BAT, which has always been the pride of China's innovation industry and asia as a whole, and one of the few technology companies in China with world-class business projection capabilities, is now facing new strategic rebalancing pressures.
BAT's three giants, Tencent, Alibaba and Baidu, have always been the pride of China's and even the entire Asian innovation industry, and are one of the few technology companies in China with world-class business projection capabilities, and are now facing new strategic rebalancing pressures.
Online critics seem to have good reason to deny the internet giant's success. They say that the Internet industry no longer represents the most advanced productivity, saying that this is a rentier wrapped in international capital; they also say that internet companies lack original technology, which is based on the success of the application level of the surface of technology; and even more accurately calculate the linear correlation between playing games and having children, amplifying the underage control challenges of the entertainment industry such as games into all-age moral problems. Voices such as these negate the banner of inclusiveness and innovation in the Internet industry, and an unfriendly atmosphere to Internet giants has quietly fermented. Although many of the critical views are not rigorous, they have an impact on the aesthetics of the Internet industry in the whole society.
It has to be said that throughout 2021, the stock prices of Internet companies including BAT have been hit into a trough by the comprehensive reaction caused by this sentiment, and in 2021, Tencent's Hong Kong stocks fell from a maximum of 755.4 Hong Kong dollars to 456.8 on December 31 at the end of the year, a cumulative decline of nearly 40%. The same happened at Alibaba, which fell from about 220 Hong Kong dollars to 118.9, a cumulative decline of nearly 50%. Baidu also fell sharply, and Internet companies such as Meituan, Didi, and Pinduoduo were also almost cut off. When China's top tech companies have been hit so hard, the U.S. tech giants, which were almost worth the same amount before the epidemic in 2020, have soared, with Google parent company Alphabet rising 65%, Microsoft and Tesla both up 51%, Apple up 34%, and Nvidia up 102%. China's tech giants, affected by policy uncertainty in both China and the United States, are clearly out of their places in 2021 by their U.S. counterparts.
This has never happened in the last 20 years. Naturally, the "Chinese innovation threat" muttered by European and American Internet technology companies before disappeared. At the same time, the domestic bearish voice is still continuing, a big V in the New Year's speech threw out the "Internet is highly saturated" argument, the data of the argument is the so-called internal acquisition of "Ali 673 yuan, Pinduoduo 578 yuan, Jingdong 384 yuan" customer acquisition cost data, first do not challenge whether the data is true, any industry after the rapid acquisition of users will have a slowdown in growth but marketing investment changes are small, obviously the base is small, the result will become larger, which does not represent decline, And professional analysis will not be so calculated, let alone reason out the so-called "Internet saturation theory", and these cater to the public has a wide market, can not help but let the public look at the technology giants more foggy flowers.
So do Internet companies still have the characteristics of "advanced"? Does BAT still have "people's" value? This article hopes to go beyond the level of debate to rationally answer the question, from the perspective of global industrial technology to make a detailed analysis of the general trend of the strategic transformation of Internet companies to industrial technology companies, hoping that comprehensive analysis and speculation will bring readers and decision-makers more dialectical thinking, after all, the Internet industry is a technology-led industry involving tens of millions of people.
State regulation is necessary
It should be admitted that the attention and high standards of the state and public opinion on the Internet giants are not unreasonable.
The rise of Internet companies follows the principle of big waves and sand on the basis of small probability of successful innovation, and the vitality and competitiveness are naturally stronger, which is in line with the basic logic of survival of the fittest in the market economy, and the industries driven by cruel competition are often the most active parts of the economy. But when this tenacious vitality succeeds and becomes a huge commercial power, market competition will inevitably break the weak balance, and a certain degree of participation in national governance is necessary. That is to say, the most important measure of the regulation of the Internet is to encourage fair competition and continue to promote innovation, and this principle should be the core orientation of regulation.
From the macro level of the country, it has now surpassed the factor challenge of the scarcity of production factors in the 1980s and 1990s, and also surpassed the dilemma of the debate between opening up or closing in the early decades of this century, beyond the balance challenge, and facing the "difficult challenge" brought about by the global changes. This difficulty can be simply dismantled into three aspects, on the one hand, the changes in the international environment, the main body of the country must have a strong right to coordinate sino-foreign competition and cooperation relations; on the other hand, the lack of incremental value brought about by industrial imbalance is profoundly affecting the gap between the rich and the poor in Chinese society, aging and other issues; there is also the accumulation of social contradictions, the broad masses of the people and low-income groups have fallen into a certain bottleneck of development, and dissatisfaction is rising. The state's economic policy of regulating and controlling the overall pattern of institutional advantages has its inevitability and rationality, and it is reasonable to require science and technology companies to reflect more "people's nature".
There is no shortage of precedents for superpowers and media challenges and strong government regulation around the world. Before the great development of industrial capitalism in the United States, there was also a campaign to criticize the excrement of large companies. In the second half of the 19th century, the Us commodity economy was highly developed, capitalism moved from free competition to monopoly, internally ignoring the interests of employees, externally harming the public interest as an important means of making money, and pursuing the so-called "as long as I can get rich, let the public interest go to hell" business philosophy, which caused strong dissatisfaction in public opinion. Later, it gradually developed into a broader "progressive movement", which was a very influential social movement and trend of thought in the history of the United States in the late 19th and early 20th centuries. Triggered by the prevalence of greed and corruption, President Roosevelt promoted the enactment of laws to restrict monopolies, protect the environment, protect labor interests, and protect food safety, so that the United States can be revitalized and thus ranked among the world's great powers. If we compare the history of the rise of industrial capitalism in the United States, both China and the United States have faced the "difficult" challenges of society and the need for forced intervention in national governance to promote a new equilibrium.
From the perspective of Internet companies, the rapid development of 20 years, due to the advanced technology and the innovation of business models, non-subjective social imbalance problems, should also have the responsibility to actively participate in solving, which is also the company's long-term development needs. At least four aspects are the macro strategic issues that Internet companies should focus on at this moment, one is to pay more attention to the matching problem of their own development and national industrial policies, which are currently in the key stage of core technology attack and innovation and reengineering of many basic industries in China, and the technical advantages of Internet companies are a major topic in deeply empowering traditional industries; the second is the long-term mission of prospering the industrial ecology, which currently includes the new energy revolution, the intelligent electric vehicle revolution, the development of silicon-based semiconductors, Carbon-based biotechnology and other directions are facing global competitive pressure, Internet giants are in need of leaders to take responsibility; the third is for common prosperity, common development, reduce regional development imbalance and industrial development imbalance, etc., as a lucrative Internet company has the obligation to participate in it and contribute value. These aspects are the basic guarantee for the sustainable development of the country and the industry, and they are also the social responsibilities that the technology giants that go beyond the company's business itself need to bear.
Of course, we see that BAT has begun to make a series of strategic adjustments based on this, and the speed of response and cognitive profundity are remarkable. Tencent as an example, since 2018, the company's strategy has made systematic strategic changes and upgrades around the upgrading of the industrial Internet and the service of the real economy, showing its strategic determination to take root in the consumer Internet and embrace the industrial Internet. At present, from the situation released by the company, it has created more than 400 successful cases of industry solutions to empower the real economy in more than 30 industries, including smart agricultural technology, smart city applications, smart factory cases, intelligent manufacturing solutions, AI medical imaging technology, WeChat management solutions for agriculture and animal husbandry, digital Guangdong, etc. Tencent has invested 100 billion yuan to promote basic science, education innovation, carbon neutrality, driving low-income income, and promoting rural economic efficiency. At the beginning of 2022, its external release of the "Helping the Real Economy" propaganda film was refreshing at the beginning, "Our motherland, the mountains and rivers are majestic, the rivers are rushing, the clouds are thousands of miles...", the theme of this propaganda film is that the digital economy helps the real economy, it should be said that it not only shows Tencent's vision of the strategic direction in the next 10 years, but also a summary of the achievements of promoting the industrial Internet in 2018, clearly expressing the willingness to keep up with the pace of the times.
Internet companies, including BAT, are sending a clear signal that the label of "Internet" is becoming a thing of the past, and Internet companies in the new era are moving towards "industrial technology" companies. Ma Huateng's latest speech mentioned that "Tencent is the beneficiary of the wave of national development, not a basic service, can be replaced at any time", from this statement, Internet companies are showing a humble strategic posture after rapid development, which also means that China's technology giants are following the national strategy to promote profound strategic transformation.
Internet companies have strengthened their return to their original intentions
At the business level, Internet companies are indeed strengthening the return to the original intention, which is to reflect the "people's nature" of service-oriented technology enterprises, which is not only a gesture but also a practical action.
Looking back at history, the original intention of the starting point of China's Internet industry is clearly visible. This Internet boom began around 2000, this year Tencent's QQ user registration reached 5 million, at that time Ma Huateng also did not know how to make money; this year Baidu Robin Li just returned to China, is in the small office next to Peking University in Zhongguancun to discuss how to use search engines to popularize knowledge; this year Alibaba was just founded less than 1 year, Ma Yun and eighteen arhats living in the community in Hangzhou are worried about their livelihood, in addition to "making the world nothing difficult to do" The slogan of business can be eaten as a meal, and the same income is not paid. Speaking from the heart, the Internet giant BAT did not seem to have such a strong ambition to defeat everything with the Internet at the beginning of its business, nor did it have the barbaric impulse to plunder wealth, but just saw the needs of ordinary people's information connection, and wanted to use the Internet as a tool to do something valuable, which is an objective fact. One detail is that it was precisely because most domestic investors were not optimistic that Internet companies such as BAT absorbed more global investment.
Trace the rise of BAT. First, take Tencent as an example, Tencent, whether it is a game business or a WeChat business, after gaining a huge number of users and market dominance, did not increase the price of the game, nor did it impose charges in WeChat, but focused its attention on obtaining value-added benefits by extensively empowering multiple industries; second, Tencent and Ali and Baidu did not have the ability to control the bottom of the operator infrastructure of the communications industry. All banks focus on real estate, and none see internet companies as substantial risks.
Let's compare the Internet giants with the Japanese consortium. The characteristics of the six major consortiums recognized in Japan are to use Japan as a link to form a ring-shaped shareholding relationship, and the member companies are only a horizontal alliance, mainly to promote each other's business, forming a commercial consortium with no outflow of interests. Japanese large conglomerates often have heavy industrial bases such as arms, banking, basic industries, automobiles and consumer electronics, which should be said to have a decisive influence on the commercial form of Japan as a whole. For example, Mitsubishi, a consortium founded in 1954 and comprised of 28 large corporations, is The largest conglomerate in Japan. Its core enterprises are: Tokyo Bank of Mitsubishi, Mitsubishi Corporation, Mitsubishi Heavy Industries, Mitsubishi Motors, Mitsubishi Electric, Honda Giken, Kirin Beer, Asahi Glass, etc., from real estate to arms industry to consumer industry.
A simple comparison with Chinese Internet companies has at least two findings: first, the Japanese consortium is a monopoly sharing relationship of commercial interests, and the Chinese Internet company cuts into multiple industries from the professional subdivision field; second, the Japanese consortium has a clear "fertile water does not flow to outsiders" separation ideology, which often weakens the competitive relationship in business, has a strong pricing power, and is also the root of its later decline. While China's Internet companies have a certain market dominance, pricing power is actually affected by upstream basic operators and downstream user competition; third, the Japanese consortium deeply affects national policies, which also includes the unique power position formed by the consortium through in-depth cooperation with European and American capital. China's BAT is hardly as politically willful as the Japanese consortium.
Through the above comparison, we found that although the new Internet companies represented by BAT have certain financial attributes after their development and growth, they are generally relying on the business expansion formed by the incremental innovation needs of traditional industries, and the innovative companies they invest in only have a certain large system weak correlation, and their dominance of the overall Chinese market is weak, and they do not have overall influence and dominance. The big logic of preventing the disorderly expansion of capital is correct, but it seems that the guidance for Internet companies at this stage is more accurate than strong regulation.
Another commendable point is that BAT and even the entire Internet industry are providing products and services for the real needs of society. This is a scarce quality in China's industrial environment, because many companies that rely on government subsidies and make policy money actually provide products that are very inefficient to use. In this regard, the cloud services provided by Internet companies are a bright spot, during the epidemic, SaaS services similar to Tencent Conference and Enterprise WeChat have solved a large number of rigid needs with low-cost online solutions. The digital technology represented by cloud services has entered a variety of industries such as industry, finance, and retail, and the main direction of attack is the demand for physical industry upgrading and accurate market pain points. BAT cloud service customers are for real needs, which in turn accelerates the strategic evolution of Internet companies. In the field of investment, BAT dares to forward-look at the layout of innovative industries such as intelligent electric vehicles and biological computing, which have indeed played a positive role in promoting China's scientific and technological progress.
It can be seen that the Chinese Internet companies represented by BAT have the opportunity to embark on an innovation-driven road that is completely different from the bloody monopoly in business history under the two-wheel drive of "technology + investment", and in the current competition between Chinese and American technology companies, even BAT still has a lot of room for growth.
Back to the initial question, because the talent advantages and competitiveness of Internet companies have indeed squeezed many industries, this is also one of the factors that breed opposition. But dialectical thinking about this problem, without the emergence of catfish on the Internet, how can the fish of the entire economy survive in all walks of life with innovation and enthusiasm? Behind this is the dialectical relationship between the cruelty of efficiency in business competition and the mediocrity brought about by fairness.
Strategic new opportunities for BAT
When the above national regulatory thinking and the development of the Internet industry collide, we see that BAT has indeed made new thinking from the company's strategy, which is actually a strategic evolution process in line with business logic, but the challenges of the business itself cannot be ignored.
If we use the widely used logical framework of Web 1.0 to Web 3.0 to do an analysis, we will find that BAT's strategic challenges are constantly escalating, and in the current era of global Web 3.0 innovation, we are also facing the dual challenges of industry innovation and industrial empowerment.
In the Web 1.0 portal era, traffic monetization is an industry practice. Take Tencent's earliest product as an example, which was to provide users with free instant messaging tools. Although the number of users grew rapidly, users did not have the habit of paying, and Tencent did not have a good way to monetize at that time. In order to achieve profitability, Tencent first expanded its attempts to monetize traffic through telecom value-added services, virtual goods sales (QQ skins, etc.) and advanced demand user charging models, and then continuously expanded other free products and content, such as WeChat, QQ music, QQ portal, QQ games, etc., and then continuously expanded its traffic monetization attempts through value-added services, advertising, entertainment and e-commerce. On the other hand of the coin, this kind of traffic reservoir and application realization, the premise of free is to ensure the exclusive property rights of traffic, to some extent, the traffic closure of the Internet is a by-product of universal benefits. At this stage, Baidu mainly provides professional knowledge retrieval through free search engine services, and cooperates with the business model of advertising auction ranking. At this stage, Ali subsidized merchants under huge losses and pursued to expand the scope of platform services. The original intention of free is not evil.
The main model of all Internet giants in the Web 2.0 era is content monetization. Web 2.0 is a new era relative to Web 1.0, refers to a platform that uses the Web, user-led and generated content Internet product model, in order to distinguish the traditional content generated by website employees and defined as the second generation of the Internet. Tencent entered the content industry, invested in Huayi Brothers, invested in reading companies, invested in Tencent Video, etc. Baidu has also invested in content companies such as iQiyi, and Ali has begun to lay out in multiple content industries such as media. In fact, the vast majority of products with these content attributes are controlled by weak information and media discourse power, but the by-products of content monetization inevitably form a certain degree of media power. At the same time, ecological applications as content, around the mobile phone to form a lot of business models, Tencent with investment to enrich content, sharing ecology has brought the two core driving forces of game + investment, this investment amplification objectively brought industry pressure, but narrowed down from the real demand for content.
The new term Web3.0 is coming, advocating open co-construction, ecological consensus, and common economic system, and a number of Internet companies are being laid out in this regard. The logic of Web 3.0 lowers the barrier to entry for new participants, allows innovative ideas to be built like Lego, and creates an ecosystem where the products and services will be more dynamic and competitive. At this stage, the strategic change that occurs at the same time as domestic Internet companies is to transform to the "industrial Internet", and respond to the call of the state to increase the investment in hard science and technology and empower the real economy, which also adds a unique connotation to China's web3.0 era.
Summarizing the above, we found that the strategic evolution of this thread of Internet companies revolves around technological innovation. The innovation pressure of the Internet in the Web3.0 era and the innovation challenge of empowering the real economy actually have a certain pressure on China's Internet giants, and objectively they also need the support and encouragement of the national industrial policy.
From a pessimistic point of view, Chinese Internet companies also have a vulnerable side. On the road of innovation, the giants of 100,000 people can only incubate entrepreneurs through horse racing, because their slightly rigid system is difficult to compete with the entrepreneurial team of 50 people and 100 people than the efficiency, a little subjective judgment: in the era of innovation, the giants are often the weak ones with hindsight, and the possibility of Internet companies actively innovating and subverting the giants completely exists. Therefore, if this vigorous and innovative Internet spirit exists in China's science and technology field, it is still very difficult for giants to dominate objectively, in other words: the best way to restrain Internet giants is to continue to encourage Internet innovation.
The times are also calling on Internet giants to shoulder the new mission of strong national soft power. To take an example of the video industry, in 2021, the monthly charging standard of the US online video giant Netflix is 13.99 US dollars per month, about 1000 yuan per year, and the domestic BAT video service is generally less than 300 yuan. At present, Netflix is exporting American culture to the world, and its 2021 is ready to invest in film and television studios in more than a dozen countries such as Turkey, and the eight major Hollywood film and television companies are relying on Netflix to export content to the world, of course, including the export of American culture, which is an important phenomenon that has to be reflected. China's Internet video giants can actually develop overseas, become chinese cultural messengers, and show China's "soft power"!
Make an abstract analogy: the Internet is similar to a person's perception and nervous system, finance is like a person's blood, and industry is a muscle. Games are a means of entertainment and also carry core scientific and technological capabilities such as 3D engines; social networking is the dissemination of information, but also needs to carry civilization. Chinese Internet technology companies represented by BAT are also shouldering the new function of "reality" with innovations that look "virtual", which is also in line with the traditional wisdom of "virtual and real" in the Tao Te Ching.
To sum up the above, it is of great significance for BAT to integrate innovation across industry boundaries in the future and global technology competition. China needs a more powerful BAT such as a global innovation investment ability and other technology giants, from the perspective of the healthy development of the industry BAT growth should not have a ceiling, scientific and technological innovation and R & D investment continues to deepen before it can become a world-class industrial technology giant, in order to have the strength and confidence to compete with the top technology companies in the United States.
At the end of the article, we want to calm down again, return to objective and rational thinking around the opening question, and have a more pertinent suggestion. Confucius also had a philosophical saying: "Eat and drink, bend and sleep, and enjoy it." Unrighteous and rich and expensive, to me is like a floating cloud. Although this sentence is a little high in the business field, for BAT, which is determined to be good in science and technology and empower industry, this kind of mind and strategic determination is needed, which is also a spur and reminder for all Internet companies in China. Continuously "making China's digital economy stronger, better and bigger" is a call of duty, helping the real economy to be arduous and the road is long, and only with the determination of the return of the king can we make great achievements.