INSIGHTS│The TechNode community reviews China tech 2021

Despite their various fields and interests, members of the TechNode community agree: The theme for China tech 2021 was regulations. 

Sometimes the regulations came in waves. Sometimes the rules were new, sometimes just newly enforced. There were so many rules that, like a chronic state of pandemic alertness, regulation fatigue set in by year’s end.

There were industry-rattling rules, like the bans on crypto mining and trading in May, soon followed by the data security review that forced Didi’s US delisting. And while we were still digesting that, there was the sweeping ban on the most profitable edtech services. Mostly, though, there were fines. Tech giants like Alibaba, Meituan, and Pinduoduo faced fines large (for anti-competitive practices) and small (for illegal information releases).  

Next came the drastic limits imposed on minors’ playing hours, which could gnaw into game-makers’ profits and dent the world’s largest population of players. Meanwhile, even tech companies never previously enmeshed with virtual or augmented worlds claimed to be ready to soar into the metaverse in 2022. Already making great—frankly, surprising—advances in 2021 were several homegrown silicon chip designers and a handful of the slew of electric carmakers.

In the wake of news of tragic employee deaths and abusive working conditions, the grueling hours demanded by Big Tech got renewed official and unofficial attention in 2021 as well. It turns out that requiring employees to work six days a week, from 9 a.m. to 9 p.m–the so-called 996 workweek–violates labor laws, according to a statement the Supreme People’s Court issued in August. 

Some of the biggest companies quickly declared that they were abolishing weekend work. 

So are tech workers shouldering a lighter workload now? Is Big Tech assuming a kinder, more humane face?  TechNode’s friends and contributors are once again united and …. skeptical. On the upside, at least the ten richest tech moguls, notably PInduoduo founder Colin Huang, got whacked in their pocketbooks this year. 

Wishing you a 2022 minus 996. 

This year’s most surprising development was Didi’s forced delisting, justified by vague references to national security. It’s still unclear on what basis the Cyberspace Administration of China (CAC) believes foreign listings may result in: (1) Chinese firms transferring onshore data overseas or (2) Chinese firms being compelled to hand over data to foreign entities. My best guess is CAC believes there’s a possibility sensitive data may be requested as part of an investigation under the US Foreign Corrupt Practices Act. Whether well-founded or ill-founded, this fear has led to an overhaul of foreign listings.  

—Michael Norris, research and strategy lead, AgencyChina

The regulatory crackdown is a big one, although a long time coming. I think at this point we have become a bit desensitized to the news. I remember just how shocking the Ant Group fiasco was last year. Everyone was talking about it. Now, with everything going on in gaming, education, content, livestreaming, fintech, crypto and more, it seems like a drop in the bucket. During the latest crypto crackdown, I was surprised to see just how much mining was done in government facilities, or under government supervision, despite the May announcement to shut down the industry. 

—Eliza Gkritsi, Asia mining reporter, CoinDesk

In the semiconductor space, it is how strong industry has aligned with the government. In almost every WeChat group I am in, engineers seem to be one hundred percent behind China’s self-sufficiency goals. Whereas before they may have gone along with such drives begrudgingly, there now seems to be a true desire to work together to achieve these goals. One example where this has been a success to some extent is the silicon IP (intellectual property) space where China—through self-development, tech transfer and other means—has become much more self-reliant in CPU, interface, and GPU IP.

—Stewart Randall, director of operations, Intralink

What do you fear or hope for in 2022?

I expect China’s commercial space industry to achieve more encouraging results in 2022. As novelist Liu Cixin wrote in “The Three-Body Problem”: “The future of mankind is either to move towards interstellar civilization, or to indulge in the virtual world of VR all the year round.” Although metaverse hype swept the global tech industry in 2021, it was also fascinating that we witnessed the successful launch of NASA’s James Webb Space Telescope this past Christmas Day. Personally, I hope Chinese space companies accelerate the steps of mankind to spread themselves beyond earth.

—Lu Guanghao, director, Befor Capital

I hope industry players can work together to create a unified standard for intelligent driving functionalities when it comes to the names, definitions, and driving scenarios, among other things. In the past year, we have seen self-driving companies and electric vehicle makers hyped up automated driving technologies as a unique selling point of their products and services due to the surging demand from customers. 

However, it takes users a great amount of additional time and effort to familiarize themselves with different vehicle systems. Also, as the technology is advancing, there are no industry-wide rules and safety requirements governing the development of automated driving capabilities. 

—Liu Guoqing, founder and CEO of automotive software developer Minieye

My hope for 2022 is that our collective understanding of China’s regulatory activities steps up a gear. In 2021, too many were suckered by the temptation to ascribe a single, all-encompassing narrative to China’s regulatory thrusts. Early uncritical anchoring to a particular analytical frame left market participants blindsided by regulation that didn’t fit neatly within their mental model. If we are to have an analytical frame equipped to consider and make prudent investment decisions within the shifting sands of China’s regulatory landscape—particularly its views on competition and market irregularities—we must do better than “Well, it’s all about taking down Alibaba” or “Well, it’s all about taming the private sector” or “Well, it’s all about semiconductors” or “Well, it’s all about reducing inequality.”

—Michael Norris, research and strategy lead, AgencyChina

US efforts to decouple China from the global economy are meant to weaken and isolate China’s technology sectors to some extent, but technology really does not follow any political boundaries. For Chinese enterprises, a key initiative would be to better utilize the research and development resources from the rest of the world and be more engaged in the global innovation community. 

Meanwhile, China will grow more innovative and more resilient in its long-term development of advanced technologies and the future looks very rosy for those startups in frontier sectors in the next several years. With the launch of the Beijing Stock Exchange in November, innovative Chinese startups will have more access to raise capital at home, while more Chinese-born scientists are expected to bring their expertise home from abroad. 

—Lu Shengyun, former partner with Simon-Kucher & Partners

I fear VCs that have been surprisingly patient to date will want to see returns on their semiconductor investments here in China towards the end of 2022. A chip takes 18 months to two years to design and get to market, so if they are not seeing returns–if these chips do not sell, miss deadlines, or struggle with performance or with bugs–then we could see some semiconductor startups fail. There is a lot of competition out there: over 20,000 chip-related companies and now over 2,800 chip design companies in China. Many companies are on thin margins, if any at all.

—Stewart Randall, director of operations, Intralink

Are Chinese tech giants becoming more humane workplaces? Or more socially responsible neighbors?

As we approach the one-year anniversary of the tragic deaths of two Pinduoduo employees in the same week, I don’t believe China’s tech giants have turned the page on excessive work hours. The collaborative “Worker Lives Matter” spreadsheet, originally published in October, suggests that overwork is commonplace and confirms Pinduoduo employees have the most grueling work hours among the tech giants.

—Michael Norris, research and strategy lead, AgencyChina

They certainly want to make it look that way, but to what extent it is an accurate depiction of reality, I don’t know. I am worried that better work-life balance might actually translate into layoffs. 

—Eliza Gkritsi, Asia mining reporter, CoinDesk

Although the “996” work schedule has been banned, it does not seem that the workload on employees has been reduced. Therefore, this particular policy has meant a reduced salary (as no longer paid double on Sundays), and yet a similar total number of working hours. Hopefully, this is simply the “adjustment period” and the companies will adapt to a non-overtime work culture. But for now, there has not been a great shift. 

—Capucine Cogne, China tech-watcher in Chengdu

As we’ve seen, the Chinese government brought two big policy shifts in the country’s tech space over the past year: strengthened policy support to build its own core technology, as well as the tightened regulation against internet giants. I believe “tech for good” will be the main theme in the industry for a while in the future.

—Lu Guanghao, director, Befor Capital