Despite Regulatory Hurdles, Chinese Tech Giants Forge Ahead in Web3
Chinese tech giants Tencent and Huawei are making significant strides in the Web3 space, despite the country's strict regulations on cryptocurrency trading. At the recent Staking Summit in Istanbul, a premier event for proof-of-stake (PoS) protocols, Tencent and Huawei exhibited their booths alongside prominent industry figures, as reported by TechCrunch.
Over the past year, Chinese tech companies like Alibaba, Tencent, and Huawei have become increasingly visible at various crypto events worldwide, either as official sponsors or discreet attendees. While their participation straddles the line between Web2 and Web3 due to China's cryptocurrency ban, these companies are leveraging their computing resources to cater to Web3 startups, similar to how they provide cloud services to established tech verticals.
Despite cloud expenses for decentralized networks still being relatively low, Chinese cloud providers are actively venturing into the crypto space. The report attributes this to their competitive advantage in the global cloud market: "As underdogs in the global cloud market, Chinese firms are far more proactive and accommodating with customers because they lack brand recognition, especially in the West. As such, they have to compete by offering cheaper — or better services."
In addition to providing cloud infrastructure, Chinese firms have expanded beyond their core products, putting them in direct competition with crypto-native companies. For instance, they have been involved in building enterprise blockchains, avoiding the public blockchain realm that heavily relies on tokens due to China's crackdown on cryptocurrencies.
Some Chinese tech giants also offer node-as-a-service businesses. Blockchains operate on distributed nodes, which can be expensive and complex to maintain. To address this, companies like Huawei provide node hosting services, enabling enterprises to build decentralized applications without requiring high technical expertise.
Chinese Tech Giants Forge Strategic Alliances with Crypto Projects
Tencent and Alibaba, as pioneers among Chinese tech giants in the Web3 sector, have forged partnerships with respected projects to enhance their reputation in the industry. Tencent has collaborated with public blockchains like Sui, Avalanche, and the Ethereum-scaling solution Scroll. Meanwhile, Alibaba has joined forces with Aptos, a blockchain developed by former Meta employees, to increase its presence in the Web3 world. The two companies recently announced their co-hosting of hackathons in the Asia Pacific region, utilizing the Move programming language.
Currently, Web3 has not significantly impacted the top-line revenues of Chinese tech giants. However, these companies recognize the immense potential of the emerging industry and understand that they cannot afford to overlook the opportunity, despite market volatility and the collapse of major players like FTX.
In May, the Beijing Municipal Science and Technology Commission released a white paper in a bid to foster innovation and development within the Web3 industry. Dubbed the "Web3 Innovation and Development White Paper," the paper aims to establish Beijing as a global innovation hub by allocating a minimum of CNY100m ($14m) annually until 2025.