Will China’s Internet Infrastructure be ready for an Internet Plus Economy?

Author James Mash 22.12.2015. | 10:33

China’s economy is in the midst of a much-needed shift from being predominantly manufacturing heavy, to innovation and technology focused. Spearheaded by Premier Li Keqiang’s so called “Internet Plus” campaign, China will seek to invest more in technology, startup companies, and the Internet of Things, to drive flagging growth. Chinese innovation is still in its infancy, but with device startups such as Xiaomi, One Plus, and Huawei gaining more recognition globally, things are looking bright.

However, to achieve this new “Internet Plus” economy, China will need a strong Internet backbone. Unfortunately, this is an area needing much improvement. The national average broadband internet speed sits around 7.9 mbps. Compared to countries like the US (11.9 mbps) or South Korea (23.6 mbps), it becomes painfully clear how far China needs to grow as a developing country.

 

Surprisingly, Guangdong, a province containing major economic centers such as Shenzhen, Guangzhou, and Dongguan, came in 3rd last – far behind far-flung places such as Inner Mongolia or Xinjiang.

China_Broadband_Internet_Speeds

(Author’s note: I live in Guangdong and these agonizingly slow speeds are believable)

Internet friction

For global entrepreneurs looking to set up camp in China, slow internet speeds are going to be a reality, only exacerbated by the additional lag of VPN usage, necessary for accessing the major web services such as Google or Facebook. (Author’s note: In my own VPN speed tests in China, one can expect reduced internet speeds by roughly 3 – 4 mbps or about 30-40% on broadband and 60 – 70% on 4G mobile). This additional friction on already slow speeds has caused significant problems in the “Internet Plus” dream, which necessarily requires open channels for business operations.

In September this year, a major malware was found in certain versions of Tencent’s Wechat messaging app for iOS. The source of this malware was traced to an unauthorized version of Xcode downloaded by Tencent developers from a Baidu cloud server instead of using the official, but slower to download, version from Apple’s own servers.

Another example of this internet “friction” specific to China is the distribution of Android apps by foreign developers. In the vast majority of the Google-fied planet, developers can distribute apps through a single unified channel – the Google Play store. Instead of a Google Play store, China has a multitude of app stores, which complicates app distribution immensely. This friction may thaw in the future with the rumored return of Google to the mainland, through a Chinese language Google Play store. Whether the entire suite of Google services (search, Gmail, Youtube) will make a return, remains to be seen.

The future of China’s internet

Presently, the internet infrastructure in China pales in comparison to other developed nations, but there is good news. The Chinese government has pledged to invest 182 billion dollars in a nationwide fiber-optic network over the next 2 years as part of the “Internet Plus” road-map. Currently, 4G LTE is already prevalent in most major areas in China through providers such as China Mobile and China Unicom. In September this year, China and the European Union signed a joint development agreement to layout the road-map for the next generation 5G cellular data standards. China’s desperate technological push to energize its economy in the face of the dreaded “middle income trap” will bring positive progress to not only the tech industry but also to its growing internet consumer base.


 

This guest post was written by Startup Living China (@startupLchina), an online community and blog about life and entrepreneurship in China.

Author James Mash 22.12.2015. | 10:33
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