The following is a guest article by a Chinese writer. Being that China is largely responsible for the recent run up in Bitcoin, I find their perspective of things to be very interesting.
A lot marveled as they see that Chinese bitcoin markets removing their trading fee. Many bet this disruptive competition a lose-lose game for Chinese markets.
This game however isn’t recent. It started quite a while ago. 42btc.com announced their 0-trade fee on bitcointalk.org by March 2013, that is almost a decade ago measured in bitcoin time.
And the tactic has worked before. Alibaba’s Taobao used to defeat EachNet with a 0-trade-fee policy (eBay sold EachNet to Tom.com in 2012). Whoever bet the down fall of C2C e-commerce in China from disruptive competition has paid their wages; nowadays E-commerce is bigger in China than United States. Taobao.com grew to be the world’s largest consumer marketplace, and it still charges zero for all buys and sells.
And this is not a lose-lose game. Taobao brought Alibaba to the small coterie of world-class e-commerce conglomerations, and transformed his leader MaYun to a Chinese hero: His short figure appears on every “How to be successful” books, and his behemoth business wields delivery services, financial services (including ETFs) and enormous marketing power, so much so that Chinese online marketers are asked to explain their decision, not when they choose to work with Alibaba, but when they don’t.
And it is not even a game of a time. It is played again and again. This month Baidu announced its 2,000GB personal cloud storage, 400 times of Dropbox, and the price is: zero for purchase and zero for monthly subscription, forever. This tardy bold move helped it to gain a pitiful second position in the competition, right next to Tencent (QQ)’s free 10,000GB cloud storage.
To understand the phenomenon, investors need to get themselves acquainted with two unusual aspects of China: its population, and its competitive culture.
China is not only marked for its mega-size cities: the official quotes 14 cities with more than 10 million, 3 cities over 20 million people holding residency or temporary resident permits – those dwellers who don’t can easily make the quote irrelevant.
But also its highly homogeneous culture. Diversity is found mostly in remote areas, while all big cities are built alike. A brand famous in the east must be as famous in the west, too. Practically we use the same shampoo, drink the same Starbuck coffee and share the same lack of neither communism or religious faith.
The homogeneous massive population translate to immense difference of volume over the slightest competition advantage. It makes every fight feel like a death match. It also makes it a norm that the winner takes all – and “all” is an unimaginable lot here.
On the other hand, the resource is always scarce.
We learn communism in public schools, but my teacher was frank enough to teach that if we don’t fight for it, whatever ‘it’ may be, we don’t get it. It doesn’t come from the grace of God, nor social benefit from the government. A good lesson to learn, if not in public schools, in society as well.
George Patton famously observed, Americans love winners and hate losers. Maybe so, but Americans only play the game – when the game is over, they wash themselves and go on living – while Chinese live the game. The game is called survival, and Chinese take it seriously – perhaps too seriously, when we also call other trivial games fights-for-survival – say for example squeezing yourself in the morning subways.
In a feverish agitation of wining the survival game we immured. To make the point, I hand-picked a few company names from my circle: Betop, Longtop, All-winners, First Media… The names carried the wishes and the determination of the people behind them, the wish to be the top, the first, always and ever.
When the world sees Chinese traders charging 0% fee as disruptive, to our culture it is like the way competition is meant to be. To the question how do the markets earn money in such a death match, let me quote the Chinese announcement of 42btc.com on bitcointalk.org, which answered perfectly well and neglected by the world by language barrier for a good 7 months:
Yes, some would ask, how do you make money then?
We don’t think about making money before we make the biggest exchange platform in the world.
Don’t need us to think about making money before we make the biggest exchange platform in the world. (Implies: We will be so resourceful, that others flock with ideas of making money when we won the top price.)
Whatever you may think, I guarantee you 42btc.com is not the craziest company on our scale.
Before you judge with quick comments, be sympathetic that people feel righteous if they started for survival, and how mind-bogging people feel if you imply survival being wrong. And before you hurry to a conclusion that China with its current meme is on the road of self-destruction, understand that China is, not may be, reshaping the world, and whatever culture it carries with it, or lack if culture if you prefer to call, is going to impact.
The author is a license-permitted dweller in Beijing struggling for Beijing’s citizenship in his own birth country. He holds bitcoins since 2011, is not affiliated with 42btc.com in any way.