Enabling The Next Internet Wave In China

The leaders of China’s Internet success stories are rapidly becoming part of China’s establishment, interacting frequently with senior government leaders. Last week, for instance, several China Internet CEOs were part of Xi Jinping’s trip to Seoul. As they have these opportunities to spend time with policymakers, what should they be arguing is necessary for the next era of China’s Internet economy to be as successful as the one they have already profited from so well?

• Enhancing workforce skills. It should be obvious to all that universities should be graduating students equipped with the technical and business skills to succeed in operating companies. It is, however, entirely obvious today that they are not. Government action to make university curricula relevant for the growth in internet related jobs is.
• Sustaining openness to international ideas and capital. China has profited greatly from an Internet industry structure that encouraged the development of China relevant business models and local champions to deliver them. Yet often inspiration and stimulation for the business model came from outside China. And today, much of the world is looking to China’s internet leaders for their own inspiration. There is very much a two-way flow of ideas and investments. This benefits everyone.
• Enhancing data protection for individuals from businesses who are using their data. Many private companies and state-owned enterprises hold vast amounts of information on their customers. While new laws have been passed regarding how they are allowed to use such data, what permissions they should obtain, and the like, consumer confidence in the system is low. It could take only a few high profile breaches of personal information (e.g. from a bank or a telco) to have Chinese citizens pull back from providing their personal data so freely online. It is essential that China’s leading Internet companies are seen to be role models in data protection.
• Encouraging national markets. Most Internet businesses are born national. Yet regulations at a city or provincial level can hold back the development of efficient national markets that would benefit consumers. Constraints on selling second hand cars across provincial boundaries is one example. Policymakers should roll back regulations that constrain markets to the provincial or city level.
• IP protection. Increasingly, China’s internet leaders are developing a substantial amount of in-house intellectual property. They want to be certain they can protect this IP in China and internationally as they globalize. Ensuring they can get swift redress when they find their IP being used by others is key. For an Internet player guilty of using someone else's IP, a small financial fine in 12 months is almost irrelevant when a business is growing at Internet speed. Courts need to decide quickly if a business model is legitimate or not.

Swift action on these levers will place China’s Internet industries in a much stronger position to succeed going forward.