The Metaverse in China: What’s the hype all about?

March 25th, 2022

Digitalization in China 

The Metaverse in China: What’s the hype all about?

Without a doubt, the metaverse is one of the hottest topics in technology right now. What’s the metaverse? In a nutshell, it’s an immersive virtual space where online avatars can interact with each other. You can use the metaverse for gaming, work and everything in between. So it’s no wonder that it is increasingly becoming a battleground for companies that not only want to be in the metaverse, but also make profits there. Ever since Facebook changed its name to Meta, the trend has been unstoppable. We can see tech-companies racing to shape and develop the metaverse to make it more accessible to a broader audience.

While many of us are still discussing what the “metaverse” actually means and what use-applications it might have, big actors in China have already sprung into action. Interestingly, private companies are not the only force driving the metaverse’s expansion in China, it’s also the government. The Chinese government has big plans for Web 3.0 and wants to move first and set standards. Many technologies that are needed for Web 3.0, such as VR, AR, AI and cloud computing have been included in the current five-year plan. The Shanghai municipal government even made the metaverse a focus of the city’s five-year plan in relation to public services, entertainment and manufacturing.

Chinese private enterprise is also investing big in the topic. From September until November 2021, more than USD 1 bn. were invested in Chinese metaverse applications, and over 12,000 brands registered. Morgan Stanley puts the market potential for metaverse applications in China at USD 8 bn.

What’s behind the flashy numbers?

Where is all this investment going and what kind of use-cases have been developed? Here’s some examples:

Current developments include virtual avatars, who fulfill the same marketing roles for companies as real people in more traditional marketing. There are virtual livestreamers introducing products, virtual brand ambassadors like Alibaba’s Ayayi and even some first virtual celebrities. And there’s work being done constructing virtual worlds. For example, Baidu, the company behind China's leading search engine, has created its own world called “Xirang” that users can explore with their avatars and where they can interact with other users. Investors are buying virtual real estate and building houses to sell at a profit. Buildings can be saved in the form of an NFT and bought and sold by users with proof of ownership.

Other companies

Other companies, like the popular social media app Zheli have already managed to merge reality and metaverse. The app allows users to share their daily activities with up to 50 friends. The app shows location and activity status through a virtual avatar. Shortly after its release, Zheli become the most downloaded app in the Chinese App Store. (Note: At the time of writing, the app has been removed from the App Store as a result of privacy concerns)

An ideal environment thanks to hardware, software and a pioneering spirit

Most Chinese technology firms are still trying to figure out how to leverage the metaverse, and it’s still not a part of most people’s lives. Considering the ecosystem in China, with plenty of innovative companies, hardware supply-chains, government support as well as the speed and adaptability of both businesses and users, we expect China to be the birthplace of the first metaverse use-case that will truly excite large audiences. Western companies, even those that don’t see their place in the internet of the future just yet, are well-advised to keep an eye on China. It will only be a question of time until all industries have found their place in the metaverse.