Business will boom in open cyberspace
China holds a pivotal role in the Internet. It had more than 650 million Internet users by the end of last year and it is the largest and fastest growing information and communications technology consumer market in the world. The Chinese ICT sector is currently valued at €433 billion ($474 billion) and it is growing at an annual average rate of 7 percent, the fastest in the world. The country has made tremendous progress in Internet development in the past decade having become the most active e-commerce market in the world.
However, ifwe look at the distribution of the world’s ICT sector, China does not rank first. It ranks third. In 2012 China accounted for 13 percent of the world’s ICT market, behind theUnited States (32 percent) and the European Union (23 percent). In the same year, the value of the EU’s ICT sector exceeded €516 billion.
These figures show the tremendous growth opportunities of China’s ICT industry. Obviously, the strategy should not be just to copy leading brands or seek to produce “Chinese” products. The ICT industry is not the car industry. It doesn’t just produce a series of final products; it produces interconnected systems too. In the ICT industry, we cannot innovate in isolation. Each single newproduct or system needs to be compatible— to interoperate— with those of upstream service providers and of the applications that users want.
Even more than in other globalized industries, the keyword in ICT is specialization. In other words, China should not promote investments in areas where other countries or economies are strong, but seek cooperation instead. In this regard, an analysis of the ICT statistics of China and the EU show how complementary China’s and Europe’s ICT sectors are.
China is very strong in manufacturing— more than 50 percent of the ICT sector comprises the manufacturing of telecom equipment, consumer electronics and electronic components. The EUinstead dominates in high-end innovative services and IT applications, which together account for more than 55 percent of regional ICT sector.
The EUis a major technology hub and it can provide a key contribution for the growth of newICT markets in China if adequate cooperation agreements are timely discussed and concluded, for example, in niche markets like the Internet of Things, smart cities, big data, e-health, cloud services, which will drive growth in the ICT industry in the next decade.
But opportunities for cooperation also exist in the “traditional” telecom segment. China and the EU are home to the world’s major telecom vendors. Synergies in 5G development are clear, especially following the signing of the EU-China Agreement on 5G in September in Beijing.
The EU-China political and economic relationship is very developed, though there are some challenges, which we need to overcome to improve cooperation in the digital field, such as the lack of mutual understanding of the reciprocal markets, divergences in the approach to cyber security and, related to it, a lack of global Internet confidence. Moreover there are substantial regulatory divergences between the Chinese and EU rules, for example, on consumer protection and data protection.
The EUhas just started its ambitious Digital SingleMarket strategy, which should in the coming years reduce barriers to doing business across the EU’s internal borders, provide EU companies scale and resources to grow and make the EU an even more attractive location for global companies.
The EU’s Digital SingleMarket strategy will offer substantial investment opportunities to Chinese ICT companies.
However, in the global Internet ecosystem, the concept of attracting investment by making one’s investment conditions more attractive than those in competing economies is outdated. We need a global single, open cyberspace.
The secondWorld Internet Conference inWuzhen, East China’s Zhejiang province, could be the starting point of discussions between China and the EU, for instance, on how to facilitate online purchases of digital contents and promote affordable high quality parcel delivery. Obviously, at a later stage anecdotal evidence should be complemented through academic study of respective Internet regulations in China and the EU.
The author is president of ChinaEU, a non-profit platform aiming to boost bilateral digital cooperation.