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The side-effect was definitely not accidental. China has blocked the major company in every internet industry (social networks, search engines, video streaming,

by maged 12y ago

The side-effect was definitely not accidental. China has blocked the major company in every internet industry (social networks, search engines, video streaming, etc.), and as a result domestic products are booming. Now these domestic products are starting to expand internationally with the revenue they get from the artificial Chinese market. Korea did something something similar with its Chaebols' (Hyundai, Samsung, or other large Korean companies in countless industries) in the 80s. It had protectionist policies that let the Korean companies charge outrageous prices domestically, and used that revenue to become very competitive internationally. And it worked.

RodericDay 12y ago
"Bad Samaritans" by Ha-Joon Chang, a South Korean economist now at Cambridge University, is a good light read fleshing out these ideas.
netcan 12y ago
When the companies in question are google, facebook, twitter, etc., it's a lot more difficult to make the normal "utility calculus" arguments that are the way most economists understand the cost of protectionism to domestic consumers. When you look at the cost per vehicle paid by consumers in scenario A vs scenario B, there's a clear argument to be made. With services, it's more speculative. Is the average haircut in China better or worse than Malaysia's? With web services, it's near impossible to measure consumption or consumer surplus. The underlying economics driving normal goods and services industries (economies of scale, price competitions, marginal costs of production) aren't there. That makes the economics we can measure in goods industries and theorize in services industries very shaky. Economists generally do have a sense that choice is good and protectionism is bad, but it's hard to formalize or measure when the products are newspapers, search engines, social networks and dating apps.
spoomor 12y ago
Google never got much market share before it was more seriously blocked. ICQ too failed compared to QQ despite not being blocked. I think the bigger reason is foreign companies just don't provide what Chinese people want - ie Chinese language and millions of flashing banner ads.
- intopieces 12y ago
  I think your theory might be chicken-and-egg. Without access to the website easily, companies don't have a real reason to invest in Chinese language versions of their service.
  - not_with_retard 12y ago
    Both Google and ICQ had almost two decades before they were blocked.
Al-Khwarizmi 12y ago
Actually, all the major economic powers got there by means of protectionism. Economic liberalism is nice when you're already at the top.
- Synaesthesia 12y ago
  Yes, this is true, going back all the way through history.
- tim333 12y ago
  Is that true? I got the impression the US and UK mostly became major economic powers by being ahead on tech in their day and China mostly by undercutting everyone on price through low wages and low environmental protection. OK China is protectionist but iPhones are made there because it costs less, not because of restrictions on importing phones to China. Dunno if you've got a source? I'll give you protectionism seems to have worked for S Korea though I'm not sure I'd call it a major economic power. Also what I'd think of as the most similar competitor in the area, Taiwan, has a higher gdp/captita without all the Chaebol protecting stuff.
  - latch 12y ago
    The US became an economic power in large part because of slavery [1]. And I don't mean to say that in a snarky or condescending manner. The US is hardly the only country to give itself advantages. As you say, China's taking advantage of the environment. Protectionism is extremely active (subsidies and import tariffs). Wages are kept low. Comfort and suffering seem to go hand in hand. Subsidized rice creates a surplus, which floods the market, which [seemingly paradoxically, but not really] results in famine in Haiti. [1] - http://www.salon.com/2014/09/07/we_still_lie_about_slavery_heres_the_truth_about_how_the_american_economy_and_power_were_built_on_forced_migration_and_torture/ http://www.salon.com/2014/09/07/we_still_lie_about_slavery_h...
    - tim333 12y ago
      I can believe you on the slavery thing but that's not really protectionism. Without being moralistic about anything I'm still skeptical that protectionism, as in restricting imports, works particularly well for a country as a whole.
turingbook 12y ago
A Chinese insider here. Most China Internet companies are more successful not because their foreign competitors are blocked, but they are more agile to move and adapt products/services to local market. There are lots of examples. Alibaba beat eBay(never blocked) badly. JD is much popular than Amazon.com China which is continuously operating in China for long time. Tencent becomes an Internet empire via QQ, an instant messaging service which AOL, Yahoo, Microsoft all can not find reasonable monetization ways. Maybe the best counter-example is Baidu with Google nearly blocked fully. But before that, after several years operating, Google' market share is below 30%.
- skratlo 12y ago
  Note the wording here: agile, adapt. So you develop a copy of a "western" product/service, then block the original from the west and "market locally". Great, genius. To me this is the totalitarian equivalent of import tax.
killnine 12y ago
How can you be so sure it was not accidental? Seems to me, the need to be in control is enough motivation for these acts... without ever thinking that someone will have to build a Chinese amazon

by maged 12y ago

RodericDay 12y ago

"Bad Samaritans" by Ha-Joon Chang, a South Korean economist now at Cambridge University, is a good light read fleshing out these ideas.

netcan 12y ago

When the companies in question are google, facebook, twitter, etc., it's a lot more difficult to make the normal "utility calculus" arguments that are the way most economists understand the cost of protectionism to domestic consumers. When you look at the cost per vehicle paid by consumers in scenario A vs scenario B, there's a clear argument to be made. With services, it's more speculative. Is the average haircut in China better or worse than Malaysia's? With web services, it's near impossible to measure consumption or consumer surplus. The underlying economics driving normal goods and services industries (economies of scale, price competitions, marginal costs of production) aren't there. That makes the economics we can measure in goods industries and theorize in services industries very shaky. Economists generally do have a sense that choice is good and protectionism is bad, but it's hard to formalize or measure when the products are newspapers, search engines, social networks and dating apps.

spoomor 12y ago

Google never got much market share before it was more seriously blocked. ICQ too failed compared to QQ despite not being blocked. I think the bigger reason is foreign companies just don't provide what Chinese people want - ie Chinese language and millions of flashing banner ads.

intopieces 12y ago
I think your theory might be chicken-and-egg. Without access to the website easily, companies don't have a real reason to invest in Chinese language versions of their service.
- not_with_retard 12y ago
  Both Google and ICQ had almost two decades before they were blocked.

Al-Khwarizmi 12y ago

Actually, all the major economic powers got there by means of protectionism. Economic liberalism is nice when you're already at the top.

Synaesthesia 12y ago
Yes, this is true, going back all the way through history.
tim333 12y ago
Is that true? I got the impression the US and UK mostly became major economic powers by being ahead on tech in their day and China mostly by undercutting everyone on price through low wages and low environmental protection. OK China is protectionist but iPhones are made there because it costs less, not because of restrictions on importing phones to China. Dunno if you've got a source? I'll give you protectionism seems to have worked for S Korea though I'm not sure I'd call it a major economic power. Also what I'd think of as the most similar competitor in the area, Taiwan, has a higher gdp/captita without all the Chaebol protecting stuff.
- latch 12y ago
  The US became an economic power in large part because of slavery [1]. And I don't mean to say that in a snarky or condescending manner. The US is hardly the only country to give itself advantages. As you say, China's taking advantage of the environment. Protectionism is extremely active (subsidies and import tariffs). Wages are kept low. Comfort and suffering seem to go hand in hand. Subsidized rice creates a surplus, which floods the market, which [seemingly paradoxically, but not really] results in famine in Haiti. [1] - http://www.salon.com/2014/09/07/we_still_lie_about_slavery_heres_the_truth_about_how_the_american_economy_and_power_were_built_on_forced_migration_and_torture/ http://www.salon.com/2014/09/07/we_still_lie_about_slavery_h...
  - tim333 12y ago
    I can believe you on the slavery thing but that's not really protectionism. Without being moralistic about anything I'm still skeptical that protectionism, as in restricting imports, works particularly well for a country as a whole.

turingbook 12y ago

A Chinese insider here. Most China Internet companies are more successful not because their foreign competitors are blocked, but they are more agile to move and adapt products/services to local market. There are lots of examples. Alibaba beat eBay(never blocked) badly. JD is much popular than Amazon.com China which is continuously operating in China for long time. Tencent becomes an Internet empire via QQ, an instant messaging service which AOL, Yahoo, Microsoft all can not find reasonable monetization ways. Maybe the best counter-example is Baidu with Google nearly blocked fully. But before that, after several years operating, Google' market share is below 30%.

skratlo 12y ago
Note the wording here: agile, adapt. So you develop a copy of a "western" product/service, then block the original from the west and "market locally". Great, genius. To me this is the totalitarian equivalent of import tax.

killnine 12y ago

How can you be so sure it was not accidental? Seems to me, the need to be in control is enough motivation for these acts... without ever thinking that someone will have to build a Chinese amazon