The Chinese Metaverse- A Parallel Universe Detached from the West

June 15, 2022
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Since Facebook has changed its name to Meta, the Metaverse trend has taken over the professional debates in the technological world. And, despite Facebook being blocked in China, the nation and its sea of ‘netizens’ have been no exception to this phenomenon. Surprising as it may sound, there have already been 16,000 metaverse-related trademark applications in China, and the research firm IDC (International Data Corporation) estimates that by 2025, 37 million Chinese online users will have virtual avatars in the Metaverse. According to Morgan Stanley, the Chinese Metaverse’s market value is about eight trillion dollars. All the big Chinese tech corporations are already there – Baidu, Alibaba, Tencent, and many more who have started investing in developing their tech accordingly. Even the Chinese government has already set up a designated – Metaverse Industry Committee, with various local governments (like Shanghai) addressing the advancement of relevant technology in their five-year plans.

So what exactly is the Chinese metaverse? How is it different from its western counterparts? And what should international companies and brands know about these trends? Keep reading, and we will reveal all:

What is the Metaverse, and what is unique about China’s?

For those who never really got the fuss, we’ll just say that the Metaverse is considered the next generation of the Internet. It is a 3D virtual universe where the boundaries between the physical and the digital are blurred. Through special glasses and high-end technologies such as virtual reality (VR), augmented reality (AR), and mixed reality (MR), users who are represented by virtual characters (avatars) can shift between worlds and do just about anything possible in our everyday life, such as going to work, shopping, watching movies, or hanging out with friends over a cup of coffee.

The Chinese Metaverse has several characteristics that set it apart from the emerging International Metaverse. First, the Chinese Metaverse is independent and operates in parallel to the international Metaverse. It will adopt Chinese blockchain technology and the digital yuan currency, with access to Western cryptocurrencies totally blocked on it. Nonetheless, Timothée Semelin from Web3 predicts that the Chinese Metaverse will be the largest Metaverse worldwide by 2030.

Furthermore, unlike the international Metaverse, which focuses its users’ attention on the interface’s aesthetics and visible features, the Chinese Metaverse also emphasizes sounds. The Chinese Metaverse doesn’t compromise on visual virtual figures, but strives to attach a voice to them as well to improve the overall experience. The premise is that such a multi-sensory user experience will keep users coming back to the platform.

Finally, and perhaps most crucially, the Chinese metaverse, unlike its western counterpart is regulated and censored. While in Beijing it’s clear that the Metaverse could help China fulfill its dream of becoming an AI leader by 2030, there are also concerns about potential security breaches, invasions of privacy, or, worst of all – the spread of messages that do not align to the government’s agenda and Chinese-centric rhetoric. So far, and as long as the technology is still in the early stages of development, the government has not yet taken a clear position on the status of the Metaverse in China. That said, analysts anticipate that it’s only a matter of time before regulations and restrictions are placed on the Metaverse in China. It will probably be one major challenge for any international company that will want to participate.

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Consumer acceptance

Chinese consumers are known as the first adopters of innovative technology, especially when it comes to the next generation of the Internet. A survey conducted by Newzoo shows that 78% of Chinese respondents aged 14-50 expressed interest in the idea of socializing through online games, compared to 57% in the United States and 47% in England. Moreover, 82% of Chinese respondents expressed optimism about the benefits of the Metaverse, once again substantially higher than in Western countries -with 72% and 67% support in the United States and England, respectively.

How can international businesses enter the Chinese Metaverse?

China is a fertile breeding ground for international businesses seeking opportunities in the physical and virtual worlds alike.

Business opportunities for technology companies in the fields of hardware, software, and VR – In order to build and develop the Metaverse in China, graphics processors (GPUs), 3D software, cloud computing solutions, and other technological means are constantly required to enable the transition to the virtual world and optimize the user’s experience. These industries are already booming in China, as the following data shows: At the end of 2020, China’s virtual reality (VR) industry accounted for about 44% of the global market and was valued at about $8 billion. The augmented reality (AR) industry has not yet reached this level, but it is developing at an impressive pace in China. By 2021, China’s augmented reality industry profits (including software, hardware, content, and services) have exceeded the $3 billion mark.

It is interesting to examine where virtual and augmented reality technologies are starting to be commercially adopted. The gaming field is an obvious answer, but now users can play together or participate in activities initiated by the brands featured in the Metaverse. For example, haute couture company Louis Vuitton launched a game to mark the founder’s birthday, in which participants were asked to collect 200 candles. Another fascinating and surprising sector is tourism. In November 2021, a virtual learning and development center was opened in Zhangjiajie Park, aiming at integrating the worlds of the Metaverse and tourism.

It is advisable for international investors and technology companies to bear in mind that China still lacks much of the professional knowledge needed to develop these sorts of technologies. Therefore, the government also offers benefits and incentives to international companies capable of helping China advance on this new and exciting front. Hence, this is a golden opportunity to consider entering the Chinese market and filling the gap.

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Retail brand marketing opportunities – Suppose touring a supermarket or mall will become one of the Metaverse experiences, new marketing opportunities will also open up to fashion, cosmetics, toiletries, and consumer goods brands such as food and beverages, known as Fast-moving consumer goods or FMCG for short. For example, companies could display their products on these virtual shelves or store windows to increase brand exposure. Complimentary services such as cooking games, or games such as Louis Vuitton’s, can help guide and educate the users and create an active and positive experience that potential customers will associate with the brand.

According to the experts, successfully mirroring the user’s experience in reality to those put forward virtually is a pivotal condition for the transition to the Metaverse. In other words, the biggest challenge among B2C companies looking to enter the Metaverse is to create a seamless transition from the tangible to the digital.

Meanwhile, China seems to have everything it needs to develop an independent Metaverse – an enthusiastic audience, a vast local market, and active support from local governments. However, the central government has not yet formulated regulations in this area, and it is certainly intriguing to wait and see the developments.

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