Zeroing in on 0.0% beers

Non-alcoholic and low-alcohol beers are becoming increasingly mainstream, finally breaking their social stigma and general disdain. Although a seemingly insignificant fashion in our drinking behavior, the rising popularity of these beverages reflects changing consumer practices and social norms. As such, we need to understand the deeper social and cultural foundations that explain the appeal of non-alcoholic beer.

Observations

  • Non-alcoholic beer is the fastest-growing segment of the U.K. drinking market, up by 27% this year, and 58% last year. This trend of growing non- and low-alcohol consumption is mirrored in other countries, such as Germany, the Netherlands, China, and the S., while the Middle East already has a long tradition of non-alcoholic beers, given the strict stigma on alcohol in the region.
  • This growth is not confined to beer alone, as the U.S. market for non- and low-alcoholic beverages will grow by 32% in the coming years. In Western countries, there is a trend of younger generations consuming significantly less alcohol compared to previous generations, such as in the S., Netherlands, U.K., and Germany.
  • Last year, a study gave the most comprehensive overview of more than 700 studies across the world that had investigated the burden and benefits of alcohol consumption. It found that no level of alcohol improves health, and that alcohol was the leading cause of disability-adjusted life years for those aged 15-49. However, the burden of alcohol spreads beyond doing harm to the individual consumer. A 2010 study found that of all the drugs and intoxicants available in the U.K., alcohol is the most harmful overall (followed at a significant distance by heroin and crack cocaine). The study distinguishes in the overall harm of the substances between the harm to the user and to others, and it is in the latter category that alcohol scores extremely badly.
  • Alcohol consumption is often a social activity, and high alcohol consumption is significantly related to particular life phases as well as temporary moments. For example, students tend to consume alcohol in large quantities because they think it is an integral part of their identity as a student and that it is a socially accepted practice. Similarly, most people consume the highest quantities of alcohol at the onset of or early in the weekend (from Thursday to Saturday) and state that their alcohol consumption is mostly related to social expectancies (instead of tension reduction expectancies, which is mostly related to weekday drinking).
  • In 2015, the U.K. government started the “Dry January” campaign, encouraging Britons to stop drinking. In 2014, 17,000 Britons abstained from alcoholic beverages during the 31 days of January, which increased to 2 million in 2018. In the U.S., one in five people planned to participate in Dry January this year, showing that its popularity is not contained to the U.K. The practice of abstaining from alcohol has deeper historical roots in the U.K. and U.S., where religious leaders from the Anglican Church and Protestant evangelists prohibited the consumption (as well as production) of alcoholic and intoxicating beverages on religious grounds, claiming that it would desecrate the individual’s soul and free the body from restraint, giving way to unwanted pleasures (in contrast to the Roman Catholic and Eastern Orthodox Christian traditions that saw fewer moral objections to alcohol and bodily pleasures in general). This eventually led to the “temperance movement” in English-speaking countries as well as the Nordics: the social movement that wanted to ban all alcoholic consumption, leading to the prohibition of alcohol between 1920 and 1933 in the U.S.
  • This practice of “teetotalism” has many other cultural exponents, as most religions prohibit the consumption of alcohol on spiritual and religious grounds, such as Buddhism (abstaining from intoxicating substances such as alcohol or drugs is one of the Five Precepts), Hinduism (it does not forbid, but denounces tamasic food and drinks, such as alcohol and meat, that bring the soul out of balance), and Islam (most Islamic jurisprudence prohibit khamr, the Arabic word for wine).

Analysis

Eating and drinking are intimate issues for most, as they are a daily practice and closely related to culture and tradition. In many countries, especially in the West, the consumption of alcohol is deeply ingrained in social (the “vrijdagmiddagborrel”, champagne during New Year’s Eve), cultural (serving particular beverages with food, student movements) and even religious practices (e.g. the transubstantiation of Jesus Christ’s blood into wine during the Eucharist). Of these alcoholic beverages, beer is the most prevalent. However, non-alcoholic and low-alcoholic beers are becoming increasingly popular. There are various reasons why consumers are choosing non- or low-alcoholic beer over regular beers (containing 5% of alcohol).

As such, we need to understand the deeper social and cultural foundations that explain the appeal of non-alcoholic beer.

Beer companies are playing into the growing thirst for non- and low-alcoholic beers: Heineken and Carlsberg owed their record sales in 2018 to non- and low-alcohol beer sales, while AB InBev, the world’s biggest brewer, wants to increase its share of this segment from 8% in 2017 to 20% of its total sales by 2025. All these companies are investing heavily in R&D and the technology in order to unbundle the taste of alcoholic beer at the molecular level, and then rebundle this into beer without alcohol but with the same taste. As such, the increasingly improving savor and resemblance of no-alcohol to regular beer makes it a tastier substitute. Combined with lower prices because of lower taxes (because it does not contain alcohol), non-alcoholic beers thus become more attractive from a utilitarian perspective. However, there are deeper reasons, driven by more fundamental social and cultural transitions, that explain the appeal of these non- and low-alcoholic substitutes.

The first is that no- and low-alcoholic beer tie in with the rising “wellness mentality”, in which consumers want more control over their physical and mental health. This holds more for younger generations, who increasingly spend their time in virtual habitats, and thus place higher value on their physical and biological constitution and wellbeing. As such, many of them no longer find that the pleasure of consuming beer or alcohol in general outweighs the costs (e.g. a hangover, reduced concentration, worse sleep), and instead focus on those activities and refreshments that actually increase physical wellbeing (e.g. sports, healthy food).

Furthermore, digital technology empowers consumers to critically examine the effects of our consumption and practices to ourselves and others. Generally, we are living in a time in which traditions and habits are increasingly challenged, and consumers are applying this mindset to the health aspects of particular consumption products, exemplified by the rise of veganism and eating less meat or drinking decaf coffee. Technological rationalization creates a “risk society” according to the modernization theory of Giddens, as well as a society that is less willing to permit socially harmful behavior and practices. As data on alcohol consumption tends to have a will of its own, unveiling that alcohol consumption renders the highest socially detrimental effects and costs, social norms are increasingly biased against alcohol and thus in favor of non-alcoholic beer.

This already shows that the consumption of alcohol and non-alcoholic beers is determined not only by economic but also by social factors. However, more fundamentally, consuming beer is also an important cultural practice, especially when it isn’t related to tension reduction but to societal expectancies. As such, drinking beer can be considered a rite of passage: these are rituals or ceremonies that inaugurate the individual in the world through the three-step process of separation, transformation or liminality, and finally incorporation back into the world. These rites of passage used to mark the most important moments in the individual’s life in traditional societies, such as birth, death, maturity, and inaugurated the individual’s socio-cultural status (e.g. becoming a priest, warrior, medic). Historically, tradition, religion and local authorities used to lead this process. However, in our times of disappearing rhythms and accelerating socio-cultural change, new “secular” rites of passage are emerging, such as adherence to particular clubs (e.g. football and motor clubs), the semi-religious worship of celebrities, ritual oaths in specific professions (e.g. doctors, lawyers, students finishing their PhDs). Likewise, there are also numerous social activities – especially in the West – in which one is supposed to consume alcohol that have the characteristics of a rite of passage (e.g. champagne on New Year’s Eve or “vrijdagmiddagborrel” to toast the finalization of the year or inauguration of the weekend as a period of relaxation, “hazing” at fraternities and sororities). From this perspective, non-alcoholic beer enables those who want to abstain from alcohol, but want to be included in these socio-cultural rites of passage without subpar experiences.

This also points to the most fundamental element: our experience of consuming beer and alcohol. Phenomenologically, these are substances that “numb” or “anesthetize” us, blurring our experience of the world. It also explains why non-social alcoholism increases in places where the material conditions of life have degraded (e.g. among the unemployed, in countries of the former Soviet Union), as it is related to withdrawal from the world and others. In her book Sober Curious, Ruby Warrington explains that alcohol not only generates the infamous hangover but also undermines our self-worth, social activities and relationships and our intimate relationships because it clouds the senses and thus our awareness of ourselves and others. Consuming alcoholic substances does not befit our digital living world that continuously stimulates our senses (e.g. social media, ads) and invites us to act in the real as well as in virtual worlds. One could even claim that other types of intoxicating substances, such as XTC or weed, are better suited to create the consumers of our current hyper experience economy and tie in with the emerging practices related to the spiritual economy (e.g. meditation, silence retreats, courses and tours in esoteric philosophy). And although alcohol is related to certain religious practices, most spiritual, shamanic and religious traditions prohibit its consumption on these grounds. Indeed, other intoxicating substances besides alcohol could actually help fulfill our longing to find holiness and meaningful experience.

Implications

  • We have written before that increased transparency in society could also lead to the undermining of trust, and thus increased polarization on specific issues. As such, non-alcoholic beer could also become another “culture war phenomenon”, like LGBT rights, eating meat, vaccinations, drug legalization, stem-cell research, euthanasia, or sexual education. More radically, beer and alcohol could even come to have a new social stigma, given their harmfulness to health and society. Untangling this discussion and providing a meaningful narrative for understanding this polarization makes the tradition of hermeneutics all the more relevant in our times.
  • Non-alcohol beer, being so intimately tied to one’s daily consumption and cultural practices, could become the harbinger of a new trend in which food and beverages are unbundled into their fundamental tasteful components, and then rebundled into new tastes. Combined with 3D-printing technology, this could lead to wholly new designs for food and drinks, such as squared tomatoes for efficient transportation, food printed in the form of merchandise (e.g. action figures), or tasty medicines.

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.