It’s an oldie but a goodie. Two years ago, Shen Yin, co-founder of The Founder magazine, wrote about two unnamed friends, “L” and “W.” L focused his business on China’s poor laborers, while W focused his on its elite. From L’s success, and W’s comparative frustration, Shen felt the reader could learn about the bifurcation of China’s Internet and its society.
Now, netizens are chatting about the article once again on Sina Weibo, China’s Twitter. @YesMyLaw马强, a legal consultant in Shanghai, tweeted the article along with a guess that the “W” in the story was Wang Xing, graduate of China’s elite Tsinghua university and founder of several Chinese Web 2.0 platforms with close parallels to their American counterparts. Netizens have not answered this question definitively, but interest in Shen’s piece has revived enough that it has been re-tweeted over 21,000 times and received over 3,500 comments.
Regardless of W’s identity, Shen’s story is as vivid and thought-inspiring now as it was in 2010. For that reason, Tea Leaf Nation has translated much of Shen’s piece. Please enjoy.
Telling you the truth about the Chinese Internet: The Elites and the Grassroots
I have two friends; let’s call them L and W. L works at a company in Shanghai and spends half of his time running off to Guangdong. He graduated from a not-very-famous university in southern China, a simple guy with small eyes who used to be a young intellectual many years ago. The guy makes games for mobile phones, and I’ve seen him use several types of phones but the most expensive one was never more than 1,000 RMB [about US$150]. He cares a lot more about the millions of migrant laborers and struggling young graduates in the Pearl River Delta than he does about Web 2.0 or the mobile Internet. He chats with the night merchants in Dongguan, the night owls in the Internet bars outside the Foxconn factory complex, and convenience store owners who’ve earned enough to drive a BMW.
W lives in Beijing’s [tech zone] Zhongguancun. From a young age, he was a genius with a big brain and shining eyes, top grades in the hard sciences, preternatural logical reasoning abilities, and equal mastery of the Chinese and English languages. He graduated from a famous university in the capital, then immediately went to the U.S. to get his master’s from another famous university, returning to China afterwards to start a business. I always thought that he was a Chinese version of the Silicon Valley geek. He was always the first to introduce me to new tech gadgets like the iPad. He was the type of person who would use Facebook, Twitter, Groupon and Foursquare while in China. [Note: Facebook, Twitter and Foursquare are blocked in China, but users of a VPN, or virtual private network, can still access them.] Whatever the future of the Internet was, it was probably to be found in whatever website W was working on.
W had more fame and received more praise than L. But the sad thing is, even though he’d done a number of websites that even investors thought were really cool, he never struck it rich. The reasons were nothing more than these: He was too early to the game and got beat by fellow competitors who took shortcuts; he couldn’t amass enough capital and got bought out by bigger firms; or he stepped on some sensitive nerve of a high official and got shut down outright.
L’s business was truly taking in money every day to the point where he could afford to play golf, but he never wanted to tell outsiders that he was making money. I know people won’t believe it, but hundreds of thousands of laborers making less than 2,000 RMB per month were paying hundreds of yuan a month in ARPU [average revenue per user] to play games made by L’s company on their fake, 300-yuan cell phones. Put another way, they were happily giving about 1/10 of their entire income to L. Sometimes I can’t figure it out myself. W’s target customers were obviously elite customers from Beijing, Shanghai and other big cities who had more purchasing power than anyone. Why is it that although these people were willing to spend to buy the newest phone, upgrade to the newest laptop, and eat at the best restaurants, they still wanted everything online to be free?
It’s well known within the industry that whatever W works on gets immediate attention. It can be other techies, members of the media, marketers—everyone talks about it, and the growth in the number of online links and users seems to be a straight upward line. But the strange thing is, after a short period of time the upward trend stops, then it starts to slow down like the heart of a middle-aged or an elderly comrade. I’ve even asked L: Most of these grassroots users don’t even have their own computers, much less 3G; how did he have so much success targeting them? L responded with a laugh that an Internet bar isn’t the best path to reach them. There are a lot of convenience stores in the area around the factory, and the workers gather there as soon as their shifts end. The proprietors make available computers pre-loaded with every kind of mobile game, MP3 and movie, along with a book listing the offerings on tap much like the “song menu” at a karaoke bar. There’s no need to go online—just pick up a USB data cord and download whatever you want. In fact, there’s an even easier way: Push a shopping cart up to the factory’s dormitory gate.
In the past, W naively believed that he could use technology to change society. Now he knows that even if you don’t involve yourself in politics, politics will find a way to get involved with you. But it’s still a shame that a foreign-educated elite has to learn the dark arts of working his personal connections. L was once an angry youth, but now he’s pragmatic; a good businessperson always knows how to read between the lines as well as anyone. Although he spends his days selling games, he truly cares about his management duties, organizing workers’ association meetings, changing personnel, and trying to correct vices. When there was a string of 12 jumping suicides at Foxconn, he told me very seriously that he felt personally responsible. This startled me, but L said that these depressed youth were his bread and butter. For many of these workers, a cell phone is their only means of entertainment and their only means of communication with the world outside the factory. It’s their responsibility to make these laborers happier.
All of the investors I know hold W in high regard, but are more willing to give their money to L. Their thinking is a as clear as a mirror: In China, being an elite only gets you accolades, but being grassroots gets you the money. [Popular Chinese Internet platforms] Tencent and Baidu are the best examples of this.
I once had a sudden, strange thought: Would things be different if W and L traded places? Could they better understand the strengths and weaknesses of each other’s business? After some thought, I realized it wasn’t likely.
The Internet that W seeks is an “American-style Internet.” In the U.S., the information revolution traces back to the 1960s, with the period from after the ’50s to after the ’90s being the “age of digitization.” There wasn’t a big “digitization gap” during that time. Americans’ business and their lives, their work and their play were all inseparable from the Internet. It was the reason that a post-’80s Zuckerberg could compete with a post-’50s Jobs, a post-’60s Bezos and post-’70s Page.
At the same time, the American social structure is like an olive, without a terribly large gap between rich and poor, without large regional differences or a schism between cities and villages. Therefore, the American Internet could be called an “Internet for all.”
We originally thought of Chinese society as a pyramid, but it’s becoming more and more like a thumbtack. W stands at the top of the cap, and L resides far out on the distant tip. China does not have an “Internet for all,” rather, the Chinese Internet is separated by its people. It exists simultaneously in the Thinkpads of elites and the fake MTK cellphones of the grassroots. While our elites perhaps keep pace with the Americans, our grassroots is instead keeping pace with the Vietnamese.
The truth is, China’s “age of digitization” is only happening in big cities like Beijing, Shanghai and Guangzhou among a few tens of millions of middle-class between the ages of 20 and 40. The remaining hundreds of millions of Chinese Internet users are QQ users from head to toe. [QQ is a popular messaging service but is not considered prestigious or high-end.] The Internet cannot itself change this status quo. Could it be that a macro-level revolution in the society and the economy is required?
I believe that L has seen the true essence of the Chinese Internet. No member of the elite lacks the means to be satisfied, not while too many companies continue to chase this spoiled and frankly very limited user group. Conversely, a great number of the “digital poor” are unable to utilize the Internet to change their own destinies. They don’t have the means to use the Internet to raise their living standards, and can only lose themselves in cheap virtual entertainment.
I’ve always thought that there will come a day when W will put together a modern masterpiece of the Internet, leaving the Americans in the dust to chase us instead. But will real-life difficulties ultimately thwart his determination?
According to Plato’s “allegory of the cave,” every one begins life in a cave of their own digging. The world that we see is simply the play of shadows thrown on the cave wall from a light behind us. Yet those of us in the cave mistake this for the real world, for we’ve seen nothing else. The real world is outside the cave walls, where the sun shines.
The hundreds of millions of Chinese farmers and laborers inhabit a completely different world from recent college graduates and their ilk. If you can pay attention to this group of people, you will have many opportunities. But more likely, we will never find a way to walk out of our cave.