Despite the rapid movement of China Since the ban on cryptocurrencies, local web3 talent has been quietly thriving, and many of them are moving out of the country.
From offering crypto-derivative products to creating NFT games, Chinese web3 entrepreneurs have a strong presence around the world. We spoke with a dozen Chinese founders and investors to find out how this group is trying to build a global web3 business while maintaining its roots in China and taking advantage of its home country’s abundant technical talent.
Many of them requested anonymity. Some do not want to attract the attention of the authorities because there are no clear rules for operating in China and serving overseas users, while others want to avoid the label of “Chinese” at a time when China’s geopolitical tensions with the West are heating up.
Many feel that the current state of the Internet, or web2, is overly dominated by centralized, rent-seeking corporations like Google and Meta. Part of the appeal of web3 is to take back the Internet with distributed ledger technologies such as blockchain, which promise greater decentralization and user ownership.
Cryptocurrencies and non-fungible tokens are two popular blockchain applications that have attracted billions of dollars of investment, but they are far from the only use cases for the technology.
China is still figuring out what it wants from web3, but clearly doesn’t want to miss its chance. In 2019, President Xi Jinping personally vouched for the role of blockchain in the technological revolution.
What China does not want is the falling prices of cryptocurrencies that have rocked the market in recent months. This seems to encourage a more controlled, centralized version of web3 – the blockchain should be run by trusted organizations, not anonymous computers on an open network, and provide performance in areas that the government sees fit.
No wonder China has outlawed initial coin offerings as well as crypto transactions for their financial risks, but there is a gray area when it comes to other blockchain applications. While China has warned against using NFTs as financial securitieshe rebrands it as “digital collectibles” that can only be bought using China’s fiat currency RMB, have little liquidity, and are tasked with promoting copyright protection.
Some Chinese web3 developers are following the lead above and joining the digital collectibles infrastructure. Other use cases have also received government approval. Alibaba’s financial subsidiary, Ant Group, for example, has developed many blockchain services for purposes such as using blockchain to verify forensic evidence and track food supply chains for security purposes.
Some argue that the cryptocurrency, which is seen as a store of value, is similar to web3’s underlying assets. Without this, web3 will not be able to work to its full potential. Those in China who hold this view have mainly focused their attention abroad, serving international users and raising funds from offshore entities.
Over the past few years, dozens of Chinese web3 startups have moved their businesses overseas in the wake of the country’s cryptocurrency crackdown, but they’re not giving up on China outright. They are following a pattern proven by previous generations of tech firms: locating offshore, maintaining some operations in China, and expanding into overseas markets.
“Where else can you find thousands of capable engineers?” says one Chinese employee of the crypto exchange, who asked not to be named.
China played a key role in the early development of the blockchain industry, spawning a whole generation of crypto-savvy talent. Some of the world’s largest cryptocurrency exchanges, including Binance, FTX, KuCoin, Crypto.com, OKX, and Huobi, have launched operations in the Greater China area. The world’s largest cryptocurrency mining company Bitman was founded in Beijing. Chinese conglomerate Wanxiang was the first corporate investor in Ethereum and spawned crypto investment hub HashKey.
“There are seven million programmers here, and they have proven time and time again that they can innovate,” said Herbert Young, general manager of Dfinity Asia. a16z with supportthe Zurich-headquartered company was looking to China for projects to deploy on its blockchain network because the country offers a “large pool of technical talent.”
Other international organizations are turning to China for the same reason. The Ethereum Foundation, the organization behind the second largest cryptocurrency, sponsored ETH Shanghai Hackathon attract developers to their blockchain network. The virtual version of the event attracted about 1,000 developers this year, of which about 60% came from China, according to event organizer Mask Network, a startup that brings web3 features to web2 platforms.
Chinese crypto firms moving overseas are trying to bring their Chinese employees with them, but most have resorted to maintaining some presence in China. While crypto-friendly countries like Singapore have policies to attract foreign talent, local governments often set quotas to protect domestic employment. Employees with families in China do not want to move in the first place.
For web3 startups that have been trying to hire in China for the past two years, the time has come. The value of the cryptocurrency hit an all-time high last year when China suppresses its Internet industry was in full swing. Large-scale layoffs and wage cuts have spurred many workers at companies like Tencent and Alibaba to look for web3 opportunities.
Others are voluntarily leaving their jobs at well-known technology firms to ride the web3 wave, either because they are attracted to the technological potential of blockchain or the ability to quickly amass wealth. For example, Ant Group, Alibaba’s fintech subsidiary, has lost dozens of its employees in recent months to web3 startups, TechCrunch has learned.
Top product managers
It’s not news that tech companies are hiring workers in China to serve international users. zoom had hundreds of R&D employees in China before Western media questioned the safety of his cross-data practice. owned by Alibaba Lazada and Shopee, the enemies of e-commerce in Southeast Asia, also have significant operations in Shenzhen, a hub for exports and tech talent.
For many tech firms, China remains a desirable place to hire thanks to a decade of breakneck growth and competition in the internet sector. Companies such as Alibaba, Tencent, and TikTok owner ByteDance have earned recognition in Silicon Valley and beyond for innovation in their fields.
“Chinese projects are doing a great job of managing and developing products for business,” said a Chinese employee of an American blockchain startup. “They are obsessed with data analytics and spend a lot of time fine-tuning products.”
China’s strength in web3 lies less in building the underlying blockchain infrastructure and more in developing applications for users, several crypto investors and entrepreneurs say.
“The first features of web3 are protocols [infrastructure for blockchain applications]but mostly they decide transactions while user experience is ignored,” says Hong Kong-based blockchain startup founder.
“The Chinese are very good at creating user experience. After all, China has built a robust web2 ecosystem,” he adds.
Chinese tech workers are also known to be “hard-working,” according to Kurt Shea, one of the first investors in China. StepN earning app and a partner in the Prodigital Future Fund looking for global web3 projects based in China. While the culture of overwork in China’s tech sector has caused a stir in recent yearsothers see it as an advantage for the country.
For example, StepN is run by founders who emigrated from China to Australia. Like many entrepreneurs in the Chinese diaspora, he takes advantage of his original and adopted homes while maintaining a small team in China as part of his international staff.
“That’s why it can have 24/7 customer support, while many of its competitors can’t,” Shi says.
Despite the strengths of Chinese web3 startups, they face the same challenges as their web2 predecessors.
TikTok, which pioneered fast video sharing, is arguably the only Chinese consumer internet platform to achieve global success in recent years. Without a significant presence in foreign countries, TikTok has taken off quickly thanks to its parent company ByteDance. algorithm-based content discovery engine developed in Beijing.
But the cultural understanding of entrepreneurs is becoming critical on the Internet3. The industry is still in its infancy, which means that a company’s ability to tell compelling stories is key to attracting early adopters. “Companies on web3 need to culturally resonate with their users,” says the Chinese-born Singapore-based Decentralized Autonomous Organization (DAO) founder.
Web3, its proponents say, is in many cases driven by the community. The technology behind the blockchain has the idea of consensus built in. For example, DAOs make decisions based on the collective consensus of their communities.
China-based web3 teams that lack the language skills to effectively communicate their ideas or understand other cultures may find it harder to win over users in new markets.
“I have seen Chinese companies with good products, but they don’t know how to communicate with the international community,” says the DAO founder. “In web3, it’s no longer enough to just have a good product.”
Credit: techcrunch.com /