- November 19, 2020 Technology
How Silicon Valley Views China Across Five Dimensions
The past decade saw China grow from a bit player to a central actor in the global technology ecosystem. That rise and its associated impacts have led to an equally dramatic change in the way Silicon Valley sees China. These shifts are often boiled down to oversimplified dichotomies: “imitator to innovator” or “partner to rival.” But in reality, Silicon Valley’s perceptions of China have always been multidimensional and dynamic, shaped by technological and geopolitical currents.
Depending on when and who in Silicon Valley you ask, China has been seen as a copycat, a competitor, a key growth market, an inspiration, and a warning sign about the impacts of technology. By charting and visualizing the arc of these competing perceptions over time, certain trends and inflection points come to the fore in the relationship between the world’s premier tech ecosystems.
A few important notes on the charts are in order. First, the trend plots presented here are derived from my subjective assessments of these factors, not quantitative data such as sentiment analysis. These assessments are based on hundreds of interviews, off-the-record conversations, and collaborative projects with actors throughout Silicon Valley: entrepreneurs, investors, engineers, executives, and researchers. As such, this is an attempt to synthesize the prevailing views in Silicon Valley over these years.
Second, the Y-axis represents the “mindshare” of each dimension—which I’ve defined as the extent to which Silicon Valley views “China as a _____” in a given time period. The general upward trajectory in the plots reflect the growing prominence of China in the mind of Silicon Valley over the decade.
Figure 1. Silicon Valley’s Views of China Across Five Dimensions, 2010-2020
These five dimensions can be divided into three periods (see Figure 1). From 2010-2013, China was primarily viewed as a copycat and a potential market, with the country slightly receding in prominence due to the enduring blocking of US tech companies. During the 2014-2016 period, Silicon Valley’s interest in China rose dramatically, due to both the rise of WeChat and Chinese mobile payments, and also to leading US tech companies pushing to enter the Chinese market. Finally from 2017-2020, Silicon Valley’s general views of China grew more complicated and contradictory, due to growing competitiveness of Chinese firms and the ways in which the technologies they created were used by the Chinese government.
At the same time, there has been a near-total inversion of the dominant perceptions of China. Where “copycat” and “market” shaped views in 2010, those factors have declined the most. Meanwhile, the least important dimensions a decade ago—inspiration, competitor, and warning sign—have risen to become the main ways that Silicon Valley views China.
To zero in on these dimensions for comparison, I’ve juxtaposed the most prominent trend shifts into two batches: business and technological.
Figure 2. China Viewed Mainly as a Market Competitor Since 2018
Perceptions of China as a market and Chinese companies as competitors rose largely in synchronicity from 2010-2017 (see Figure 2). That’s because Chinese companies were seen as competitors only within the Chinese market.
After a period of commercial retrenchment from 2010-2013, the business relationship picked up from 2014-2015. During this period Apple’s China revenue grew dramatically; Uber, Airbnb, and LinkedIn all made efforts to compete in China; Google and Facebook began exploring re-entry; and ambitious US startups began incorporating China into their global strategies. But this spate of market optimism and head-to-head competition receded during 2016-2018, when it became clear that the Chinese market was a dead–end for many Silicon Valley companies.
In 2019 and 2020, perceptions of China as a market and competitor diverged for the first time, due to the globalization of Chinese technology products, especially TikTok and Chinese smartphone brands. Competition between companies in the two ecosystems has now moved out of the Chinese market and gone global, ranging from the United States to Indonesia.
Figure 3. China Represents Both the Potential and Perils of Technology Applications
While “copycat” dominated perceptions about Chinese technology up to 2015, it has since been replaced by two competing dimensions: China as a source of inspiration and as an ominous warning sign (see Figure 3). Driving the “inspiration” dimension was growing awareness of the dynamism in China’s mobile ecosystem: the rise of WeChat as a superapp, the proliferation of mobile payments, and the hundreds of new products and business models spawned by that software.
But growing excitement around Chinese innovation took a hit starting in 2017, as people in Silicon Valley began learning the extent of China’s tech-powered surveillance state, particularly its application in the mass internment of China’s Muslim Uyghur minority. Silicon Valley has always had concerns over Beijing’s online censorship regime, and the way the government could limit Chinese citizens’ access to information. By 2020, that concern had metastasized into fears over the way technology was granting Beijing unprecedented access to information about its citizens.
The rise of TikTok over the last few years has again shifted some emphasis back to the inspiration dimension, with products like Instagram actively copying its features. But going forward, that inspiration will be tempered by an accompanying awareness of the many authoritarian applications of that same technology.
Matt Sheehan is a Fellow at MacroPolo. You can find his work on tech policy, AI, and Silicon Valley here.
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