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Elise Huang

A metaverse that is different from the rest of the world

Since Facebook changed its name to Meta last year, the term “metaverse” has become one of the most-talked-about topics around the world, including here in China. Despite its tightly regulated internet space, China is building up a metaverse under a brand-new ecosystem which could be valued up to US$8 trillion according to Morgan Stanley’s prediction. For brands looking to win this virtual game in China, it is worth taking a deeper look into the local market.

Chinese players of all sizes are rushing into the new virtual world, with some excited about the business opportunities, and some anxious about being left out. According to China National Intellectual Property Administration, there have already been 16,000 metaverse-related trademark applications filed by mid-February this year. And China’s tech giants have been actively investing into the software, hardware, and key infrastructure needed for building out digital assets for the metaverse.

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Here are some examples: Tencent, the world’s largest game publisher, announced partnership with American video game developer Roblox in 2019 for establishing a strong metaverse-related portfolio. Alibaba, China’s largest ecommerce company, just led a US$60 million investment round into augmented reality glasses maker Nreal and invested in the offline virtual reality experience center Sandbox VR. TikTok parent company ByteDance, spent US$1.4 billion to acquire China’s leading virtual reality headset maker Pico to strengthen its metaverse hardware capabilities.

Yet, there are going to be a set of regulations to comply with, which makes China’s metaverse different from the rest of the world. Cryptocurrencies for instance, won’t play a major role in the Chinese version of metaverse as the country has banned cryptocurrency trading and mining to avoid illegal activities. Instead, the existing Chinese digital payment, such as the China’s nascent digital yuan, will likely take their place. Nevertheless, according to Tencent’s president, Martin Lau, the Chinese government isn’t fundamentally opposed to the concept of the metaverse. For them, developing an inward-facing metaverse is also vital for boosting the development of domestic and self-sufficient cloud computing and blockchain technologies. In the opinion of experts, a ‘clean, censored, compliant and crypto-less’ virtual space is what the country is trying to build.

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Despite the foreseeable restrictions, some believe China’s metaverse will thrive, because Chinese consumers are generally open-minded towards new technologies and are quick to adapt to new trends under the rapidly changing Chinese digital landscape. The term “metaverse” has definitely sparked interest in the citizens. Until April, the hashtag “metaverse” has over 1 billion views on the Chinese Twitter Weibo. A Chinese app launching an online course about the metaverse has been signed up by more than 45,000 people in less than a month, generating over US$200,000 in revenue. In a 2021 survey conducted by Statista about “awareness of metaverse among Chinese netizens”, over 60% of Chinese internet users indicated a clear intention to socialize in the metaverse. Expert analyzed that the prolonged isolation due to the widespread lockdowns in the country possibly accelerates the development of the metaverse. Because people are getting tired of the same web-based lifestyle and are seeking more personalized and human online interactions.

To win over these digitally savvy Chinese consumers, a race in the virtual world has taken place in China in all forms.

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As Gen Z show increasing interest in two-dimensional ACG (Animation, Comics and Games) content, a growing number of brands are adopting virtual influencers to entice these fans, according to Jing Daily. One of the front runners is virtual human AYAYI, who has collaborated with brands like GUERLAIN, Burberry and Kiehl's, as well as featuring in China’s first virtual magazine “MO Magazine”. Another successful example is Chinese original trend IP Marsper, dressing in suits from Gucci in a glittering fashion show.

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In China, NFT are referred to as 'digital collectibles' rather than 'tokens' as there’s no resale market for crypto assets. The Chinese version of NFT is more a marketing opportunity than a direct source of profit. A recent example is Xiaohongshu, China’s popular lifestyle-sharing platform, which launched its own digital collection platform named “STEP INTO R-SPACE”, rolling out a number of digital collectibles. Users are allowed to purchase the digital arts directly with Chinese mobile payment app like Alipay and WeChat Pay. Meanwhile, some are actively exploring economic relationships between content creators and fans, such as CryptoC Labs. It is now one of the most influential NFT communities in China, with a crypto art gallery launched just last year.

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China’s Internet titan Baidu launched a metaverse app XiRang (Land of Hope), which allows up to 100,000 users to explore the surroundings at the same time. And in February this year, a Chinese proto-metaverse social app Jelly became a viral, gaining over one billion active users in less than a month. In here, users can share their daily lives with close friends by their own 3D avatars. Also, ByteDance, owner of TikTok, is now testing its first metaverse social app called Party Island, where users’ personalized avatars can meet up, chat and join events with others in real-time.

Although China is still at an early stage of developing metaverse, local companies and consumers are ready to give this new technology a shot, especially the country’s Gen Z, who grew up with high standards of living and advanced technology. These digital natives see virtual worlds as a natural evolution and new ways to express themselves. Exciting experiences and connections are what they are craving for. Reportedly, China’s Gen Z expenditures accounts for 13% of their household income, compared with 4% in France and Germany. Despite accounting for only 17% of China’s population, Gen Z contributes to 25% of the spending on new brands. And their purchasing power is still growing. Hence, it is key for brands to align their marketing strategies with local rules and preferences to offer both functional and emotional benefits to the consumers. Building metaverse by partnering up with powerful third-party platforms in China, could be an opportunity for brands to establish deeper ties with these consumers of the future.

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About the Author
Ching-yu (Elise) HUANG is an expert in cross-cultural marketing. A Taiwanese having lived in Europe and the USA, she has experiences working with an extensive range of projects in Chinese, English and French. Currently Content Manager in the AVANTGARDE Group in Shanghai.

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