Laurent Pignot

Laurent Pignot has a passion for crypto-currencies and is dedicated to the popularization of these alternative assets. He particularly likes the decentralized and disintermediated dimension of these currencies. What drives him? The adrenalin linked to the investment game.

Will the first metaverse be Chinese?

01/20/2022 | 10:03am EDT

Apple, Microsoft, Meta, Nvidia, Google come to mind when talking about the metaverse. You know, this world where the border between the virtual and the physical is blurring. If the U.S. race is now launched between the giants of the tech industry to conquer the metaverse, China doesn't want to be left behind.

A contraction of the words "meta" (which refers to a global vision) and "vers" for "universe", the metaverse designates digital spaces much more advanced than virtual reality (VR) or augmented reality. It is about extending our reality into shared virtual spaces, which are modeled in a 3D environment. The basic idea of the metaverse is not complicated. Simply put, the metaverse includes any digital experience on the Internet that is persistent, immersive, three-dimensional and virtual. While Facebook's rebranding as Meta automatically comes to mind when we talk about this new universe, Chinese companies and local governments in the country are moving to counterattack the American offensive.

Chinese local governments enter the metaverse

The municipal governments of Wuhan and Hefei have both pledged to boost the metaverse dynamic over the next few years. For Wuhan, the desire is to integrate the metaverse, big data, cloud computing and blockchain into the "real economy," while for its part Hefei has said it will promote enterprises in "cutting-edge fields" including the metaverse. As we'll see below, a number of tech companies in China are keen to get into this universe while at the same time, state media outlets are blowing smoke to quell speculation remotely related to the metaverse.

"Everyone must remain rational to understand the current mania for the metaverse," The People's Daily, the Communist Party mouthpiece. Other newspapers, including the state-run Economic Daily, have warned against speculative trading in the sector. The incentive is to avoid hastily investing in the "immature" concept like the metaverse.

Despite these warnings, other cities are also developing metaverse initiatives. Probably to attract new companies in the field. Zhangjiajie, in Hunan province, has launched a metaverse-based research center to help the city develop its tourism industry. Shanghai said that in the next five years, it would strengthen R&D of technologies underlying the metaverse, especially for commercial and industrial applications. Finally, the city of Hangzhou, which is home to the headquarters of e-commerce giant Alibaba, has set up a "metaverse committee" made up of representatives of companies and academics.

If Chinese cities are launching themselves into this new virtual world, you can imagine that companies are not going to be left behind either.

Tencent, the Asian ogre

Let's start with the giant of the gaming and entertainment industry, Tencent. Obviously, the Chinese company cannot afford to let its American competitors get a head start on a potential revolutionary technology. It should be noted that the company still has a foot on the American continent by owning 40% of the video game development studio: Epic Games and it has also signed a strategic partnership with Roblox, a platform that allows users to create virtual worlds. Tencent's CEO, Ma Huateng, told many analysts at a conference that:

"The meta universe is an exciting thing, but it's also a conceptual thing. We are at a relatively high stage of looking at the metaverse, which is about making the virtual world more real and the real world more rich. Tencent has several technical modules, including the basis of interaction and social media, AI and the ability to create a community game platform, can create a metaverse like building blocks."

Tencent also owns the super social networking app WeChat, which allows you to chat, shop, order food, or book a cab. An indispensable application for the billion Chinese people. If Tencent is preparing behind the scenes a smashing entry into the metaverse, it will be able, thanks to its sprawling business empire, to be part of the players promoting the mass adoption of this new universe. In this sense, Tencent filed a registration application last September for a hundred or so metaverse-related trademarks, including "QQ metaverse", "QQ Music metaverse" and "Kings metaverse".

Baidu, the Chinese Google

Last month, the Chinese group presented a parallel universe called Xi Rang ("Land of hope") As the different metaverses aim to do, the platform proposed by the group's boss, Robin Li, will allow its users to interact with other individuals living in this Land of Hope. Playing, entertaining, learning, shopping, displaying advertisements, attending conferences are all activities that will be, according to the company, possible in the metaverse.

There is still a lot of work to be done to offer users a quality metaverse experience. A fluid, intuitive and ergonomic navigation will have to be put in place for a massive adoption. But we will have to be patient before we see an operational platform, since Baidu estimates that it will take at least six years before it can offer an optimal solution. The virtual world is available on multiple mediums: AR/VR headset, computer, smartphone, which will help reach a wide user base. For the moment the company has not communicated on the economic model that will be applied for the metaverse. To be continued in the coming months.

ByteDance buys Pico

In late summer 2021, the Chinese company acquired VR software and hardware maker Pico. This was founded in 2015 by Zhou Hongwei, who was previously vice president of Goertek (the exclusive Oculus foundry of Meta). In other words, Mr. Hongwei has some bottle, or should I say, headset. Pico holds more than 300 patents covering the core technology areas of virtual reality such as imaging, optics, acoustics, hardware design and spatial positioning among others.

Pico's Goblin 2 model
Source: Pico

ByteDance, which owns the popular TikTok app, plans to absorb these technologies in hopes of one day offering augmented reality-based resources to its user base. But that's not all. ByteDance has invested 100 million yuan in Qiankun, a mobile game developer with the Metaverse concept. A kind of Roblox with a Chinese twist. ByteDance seems to be entering the Metaverse samba.

The Alibaba triplet

The Chinese e-commerce giant recently registered a new company named Yuanjing Shengsheng in Beijing to explore the possibilities of the "gaming-metaverse". In addition, the company has registered the Chinese version of the trademarks "Ali Metaverse", "Taobao Metaverse" and "DingDing Metaverse". With these different initiatives, Jack Ma probably has several ideas in mind to compete with the American Big tech and their metaverse projects.

NetEase: an island dedicated to the metaverse

The Chinese company is one of the leaders in the development and publishing of video games. Inevitably, NetEase has to be part of the metaverse trend, and to do so, it does not skimp on the means. It signed a strategic cooperation agreement with the Sanya municipal government last month. The agreement calls for the company to set up its headquarters in Hainan and build a metaverse-based industrial base project in the capital of the southern island province of Sanya.

As part of the agreement, NetEase noted that it has "comprehensive reserves in metaverse-related technology, talents and regulations." For example, NetEase has advanced technical capabilities in areas such as virtual reality/augmented reality, artificial intelligence, robotics, cloud gaming and blockchain. The tech giant has also implemented conceptual metaverse products such as the immersive "Yaotai" system, an AI virtual host, and "planet blockchain," a blockchain-based value sharing platform. If a China-verse emerges, the company will most likely be among the leading players in the field.

A contradictory Chinaverse

While the Chinese government has been quick to pour cold water on the metaverse initiatives, warning against "indefiniteness" and "hot speculation" on this new universe, the country's companies are throwing themselves wholeheartedly into this virtual world:

Number of metaverse-related trademarks registered in China

The only catch for these companies is that the Chinese government may not share Zuckerberg's enthusiasm for the prospect of an immersive, real-time universe of virtual worlds.

In recent months, Xi Jinping's government has taken a series of steps to try to reduce the role of social media and the internet in the lives of Chinese citizens. The national video game regulator recently tightened its already strict rules, requiring that anyone under the age of 18 be allowed to play online games for only one hour per night between Friday and Sunday. We can see a kind of contradiction between private initiatives and the government's will. On the one hand, companies that develop 100% digital solutions in an immersive virtual world, and on the other hand, a government that wants to limit the exposure of individuals to digital content.

At the same time, China is one of the most advanced countries in the development of central bank digital currencies (CBDs). As an example, as of June 30, 2021, nearly 70 million wallets had been opened with which more than 70 million transactions were made worth 35 billion yuan (about $5.3 billion). Four months later, the number of digital wallets has doubled and the value of transactions is close to 10 billion dollars. It is now possible for Chinese people to transform their paper yuan into e-yuan. This development is much more important than in the United States, which is still wondering about the real necessity and usefulness of setting up a MNBC.

In the end, Chinese companies have nothing to be ashamed of when compared to American metaverse initiatives. Tencent, Baidu, NetEase, ByteDance, Alibaba among others, all have the skills, the technologies and, it must be said, the ambition to develop metaverse solutions. The big question mark comes from the Chinese government, which seems to be taking a wait-and-see attitude.


© 2022
Stocks mentioned in the article
ChangeLast1st jan.
ALIBABA GROUP HOLDING LIMITED -1.03% 86.79 Delayed Quote.-26.94%
ALPHABET INC. -1.34% 2178.16 Delayed Quote.-24.81%
APPLE INC. 0.17% 137.59 Delayed Quote.-22.52%
BAIDU, INC. -0.69% 124.47 Delayed Quote.-16.35%
CHINESE PEOPLE HOLDINGS COMPANY LIMITED -2.50% 0.039 Delayed Quote.-20.00%
GOERTEK INC. 1.68% 37.6 End-of-day quote.-30.50%
META PLATFORMS, INC. 1.18% 193.54 Delayed Quote.-42.46%
MICROSOFT CORPORATION -0.23% 252.56 Delayed Quote.-24.90%
NETEASE, INC. 1.59% 96.87 Delayed Quote.-4.82%
NVIDIA CORPORATION -2.51% 166.94 Delayed Quote.-43.24%
ROBLOX CORPORATION -8.01% 31.6 Delayed Quote.-69.37%
TENCENT HOLDINGS LIMITED -1.70% 346 Delayed Quote.-22.90%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) -0.51% 6.6629 Delayed Quote.5.26%
WISDOMTREE CLOUD COMPUTING UCITS ETF - ACC - USD 2.56% 29.62 Delayed Quote.-44.25%