation from old to new forms of drivers or high-quality development.

In reaction, Alibaba’s R&D arm DAMO (Academy for Discovery, Adventure, Momentum, and Outlook) has set up its own semiconductor manufacturing business and unveiled its chip in July 2019. The chip is designed to process AI tasks such as image, video and voice analysis and will be used for tasks such as autonomous driving, smart cities and smart logistics.

 

Listen to this podcast for more information about 5G in China:

The implementation of 5G is important for the upgrade of Alibaba & Tencent’s services

5G is the next generation of ultra-fast wireless technology, offering faster data rates, reduced latency, energy savings, cost reductions, higher system capacity, and massive device connectivity. It is expected to power industrial applications such as smart city infrastructure and the industrial internet, but it can also impact consumer services. For example, 5G will enable Tencent’s gamers to seamlessly stream PC and console-quality games on their smartphones without sacrificing processing power or battery life. For Alibaba’s short-video platform Youku, a 5G connection would mean that users can send high-resolution 4K video within a few seconds.

In fear of dependency on Western hardware, Alibaba has set up a semiconductor division

Similar to the state’s concerns, Tencent’s and Alibaba’s Ma’s have expressed their fear of western dependency when it comes to core technologies.

“If we do not master the core technologies, we will be building roofs on other people’s walls and planting vegetables in other people’s yards.”
– Jack Ma (CEO Alibaba)

“China’s digital economy will be a high-rise built on sand and hard to sustain if we don’t continue to work hard on basic research and key knowledge, not to mention the transformation from old to new forms of drivers or high-quality development.”
– Pony Ma (CEO Tencent)

In reaction, Alibaba’s R&D arm DAMO (Academy for Discovery, Adventure, Momentum, and Outlook) has set up its own semiconductor manufacturing business and unveiled its chip in July 2019. The chip is designed to process AI tasks such as image, video and voice analysis and will be used for tasks such as autonomous driving, smart cities and smart logistics.

Alibaba and Tencent and Censorship

Within their services and products, Tencent and Alibaba help the government by censoring keywords deemed politically sensitive, while in-house censors also delete posts and accounts. Tencent is quite active in censoring, as the company scored a zero out of 100 for WeChat’s lack of freedom of speech protection and lack of end-to-end encryption in a 2016 Amnesty International report on user privacy.

Alibaba and Tencent have high hopes for the cloud

For Tencent and Alibaba, the cloud started as a crucial component of their internal economy. Over the past few years they have branched out, offering their in-house products to businesses.
Today, Alibaba dominates cloud computing in China with a 43% market share. Under Jack Ma, Alibaba made cloud computing a key priority, and CEO Daniel Zhang plans to make cloud computing technologies an even bigger part of Alibaba’s corporate focus over the next couple of years (for more information see Alibaba’s company profile).
Tencent’s cloud business is the second largest in China, with an 11% market share, according to industry researcher IDC. The company entered the ‘cloud-game’ relatively late, and recently announced to spur its push in cloud computing by investing billions of dollars. This move can be seen as part of its overall strategy to shift focus from its consumer-faced business to the industrial internet. Its cloud-computing business should cater to industries such as retail, mobility, healthcare, and education.

Alibaba and Tencent are members of the National AI Team

Starting in 2017, the Chinese government recruited Alibaba, Tencent, Baidu and iFlyTek to lead key projects in the development of next-generation AI technologies. Alibaba’s cloud computing division was tasked with a smart city project to improve urban life (see Smart Habitat layer for more details), while Tencent has been designated to become a leader in AI-assisted medical diagnosis.
Government endorsement helped Tencent to launch its AI Medical Innovation System, an AI-powered diagnostic medical imaging service. The technology currently has accuracy rates of over 90% for preliminary diagnoses of esophageal cancer, 95% for lung sarcoidosis, and 97% for diabetic retinopathy. Several of Tencent’s AI departments, such as the AI Lab and Tencent Youtu Lab, collaborated to develop the image recognition, using the over 1 billion images on the company’s social network. After the success in healthcare, Tencent is looking to apply its AI knowledge to other applications, such as transportation solutions, security, and protection, as well as voice recognition.

In this episode of the ChinaEconTalk podcast, China expert Jeff Ding of the Future of Humanity Institute discusses the detour Tencent is making from the national champion designation [12:18-13:35]:

Alibaba and Tencent are working on the city of the future…

ET City Brain
The Chinese government designated Alibaba with the task of applying innovative technology to improve urban life. This resonated in Alibaba’s cloud-powered and AI-driven urban project “ET City Brain,” which aims to use AI to optimize city-services in real-time. One of Alibaba’s first pilots focused on reducing traffic congestion in Hangzhou. The video below shows how innovations within several layers of the Stack (think of Cloud Computing, Facial Recognition, and AI) are merged to improve traffic speed up to 11%.

PATH
A joint effort in the smart city area is PATH (Ping An, Alibaba, Tencent, Huawei), a smart city initiative in which these four Chinese tech giants apply their core technologies and an investment of 50M RMB in order to propel China into the global smart cities race (and of course to counter some major problems such as air pollution and congestion).

…but rural areas are also a key priority for Alibaba and Tencent

While smart digital applications are often first rolled out in #tier 1 or 2 cities, both Alibaba and Tencent are currently working on a Rural Strategy. Especially Alibaba sees tier 3, 4 and 5 cities and rural areas as an important new addressable market.
Striking examples are:

•  Tencent-backed WeDoctor and Alibaba’s Good Doctor are making healthcare more accessible for patients in tier 3 and 4 cities.
•  Alibaba invested 716 million USD in Huitongda Network, a platform that offers a variety of business models to help offline stores sell goods via e-commerce offerings, and also help online retailers sell directly to rural residents.
•  Alibaba launched Rural Taobao in 2014, allowing rural residents to buy and sell items online through the company’s Taobao online marketplace. Since its creation, Rural Taobao has expanded steadily, growing to cover 29 provinces, more than 700 counties, and over 30,000 villages.
•  Juhuasuan is Alibaba’s group-buying and flash-sale platform and will be repositioned as an online marketplace for consumers in tier-4, tier-5 cities and rural areas.

“China is experiencing an ongoing consumption upgrade as people look for different ways to enhance their lifestyle. (…) We are now seeing more and more consumers in China’s less-developed regions becoming sophisticated shoppers. They are demanding the same high-quality products as those in top-tier cities.”

– Jiang Fan, President of Tmall and Taobao

Tencent and Alibaba aim for a friction-free consumer interaction through voice

Both Alibaba and Tencent are investing in new consumer interfaces. For example, they are discovering the power of voice as an interface, and more specifically the smart speaker;

Alibaba’s voice assistant is called Tmall Genie. The device is on the market as a regular speaker since 2017 but is also available as a mirror (Tmall Genie Queen) as a device in connected cars (Tmall Genie Auto), and with a built-in monitor (Tmall Genie Family).

The Voice Assistant will become an increasingly important player in our life. I believe that in the coming decade, it will be connected with more devices and be the point of connection for different scenarios in our life, using voice commands to control our homes, vehicles and our personal devices.”

– Miffy CHEN, General Manager, Alibaba AI Labs

Two years after Alibaba, Tencent launched its smart speaker Xiaowei. The launch of Xiaowei is seen as a move of Tencent into diversifying its products and services into more business and industries (such as the B2B and IoT market). Besides, Xiaowei (in English ‘WeChat italking’) will link WeChat users with Tencent’s services available through QQ and WeChat.

Tencent and Alibaba are investing in facial recognition technology

Based on the number of facial recognition patents, Tencent is more active in the field of face recognition than Alibaba. Nevertheless, both companies have already implemented facial recognition in real-life situations.
Tencent is working closely with government in implementing facial recognition. For example, some provinces are issuing electronic identification cards for their citizens using WeChat’s facial recognition technology. The mobile IDs can be used for authentication instead of carrying physical ID cards – mandatory for citizens at all times in China – for travel booking, real name registration at internet cafés, and other security checks. Furthermore, amid tighter scrutiny by the Chinese government, Tencent uses facial recognition to detect minors in relation to concerns that excessive video gaming is damaging public health.

In 2017, Alipay unveiled its facial recognition payment service ‘Smile to Pay.’ The company says that as facial recognition technology takes the place of QR codes, “paying by smiling” will most likely experience explosive growth over the next three years. Statistics from Alibaba during 2018’s shopping festival around singles day also suggest that payments through the face and fingerprint scans now make up 60% of all transactions.

Alibaba’s Smile To Pay system in KFC:

Alibaba and Tencent are developing their own social credit systems

The best-known private system is Sesame Credit, developed by Ant Financial, an affiliate of Alibaba. Sesame Credit is a scoring system that generates individual credit scores for consumers by tapping into Alibaba Group and Ant Financial’s vast online ecosystem and other personal credit information sources. Sesame Scores, which range from 350 to 950 points, are calculated based on five factors – credit history, behavioral preference, fulfillment capability, personal attributes and social network – and are indicators of the users’ creditworthiness. Although the system’s focus is on creditworthiness, a low score can have an impact beyond loans (e.g. being banned from certain hotels) and a government blacklist has also been integrated. At the same time, a high score gives members the possibility to relax in special lounges at China’s train stations or to use bike sharing platforms HelloBike and Ofo deposit free.

Listen to this NPR podcast on the rollout of a Chinese Social Credit System and the role of Alibaba in it:

Tencent is also testing a credit scoring feature for WeChat Pay. Similar to Alibaba’s Sesame Credit, its score is calculated based on WeChat Pay’s pool of data, particularly on personal consumption behaviour. According to Tencent, the purpose is to “provide services that make people’s lives simpler and more convenient.” Users with high scores will be rewarded with perks such as waiving of deposits for rental services and hotels, and paying for services and goods after delivery.

Tencent and Alibaba contribute to the State’s innovation goals

Although Tencent and Alibaba are originally consumer-focused companies, they are expanding their businesses to the ‘industrial internet’, which involves the broader adoption of advanced consumer and industrial applications that take advantage of next-generation technologies for business purposes.

For instance, Tencent is teaming up with Huawei Technologies, a Chinese multinational technology company that provides telecommunications equipment and sells consumer electronics, to accelerate innovation in core technologies, such as AI and cloud computing.

Meanwhile, last year Alibaba’s CEO Jack Ma called for Chinese traditional manufacturers to fully embrace what he called the “New Manufacturing” model. New Manufacturing involves a transformation of traditional manufacturing industry by integrating technology capabilities in the internet, data, AI, cloud computing and IOT. “Proposing the New Manufacturing model is not because Alibaba plans to enter the manufacturing industry, but rather to help manufacturing companies to innovate and upgrade,” Ma said during the 2018 Cloud Computing Conference in Hangzhou. “During this shift, the current manufacturer-oriented industry will transition to a new era led by customers, where small and medium-sized enterprises can benefit the most.”’

Incubators
Furthermore, both Alibaba and Tencent invest heavily in startups and support emerging companies with incubator programs. Tencent’s WeStart for example operates innovation spaces where it offers start-ups office space to rent and incentives such as tax exemption for three years and favorably-priced access to Tencent’s products and infrastructure. Furthermore, the company assists start-ups to target government-backed support programs. Meanwhile, Alibaba’s Cloud division teamed up with the U.S. workspace operator WeWork to develop an incubation program for 20 foreign startups to enter China, and assist 30 Chinese companies to expand overseas.

Alibaba and Tencent investments in electric vehicles

Alibaba, Tencent and several other Chinese companies have joined efforts to meet China’s ambitions concerning green growth of the automotive industry. They have setup car-sharing services T3, which is powered by renewable energy, called T3.

Other examples of investments in the green future of this industry are Alibaba’s leading role in the 2.2B RMB funding round in Xiaopeng Motors, a Chinese electric car maker that aims to speed up the development of electric vehicles. Alibaba elaborates on this investment: “As a clean energy vehicle start-up, the investment in Xiaopeng Motors fits with Alibaba’s strategic focus in the automotive sector. Under our open-platform approach, we will continue to work with a range of automotive manufacturing partners to benefit Chinese consumers”.

Alipay and Wechat transformed China’s Digital payment landscape

China is a country where Visa and Mastercard are (still) banned, and it has an underdeveloped banking system. As a result, Chinese society remained largely cash-based for a long time. Nevertheless, when China started to manufacture cheap mobile phones, Alibaba and Tencent successfully set-up their own mobile payment solutions known as Alipay (by Alibaba) and WeChat Pay (by Tencent).

Users of these payment solutions link their bank cards to the wallet inside the app. Once linked, they are able to use the wallet as a debit card for direct payments in stores or for online purchases. Furthermore, users can transfer money from their bank account to create a balance on the wallet.

The digital solutions provided by Alibaba and Tencent made it extremely easy for consumers to pay with their mobile phone. In 2018, over 85% of purchases made in China were on mobile payment platforms.
In physical shops, merchants offer consumers the opportunity to pay with WeChat Pay and Alipay mostly with QR codes.

Alibaba and Tencent are incorporating the next wave of Chinese entrepreneurs

Established in the late nineties, with founders around 50 years old, Alibaba and Tencent are classic examples of companies that stem from the previous generation. Alibaba and Tencent realize though that today’s wave of entrepreneurs is bringing products and services that appeal to Generation Z, and this is the reason they are heavily investing in innovative startups within and beyond the Chinese border. Furthermore, to arm themselves against newcomers, Alibaba and Tencent are combining their strengths to secure their position (see section 1).

Alibaba and Tencent are SOE-investors

As a testing-ground of the mixed-ownership reform, Tencent and Alibaba have both invested in China Unicom, the country’s second-largest wireless telecom operator. These investments are financial, but are also intended to improve the services of state firms. For example, Alibaba and Unicom launched a cloud knowledge venture in order to meet demand from SOEs and governmental institutions in China for innovative technology solutions. Tencent and China Unicom are amongst other things, working on a network security platform.

Tencent’s hometown is a Special Economic Zone

Tencent’s hometown Shenzen was appointed one of the first Chinese area’s to be a SEZ. Tencent – founded in 1998 – witnessed the effects of the nomination: the share of high-tech industries in its total industrial output increased from less than 10% in 1990 to nearly 40% in 1998. Companies could make use of incentives such as access to quality infrastructure, corporate income tax exemptions, exemptions from tariffs on high-tech equipment and special treatment for employees. Other companies that arose in this area were Huawei and ZTE ( global telecommunications equipment, networks and mobile devices company).

Alibaba and Tencent endorse the Communist Party

Tencent released a mobile game titled ‘Clap for Xi Jinping: An Awesome Speech’, in which players have 19 seconds to generate as many claps as possible for Xi.

In 2019, Alibaba reportedly developed the popular Communist Party propaganda app ‘Xuexi Qiangguo’ (in English: study to make China strong). Alibaba staff is said to be responsible for developing and maintaining the app that includes news, videos, livestream and community comments.

Confucian philosophy & Daoism underlie Alibaba’s corporate culture

Without the philosophy of Buddhism, you cannot do well when your business grows to a certain extent. If you do not know the philosophy of Daoism, you have no chance of winning during competitions. If you do not understand Confucian philosophy on the construction of organizational system, you have no chance to be sustainable when your company grows to a certain size.”

– Jack Ma, Founder and CEO Alibaba

Alibaba’s Founder and CEO is strongly influenced by China’s idea of the good life. He always carries a copy of the Tao Te Ching, the foundational text of Taoist philosophy, is a big fan of Tai Chi, and has held meetings with the senior executive team of the company in a temple. Under the eyes of Buddha, the focus would naturally be how to help others, to help ever more people.
Furthermore, Ma actively spreads the Taoist way of thinking among company employees. In the early days, all of them had a Kung Fu nickname (Kung Fu and Taoism are closely linked), Jack Ma’s being “Feng Qingyang”, which refers to an “unpredictable and aggressive” swordsman.
According to Brian Wong, Alibaba’s vice president of global initiatives, an understanding of the principles behind the philosophies do help in having a better grasp of why the Chinese tech market works the way it does. “China is much more about integrating as opposed to taking over or competing in the traditional sense,” Wong explains. “We want to create and integrate.”

Rare earths are none of Tencent’s and Alibaba’s business

Rare earths are none of Tencent’s and Alibaba’s business. Apart from Alibaba’s semiconductors, both companies do not produce goods, and therefore they are not investing in, or owning, rare earths.

Tencent has dipped its toes in vertical drama

Tencent first dipped its toes into the vertical drama category in 2018, releasing short series like My Boyfriend-ish Sister and My Idiot Boyfriend. These entertainment shows are specifically designed for the mobile screen.

Example of vertical drama by Tencent
Source: V.QQ (2018)

Alibaba and Tencent go big on blockchain

Alibaba and Tencent, together with internet giant Baidu and telecom company Huawei, have all filed information about their blockchain cloud services and issued white papers that stress the importance of developing blockchain-based cloud services as internet providers for third parties. Last year, Alibaba topped the list of the most patent applications focused on blockchain-related technologies in the world, with over 90 patent applications.

Tencent has been building blockchain services since their first white paper in 2017, and developed their TrustSQL platform as a product, service, and an application layer to provide digital asset management and authentication. Furthermore, Tencent has partnered with Intel to develop a blockchain for Internet of Things applications, while starting to test blockchain financial applications with the Bank of China in 2017.