
Ask HN: [from a16z article] Why are Chinese business models more sophisticated? - spir
Discussion of https:&#x2F;&#x2F;a16z.com&#x2F;2018&#x2F;12&#x2F;07&#x2F;when-advertising-isnt-enough-multimodal-business-models-product-strategy&#x2F;<p>Let&#x27;s assume that Chinese digital products have more sophisticated&#x2F;desirable user experiences, as well as greater diversity of revenue streams.<p>How might this be explained on a macro level?<p>Example conjectures:<p>1. Maybe Chinese possess greater capacity for product complexity. Eg. because of STEM education or introducing computers at an earlier age.<p>2. Maybe Chinese Keynesian &quot;animal spirit&quot; exceeds that of the West-- greater raw, supply-side entrepreneurial drive, leading to faster experiments and better products.<p>3. Maybe China has more competition, and hyper-competition (competition within similar strategies) than the West, yielding greater competitive pressures driving product innovation.<p>4. The a16z article describes Chinese product innovations that are often network-based. Maybe Chinese society is more communal, yielding greater opportunity for network-based products.<p>5. Maybe Chinese consumers exhibit greater product switching behavior; they are more willing to try a new product vs. settling with a current choice. They are less satisfied with &quot;good enough&quot;, leading to greater product innovation due to retention pressure. In the West, young people exhibit greater product switching behavior, and this trait declines with age. Maybe China has more young people than the West, as opposed to greater intrinsic switching behavior.<p>6. Maybe the greater sophistication&#x2F;diversity of Chinese products is baseline macroeconomics: paraphrasing Adam Smith, &quot;specialization is limited by the extent of the trade network&quot;. Larger trade networks have better stuff of the same type, cheaper stuff of the same type, and new types of stuff. Maybe China&#x27;s domestic market is so large that their products are naturally of greater variance, including the variance of sophistication and revenue diversity.
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dang
Please don't submit articles this way. Instead, submit the URL and then post
your thoughts as a comment in the thread. That way your comment is on the same
level as everyone else's.

This is actually the reason why links are disabled by default in text posts.
From
[https://news.ycombinator.com/newsfaq.html](https://news.ycombinator.com/newsfaq.html):

 _This is to prevent people from submitting a link with their comments in a
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comments, just submit it, then add a regular comment._

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umeshunni
Some of it seems to derive from the fact that the payment systems in China are
more sophisticated/efficient.

Micro-transactions are easier to perform when it's cheap to transfer $0.03
from one entity to the other and that's not possible with ACH or credit card
systems in the US.

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nemothekid
The article does a pretty good job of explaining why Chinese business models
can be more sophisticated at a macro level:

> _Largely because many people could not afford a computer, China skipped the
> PC and the credit card; smartphones were the way many people were exposed to
> the Internet for the first time. So today, products aren’t just mobile
> first, many are mobile only. Mobile payments have penetrated the country and
> China has become a seamless digital society._

Payment friction doesn't seem to be as hard in China as it is in the West.
Beyond gambling-esque micro transactions, transactional payments don't really
exist - and attempts to do so have largely failed. For example many of the
ideas tried in the Podcasting section failed in the west. I comes down to

1\. Our payments infrastructure really works against small transactional
payments. Paying .30+2.9% on a $3 means 10% of your revenue goes to payment
processing

2\. There isn't a very widely penetrated payments platform that is low
friction - meaning users would rather turn away than pull out a credit card.
Not to mention credit card processing isn't perceived as completely safe -
there's an added risk for every new site I give my credit card too that they
might overcharge me or get hacked and dump my data.

China doesn't seem to have these problems, and when your customers are more
willing to pay because they feel more comfortable paying for things online,
you as a company can experiment with more business models. IMO, Western
companies are forced to think about advertising or SaaS in order to streamline
the payment process. In each section of the article, alot of the
"diversification" comes down to micropayments.

I find it interesting, in the Video section, the article compares to iQiyi to
YouTube, instead of Twitch, which is less reliant on Ads, but more on paid
subscriptions which include emojis, game tied purchases and special messages.

~~~
MuffinFlavored
What are Chinese mobile transaction costs/rates like?

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shanghaiaway
.1% iirc

~~~
MuffinFlavored
Do you think America needs to get there? Aren't credit card
processing/PayPal/Apple Pay/Amazon Pay all hovering at like 3%?... What will
it take to drive those prices down?

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samblr
Regulation bodies, existing payment infrastructure, perception of privacy
concerns are some of primary hindrances for a super app to not exist in west.

~~~
karlmcguire
> super app

Are you referring to WeChat? If so, I think Telegram is well positioned for
that in the west.

~~~
samblr
Have been happy user of telegram, what is new?

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karlmcguire
Telegram's creating a blockchain platform for payment processing on the app.
Telegram TON or something. Raised a few $B for the funding.

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nitwit005
Most of these ideas aren't China specific, or Chinese innovations. Korea was
often the innovator with mobile oriented content.

Paid webnovel services exist across much of Asia, and they've been trying
(mostly failing) to get that to work in the US. See webnovel.com for an
example of that.

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dragontamer
The premise of the article implies that there are only "subscription" based
models, and "advertisement" models. And really, all I have to point out is
Patreon (which is a subscription / donation model), which already blows a hole
in the argument entirely.

Consider the team behind "Kurzgesagt -- In a Nutshell". Beyond just Youtube
clicks + Patreon, they're also an animation agency who contracts out their
artistic skills:
[https://kurzgesagt.org/agency/](https://kurzgesagt.org/agency/)

Patreon subscribers get some mild benefits, but for the most part, the whole
world enjoys their videos for free.

\------------

In addition: there's a huge community of free advice (rather good advice too)
for a variety of topics in Western culture. Reddit / GameFAQs / Wikis have
basically killed video game guides (RIP Prima Game Guides), because you can
get deeper information from community websites.

Why buy a game guide from Prima (which will inevitably go out of date), when
communities are able to build websites / extract frame data / hack the game
for precise information for free?

[https://www.smogon.com/bw/articles/bw_complete_damage_formul...](https://www.smogon.com/bw/articles/bw_complete_damage_formula)

This is the level of competition you've got, for free, in the game of Pokemon.
No serious game guide company is ever going to be as complete as the analysis
available for free in the general Pokemon community.

Just because there's no $$ on this project doesn't mean that its worthless. It
just means that free information in the West more readily available, to the
point where game guide companies cannot compete.

And there's a huge variety of topics: from programming, to finances, to more,
where good, solid reliable advice is free. Python communities, Blender 3d
modeling, etc. etc. Its certainly a problem for authors / podcasters who wish
to get paid, but I'm not entirely sure if it is a general problem in Western
Civilization in general.

In short: Wikipedia (and other, more niche, community wikis) have killed the
encyclopedia (and other non-fiction sources) in USA Markets.

That doesn't exist in China because China has blocked Wikipedia, allowing for
a thriving nonfiction Book / Podcast market to exist. I'm not Chinese, but my
understanding is that the free-information / Bloggosphere / Wikisphere in
China is far weaker due to free-speech / censorship issues.

I'd take the open society of the Western World with free (in beer) and free
(libre) speech any day over high-revenue for podcasts.

~~~
heavenlyblue
Patreon isn't Facebook for money.

