hi there welcome to another episode on Pascal's China lens we're going to talk about the metaverse more specifically about China's metaverse and in Chinese the metaverse is called you a new Joe and this is a metaverse just like the metaverse in the west except it's not there's something different I mean not from the building blocks I mean the metaverse is really an immersion in the virtual world where we create a new world where we can live in and we can communicate we can work we can play we can do a lot of things in but there's some difference between China and the West let me explain a little bit more well it all started some time ago with a company called Roblox that really was created or had created a virtual world on itself before we remember maybe Second Life a game that Chinese were addicted to but Roblox really made it come to life in a real metaverse first idea of the concept but it really started taking off when Facebook and Mark Zuckerberg renamed his company Facebook into meta and so suddenly the whole company including Instagram and everything had one name it was called meta and Mark Zuckerberg invested billions and billions of dollars into that new Direction this is when the hype started that was about October 2021 and everybody thought this is going to be the big new trend the big hype everybody jumped on that band Morgan Chinese did as well and so you had companies like Baidu the Google of China that created its shiran metaverse which means Land of Hope a complete virtual new world that they created where you could actually be part of a immersive virtual world this was similar to metas or Facebook's world that they created and so this meta world that is being created is a new world where you could do anything you want and actually create anything you want it's like living in a game if you could say it but it's more than just playing the game of course companies like by Dance The Tick Tock of China then they acquired a company called Pico and that got them a VR headset why VR well in the metaverts VR is one of the critical components because with virtual reality VR you can actually see everything in 3D and this is very useful of course if you want to live in a world that is similar to our real world now it's not just buy dance and and Baidu the Google of China and even Alibaba and tencent I mean every company in China was starting to invest in the metaverse by the end of 2021 I mean there were already hundreds of companies in China that had registered trademarks into the metaverse or even startups that had their name in the metaverse OR meta in their name adopted and so you could really see that this hype that we had in 2021 was not just in the world it was primarily also happening in China it's just we didn't really look at it that much simply because China was still in lockdown we had the pandemic and so nobody really looked at this new trend evolving in China like it was evolving in the rest of the world but then in 2022 the beginning of the year about a year ago now actually what happened is that Facebook stock or meta stock just tumbled and went from very high to below 60 dollars a share and this all happened because we all went back to normal work meaning the pandemic was pretty much over in the whole world meaning that we could travel again we could go to work we could do everything we wanted and the big hype that we would start living more in a digital world except of the physical world actually did not materialize and so a lot of people said well this whole hype of matter and metaverse is maybe not going to be that quickly and actually even Baidu and and Facebook's a matter confirmed that it could be a five to ten year investment before the metaverse would be as popular as the internet is today and so everybody the investors starting to get cold feet this is what happened just a year ago beginning of 2022. but the people that really kept talking about the metaverse at that time were the people that really loved the technology these were the gigs the technology nerds The Gamers that were the people that had built the platforms like meta and Baidu and so on and of course a lot of idealists now why idealists because the whole concept of the metaverse was really to create a new decentralized world now what is the metaverse a small definition which gives a meaning to what it actually means simply set the metaverse is an indefinite unending virtual experience with its all own functioning economy fully functioning economy so it's like a new world a virtual world but it's like our own economy it could be any economy it wants but it is actually functioning so the interconnected worlds of the metaverse will work together seamlessly so there's not just one metaverse there's multiple metaverses and they work together in complete sync or are connected with each other and individuals will create and contribute so they're really the creators people user generated content and Creations to the content and experiences of the metaverse so here a little bit like the Matrix the movie I mean the metaverts in the in the concept that is created is all about creating this wonderful crazy new world where it's a complete economy where you can trade things you can buy things you can do everything you want go to work you can play you can shop and so on but in China the definition of the metaverse is a little bit different and that tells us a lot about why China metaverse is evolving in a different direction for the Chinese the Chinese metaverse is a new internet application so here is the interesting thing in the west the metaverse is looked at as a disruption to a new firm of internet in China it's much more looked at not at A disruption but a transformation to the next internet world and this has to do with an internet application and social Arena similar to what we have now but it's new and it's integrated with various new technologies think about VR think about augmented reality in a virtual space in one world or an online World basically that mirrors the natural or real world and it's increasingly realistic in a digital landscape and what does that actually mean think about it as Alice in Wonderland and Through the Looking Glass which is one of my favorite movies of all time where Alice goes through the glass through the mirror and then she comes into a new wonderful life and it's enhancing it's it's strengthening the real world meaning it is like the real world but it's not but it's really enhancing the real world and this is the definition that the Chinese government is also giving to the metaverse the metaverse according to the Chinese institutions and government is really to enhance the real and to use the virtual to strength the real so it's actually to make the Real Environment the real life the physical life we live in stronger and better and more efficient and not just to create a new world like in a matrix where everything has to be redefined and so I think this is where the difference in definition between China's metaverse or the China verses and the metaverse in the West in the west we're looking a lot at creating these virtual new worlds with new ways of dealing with each other and new ways of socializing and so on while in China they're looking at a new world that is actually mirroring the exit existing world and strengthening it and of course these two worlds they're both existing and so it's hard to say which one will be the most exciting but China is really focused on enhancing and mirroring the real world more than creating a new virtual world but of course these two worlds are going going to converge except that the China verse will be closed off just like the internetings closed off in China as well and so there's not going to be a lot of connections with the metaverse outside there but really the metaverse is about working and playing in a new virtual world it's about creation it's about socialization it's about shopping basically everything you do in the real physical world today you could do in the metaverse tomorrow and so from that definition it's the same so the big big difference is really everything to do with the fact that China is trying to mirror the real world and we in the west are trying to create a new world and so is the metaverse going to be the next big thing of course it will be the next big thing it just could take 5 to 10 to 15 years before the experience is really immersive and that has to do a lot with the hardware and all the environments the building blocks that are still being built to have a perfect experience for users but in China it's going to involve maybe even bigger than in the rest of the world for the simple reason that their focus is more limited than the rest of the world and so use cases could actually apply most faster and I believe there's three things that China is doing extremely well when it comes to the metaverse which are actually giving its more power than the metaverse outside of China it has to do with the infrastructure it has to do with the use cases that they're building and most important the adoption of users to go into that new virtual experience and virtual world let's go through all three of them if we go through the first one the infrastructure I mean there's a few things that we need we need Hardware we need platforms to actually build a metaverse or a new world we need of course high speed of communication and we need regulation because otherwise if you don't have regulation how can you act actually make a new world functioning like the real world or a new economy and so this is what we need now if we take the first one Hardware it's very clear that China is very good at building Hardware I mean then the factory of the world and so if we then look at one of the most important components of hardware in the metaverse it's virtual reality and so you need a VR headset a virtual reality headset now the best of them built like okaloos and HTC from Taiwan and the Sony and there's many companies worldwide that have built this Hardware they're usually coming from outside China I mean China has one with pico that they bought from Biden's or Tick Tock and there's some others but the really high-end VR headsets are still coming from from outside China most of the times it's just a matter of time before China catches up but they're still a little bit behind on billing that best experience you can have but when we look at pure quantity that is where China is going to lead because China wants to make this VR headset not just the best but they wanted to make the most affordable and this is not just into the headsets they're also looking into what we call mobile VR where you just put your mobile phone into a headset and you can actually experience the VR as well I mean it's maybe not as perfect and as cool as a really high-end VR headset but then again neither is the content being built today which means that China is following the content and use cases much closer than actually the use cases being built for the metaverse today and so the whole idea of China is to go into quantity and then over time catch up into quality and I think that's a better strategy when it comes to user adoption because people will be able to play with it much faster at a much cheaper price and specifically when we look at augmented reality which is basically just glasses that you get you put the glasses on and what you have then is basically an extra layer of information so it's not as if you live in a completely perfect 3D world but you get a lot of information China is focused very much on augmented reality I even believe that augmented reality or ar is going to take off in China much much faster than VR and much faster than the metaverse outside China and the reason is simple it's just cool to do it's very inexpensive and it gives you this extra layer that you often need in the real world things like prices things like information things like menus of restaurants things like playing a game in a taxi and all these kind of things that you could do just with putting on the glasses or having an extra layer on top of your glasses and so Alibaba is one of the companies that has invested big into AR and they actually are now selling these AR glasses and you could use it when we are shopping into one of the Alibaba shops which are called the hermasters and so on go to restaurants you get the information this is really really cool and so this is why I think China is doing pretty well when it comes on hardware and probably is going to be ahead of the rest of the world besides the high quality and then you of course have the platforms I mean we have the Facebooks we have companies like Google we have Microsoft we have all these companies in the west building this metaverse environment but if you look at China I mean they have their own Google they have their own eBay or Amazon they have their own Facebook which is called Baidu it's called Alibaba it's called tencent it's called bidance from Tick Tock and if you then look at the four different aspects of it these platforms has actually everything of the building blocks if you look at the perception and the display layer basically you need VR you need AR and that all four companies Baidu Alibaba tencent and buy dance from Tick Tock all four of them have it they also have an application layer specifically when it comes to social connections whether it's e-commerce with Alibaba or whether it's it's games with 10 cents or maybe even social e-commerce with buy dance and then you have the platform layer which is also important this is things like the nft and and the game engine you need and lots of things that are actually on that platform layer available but Alibaba with tencent and with Biden's and ultimately of course you need smart and secure technology think about Ai and AI chips you need cloud computing you need things like blockchain you need all that technology and all four companies Baidu Alibaba tencent Biden's they're all four are very much invested in all four areas and so what does that mean it means that actually China has all the building blocks to build the metaverse with the four big companies that they have but there's also a lot of startups that are building a lot of things around it so China's not lacking anything on the platforms when we look at the communication that is where China is leading the world 5G I mean it's simple China has 1.5 million 5G base stations that have almost half a billion users in 5G and so they're like three years ahead of a country like Belgium where I'm from because we most of the people that I know don't have a 5G cell phone in China half of the population that is on the internet has has actually 5G communication already available and so this is important for the metaverse because if the communication specifically if you want to work together you want to play together you want to socialize together if that communication is not going to be seamless well the experience is not going to be good but then the big but the big change will happen when 6G comes along and this is where China is already expecting this to happen by 2030 some are even saying 2025 28. now 2028 that's
in five years from now it means that Chinese companies are now building a metaverse preparing for or 6G that will be so much faster than 5G and of course 100 times faster than 4G which means you won't feel the difference in that virtual world this will be the moment where the virtual world the metaverse is going to be really immersive and you will feel as if you're living in a real world you need 6G for that and that is where China in my view will be a couple of years ahead of the West to do that and so this is why I think we should look at users cages because people are starting to build for 6G now now the other thing is the China verse itself the regulation and this has to do with the government and this of course is a big challenge in China because cryptocurrencies they're banned in China you can't trade them basically you can't make money of them you can't issue them so it's not being used it's actually illegal in China because crypto of course and the rest of the world is used for all kinds of things but also for illegal practices nfts or non-fungible tokens we talk about that in a minute later it's a digital asset it's also something that is not it's not allowed in China to trade just like it is in the rest of the world because it's not based on crypto I mean you can't use cryptocurrency as a way to trade your nfts and then you have the pla the plans and controlled environment of China well that is a belt and that is interesting because China decided on the 14th Five-Year Plan which was two years ago that they put all these building blocks the Technologies for the metaverse into a planned and controlled environment and so it becomes very important and so what we also see is that the metaverse or at least virtual reality so far has had no crackdowns while everything else in China in 2021 and 2022 got crackdowns when it comes to Technologies and so it clearly seems that Chinese government is leaving open the VR world the metaverse world to be developed and this is what we're seeing now they're also warning everybody to not get too hyped onto the metaverse because they are worried that people just like with cryptocurrencies or with P2P loans from before well just all go in there spend lots of money into that metaverse expecting to make lots of money and that could actually be a bad thing for the economy because people could get disillusioned if it doesn't happen and we've seen with Mata the Facebook today how the stocks just stumbled Chinese government doesn't want this big hype and then everybody losing their money whether it's companies or users or any investor that has put money into it and so they're cautioning everybody to go into the metaverse what it means is that China is opening up again for a new world a metaverse but at the same time is saying don't go crazy because otherwise you could get burnt now the second thing which is extremely important to create a ubiquitous metaverse environment where I believe China will probably lead the world has to do with the user's cases and very often you hear people say yeah metaverse is cool it's I mean it's it's really exciting but how do you use it where are the cases that companies can make money from it that Industries can be built on it I mean there's a lot of cool examples but do you see many people actually making money from the metaverse today this is also why this hype went over a little bit and not many people are talking about the metaverse today as they used to in 2021 but in China it's a little bit different and I'll explain that because there's a number of areas where I believe China is really looking at new use cases that we in the west should look at China it's about gaming and entertainment it's about retail and fashion it's about having a self-reliant Industries and policies around it and also things in education in sport and culture and in tourism if we take the first one gaming and entertainment I mean this is popular everywhere in the world China is no different the only difference is that the biggest company in gaming is a Chinese company in the biggest in the world it's called tencent and tencent has like a big part of the global Gaming Community that is using their games or playing their games and so tencent is one of the companies that is driving the gaming craziness in China already for many many years for 20 years now started with QQ the League of Legends it's there's fortnite there's a lot of things that they've created that Gamers all know very well and then there's entertainment of course I mean Chinese love entertainment if you think about something like Esports It's Entertainment Sports basically where it's all online this is something that we didn't see in the west at all so Chinese are used to live in a world of gaming in a world of entertainment which is virtual already for 20 years it's a little bit different than in the west but they love to be part of this new social environment now this is something that I think both in gaming and entertainment I see very little difference between China and the rest of the worlds and this is where you also see the first user cases happening in the gaming environment but this is also something that we expect but it's a community that is small compared to the huge community of the world but most of the people playing it are young people and they will be the first ones adopting into the metaverse but this could take five to ten years but then there's of course what we call nfts non-fungible tokens and this is if you want to have the definition of an nft it's a unique one-of-a-kind digital asset or digital item so think about it as an asset like we have in the real world but now it's in the virtual in the digital world and it can't be replaced with anything else it's on the blockchain so it's safe it's basically decentralized and so on so the nft is really just an asset nothing more but why is an nfts interesting well if you create an economy in the virtual world like you create an economy in the real world you need assets and you need to be able to trade sell them buy them use them because we are living in a world where we have physical items and now you have digital items in the virtual world and so nfts can be anything like music or art or fashion you can have a painting that you create as an nft and basically is the same as a painting in the real world except that it's digital and despite the fact that cryptocurrencies in China the trading of them and the mining of them is really banned in China Chinese nfts themselves are actually legal and so you can use nfts in China and you can operate nfts in China because you need these assets to live or to create a virtual metaverse or a meta world and so this is because the nfts in China these associate themselves with the trading and the popular cryptocurrencies that we have in the US so it's a different way of trading actually you can only trade in or you can actually sell them exclusively in the Chinese raminbi or local currency and you have to have the transaction make place or take place into a Chinese wallet think about WeChat pay or alipay and so what that means is that these nfts are actually using a Chinese environment to actually make this commercial thing happening and then of course there's the cbdc the Central Bank digital currency which we're going to talk about in a minute now the second thing has to do with retail and fashion and this of course China is really ahead of the world specifically when it's about retail think about online to offline merging omo what we call or the new retail which Alibaba coined in 2017 so five years ago six years almost this is something that China has led the world into connecting the online and the offline world for retail same is happening in the metaverse of course and so because it's so natural in China to connect the digital and the real world I mean the metaverse is very attractive for Chinese and also when we look at e-commerce where China is also almost having 40 percent of the world's e-commerce I mean you have these platforms like tmall and taobao in China that are just adding a layer of the metaverse or where Brands can actually put their products and experiences in the metaverse created by these platforms but it's not just the companies and the users it's also the cities that in China specifically are really competing on becoming the smart city of the metaverse or in the metaverse and this is something quite interesting in China the cities seem to be more eager to go into the metaverse than actually sometimes the companies or the platforms themselves and this is because they can create smart cities the metaverse allows them to make their cities more efficient and then you combine that with Brands you have the platforms you have the users I mean retail and fashion is just going to be crazy and this is really where we can see the world of the virtual world of retail really coming to life and before it was all using the mobile phone and China are ready for years users have used their mobile phone to find information of products find colors of products and find basically anything they need to know about the shopping experience and now the only thing they need to replace is actually their mobile phone by an AR augmented reality technology or VR technology although VR wouldn't be too exciting to work with the goggle into a shopping mall but you could do it to go online now the third thing has to do with policies and I think this is the most important when it comes to China because China of course is regulating the internet and one of the problems of regulating the internet is that you can't build anything you want but on the other hand one of the advantage of regulating and censoring the internet is that the government clearly says what the direction is they want to go and this has been made very very clearly this has to do with self-reliance China wants to be self-reliant for the rest of the world specifically in certain industries if you think about the chip industry that's getting banned and so on but all of these high Innovative Industries is something China really wants to get the productivity up this is important for China to get a higher productivity because if they don't get a higher productivity they're going to end their problems in the future because of the demography actually coming down there's less working people in China and so what you see is that China has actually created some real regulation into the metaverse OR at least when it is about virtual reality because they believe that many Industries are actually now poised already to actually be taken advantage of the metaverse to make it more efficient if you think about VR glasses it could be something to educate workers to actually have it more efficient or maybe in healthcare to do operations and so there's a lot of things or to learn to do operations by simulator this is a lot of things that could be really enhancing the real economy and that again is the definition that Chinese government is giving to the metaverse it's to enhance and strengthen the real economy and so I see a lot of use cases coming up in China just because the policies are there and it's very clear that VR has to be big and China wants to build tens and hundreds of industrial bases and companies worth billions of dollars into the VR and so we have to look at China when it comes to that but it's also to do with the culture with the education if you think about education China wants to reach the Gen Z the Young Generation really to become part of this new metaverse and this has everything to do with just making sure that the young people who will be the people that feel this metaverse is natural is normal that they understand early on and so you see a lot of things going into the education these days that is planned for the future but not just education work is very important and companies like Alibaba with ding talk and other companies are trying to experiment how working could become more efficient by using the metaverse or actually creating extra layers I mean all of these examples these days are still gimmicks and it's just trying out and so on but the fact that they're being implemented in the big platforms means that this is being offered to companies and to users everywhere around China but it's also to do with the cities as I said before the Chinese cities really want to become the metaverse cities of tomorrow and the day after tomorrow a city like Shanghai what they want to do is really experience or have people visiting the city or want to visit the city experience the city to the maximum and this is really about attracting or making the city more attractive it's really about tourism it's about culture it's about history it's about things that they can share to users so that people would talk about the city and actually the city would be more Central and more people would be interested to actually be part of this smart city and this cool City that China or Shanghai or Guangzhou or any City that wants to be a metaverse city is actually building now the third and last thing I want to talk about which really is going to make be a make or break deal when it comes to the metaverse has everything to do with the user adoption even if you have the best infrastructure like China is actually going to have specifically once 6G is there even if you have a lot of use cases that is cool to use you still need users to adopt it and this is where China could actually lead as well first of all you need content you of course need registration and you need to replicate the real world somehow and then you need people and this will be the Gen Z in China it's the Gen Z everywhere in the world and you need a way like nfts or way to trade and to have a real economy be built a financial with financial transactions now the first thing you need is good content actually great content because if you don't have good content you don't have great content ultimately users are not going to like it the first version of meta The Meta world was really crappy and so was that one of she rang the Land of Hope from Baidu so you need great content and to do that you need good ideas but China has no lack of great ideas we've seen that in the online World already I mean they're driving think about Tick Tock think about pindodo for example think about what Alibaba did with its shopping experience or tencent with its super apps I mean they know exactly how to build great content great IP if you think about Hollywood and China is the same thing in the cinema world and and so there's a lot of great ideas in China but you also need Studios what that means is you need creative people taking these ideas and making them into reality and China's always been more into the hardware than in the software area and this is why a lot of these Studios even tencent from China is actually using Studios from all around the world and not as many in China itself that is where China is still lagging behind and will have to catch up of course they could use the global Studios but at the same time that would not be self-reliant like the government ones and then you have of course all these trials that the cities are trying to do things and cool things and this is a trial and error environment a new environment but the more trials the more things people are doing the more people are going to start trying things and the more this metaverse is going to become and and real and then of course you need nfts to trade it but we've talked about that before but I think is going to be the real difference between China and the rest of the world is the Gen Z population is the people born after the year 2000 so this century and they're the oldest are 23 years old these days and so these young people I mean what they want to do is actually just be part of a new world and specifically in China the Gen Z it's all about just creativity it's about creating things it's about being entertained being entrepreneurs it's about doing social connections but it's really an environment where people want to collaborate they want to co-create basically this is everything that we don't believe about China the Gen Z population in China is very creative but we don't see or believe that they're creative in China because we don't believe Chinese are creative but the opposite is true when you go to the young people and this is also an opportunity for them to for the first time to really be able to be something someone that they couldn't be in the real world and this of course the metaverse is an ideal outlet for the Chinese young gen Z to actually be whoever they want and maybe they don't want to be in the camera for because they're ashamed or they're they basically feel that they are not fit for that camera but with the world of the metaverse they can be whoever they want and that is going to be the key and then you have the virtual influences which is pretty cool in China because this is a trend that is going crazy it's virtual influencers and and these are virtual Idols it's actually people will follow people and I'm talking about hundreds of thousands of people will follow these influencers even if they're not real but they look so hyper realistically real that people feel they're actually almost a real person and this is where China is also focusing a lot on voice this within the metaverse because if you get the voice right and you get all the expressions and all the movements of the people being very hyper realistic it almost feels as if you're talking to a real person and this is where China for the past year actually has been really going crazy and trending and we haven't seen that anywhere else in the world and this is also when you actually start believing that these avatars and digital people are actually becoming real that is the moment where the people behind which could be people that don't want to see the camera are actually the people you're talking about and they're giving you a different social experience this is a cool Trend and this is why I think gen Z in China are gonna take on this metaverse much faster as users than gen Z in the rest of the world where is mostly going to be about gaming and maybe some socialization but not as much maybe for shopping for retail maybe as much for not as much for education and so on because we feel it still to be unnatural the Chinese are making it very natural and the most important when it comes to the metaverse is actually if you want to make the virtual world a representation of the real world or you want to mirror the real world with the virtual world I mean you need to talk specifically in a working environment where the Chinese government is really focused on you need to talk with real people and to talk with real people you need real name registrations and this is where the rest of the world is different from China in China if you go and do the internet they know who you are why because you need to use your real ID to actually log on to the platforms like WeChat or maybe have a cell phone you need your real idea and this is probably not what the rest of the world would ever want because we want to be able to have free of expression freedom of expression for anything we want and we don't want always people to know who we are behind it but that of course creates scams and it creates problems on itself but the reality is that in China this is a world where the internet has been really flourishing for 20 years and that people in China are quite used to this real name environment but this is going to help really the user cases and users to log on to the metaverse because they know they're real and it means that connections are real playing is real working is real socializing is real shopping is real everything is real and it might not feel the metaverse we want to build in the rest of the world but for a user cases and for users this is actually pretty useful and pretty real and that is why this virtual world is becoming much more real in China than in the rest of the world and finally China is pushing really hard for a central bank digital currency and this is a Chinese currency many countries in the world are building a cbdc central bank digital currency what that means is that suddenly the real money in the real world is actually valued as the same as the Central Bank digital currency and so you can go from The Real World to the virtual world and use the same kind of currency you can trade it you can actually exchange it as if it is just a real world and so the reason why I believe the Chinese metaverse could actually take off much faster than in the rest of the world with many many more users and many many more use cases and much better infrastructure is simply because the metaverse in China is actually in its own bubble it means that they are defining very clearly what they want how they want it when they want it and basically users feel that this is an extension of the real world that they've been living in for a long time and it could just strengthen that real world it might not be the metaverse that we envision in the rest of the world and maybe in 40 or 30 years from now our metaverse will be much more cooler than the metaverse in China but this is not about being cool only it's also about where this trend is going to start first and boom first and where users are going to use it first and I'm convinced China has a very good chance of being a leader into the metaverse in the years to come
2023-02-13