Five 'I's of China's Internet strategy
- By Luo Yu
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E-mail CRI, December 22, 2015
Integrity
The e-commerce market is filled with fraudulent practices like click-farms, marketing scams and counterfeit products. Similarly, despite China's recent efforts to regulate the once-volcanic and now chaotic peer-to-peer (P2P) lending industry, business fraud has been prevalent and hindering the development of sector, where borrowers intentionally default on their loans and platform owners, albeit who are supposed to act as an intermediary, vanish after fundraising for themselves without repaying investors. Speaking of fake products on e-commerce websites and dubious business activities on P2P lending platforms, it's really about the Integrity on the Internet. That's why investors remained cautious with sales numbers in the newfangled Double-11 Shopping fiesta as share prices of almost all e-commerce giants declined after the spree.
Integrity is in dire need in this topsy-turvy market. Taking the P2P lending market as an example, you cannot solely count on businesses to correct themselves. One worthwhile trial could be more cooperation between Internet banks, commercial banks and online lending platforms because credit check services offered by Internet banks such as Alibaba's backed MYbank and Tencent affiliated WeBank can cut off borrowers that are more likely to default. Therefore I don't see the emergence of Internet banks as a huge threat to P2P lending because their products are not the same in nature and differ significantly in returns. Rather, Internet banks are complementary to the industry as they can get access directly to the credit history with big data that has been generated for years by Alipay and WeChat thus strengthening the due diligence process on loan applicants.
Inclusiveness
Looking into the future, Internet will also be more Inclusive, rendering a wider array of choices for different target customers. It'll be much easier to purchase goods from overseas as cross-border e-commerce booms; rural residents can equally enjoy the benefits brought by e-commerce and there will be more tailor-made products ranging from customized wearable devices to smart homes which enable you to control every device at home remotely.
Last but not the least, the role of the government can be focused on three domains. As the regulator, it helps eradicating counterfeits, establishing an online credit rating system for credit-starved SMEs and furthering tax exemption on cross-border e-commerce; as the big boss of the state-owned companies in China, it facilitates weeding out companies with overcapacity, shutting down zombie factories and upgrading our economy; and as the legislator, it offers more favorable policies to provide a more amicable environment for any would-be entrepreneur to grow and thrive.
To sum up, the 'Internet Plus' could be boiled down to five areas. Based on Integrity, we are going to see more Integration between traditional sectors and Internet technologies and in the tech sector where new consumption models will be created and multi-billion dollar mergers and acquisitions of well-established business entities are expected to happen. In the digital era, companies need to be more Intelligent and Inclusive. They need to understand, interpret, harness the data to make critical decisions to satisfy diversified customer needs. However, I would mainly pin my hope on Innovation capabilities of Chinese companies in that innovation is the underpinning factor to build the new engine for Chinese economic development and capture the heart of millions of customers in the global market.
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