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Crisis Under Prosperity-- Analysis of Innovation in China

II. Thesis

A. History of Innovation in China

Before China lapsed into cultural and technological stagnation during the Qing

dynasty and Cultural Revolution, China had spawned some of humanity’s most significant
inventions, such as gunpowder, paper, printing, and the compass. Ever since Deng Xiaoping

launched economic reform to transfer the rigidly planned economy to the semi-capitalist one,

China has been actively modernizing by consistently learning western knowledge and system.
With the population over 1.3 billion people and a single dominant language in Mandarin,

China possesses a vast home market, which brings fast-growing economy in China.
Perceiving success in Huawei, Xiaomi, Alibaba, Tencent, and DJI, many Chinese

entrepreneurs in the burgeoning technological sector feel increasingly confident with their

ability in innovation. In 2015, China even inaugurated the Made in China 2025 project,
which aims to establish China as a technology powerhouse by 2020 and a global leader by

2050. While many deem the innovation leap in China as unstoppable, it’s important to ask
whether we overestimate China’s innovative capacity.

B. Case Study-- Tencent and Expeditors

Specialized in various Internet-related services and products, entertainment, artificial
intelligence and technology, Tencent is one of the biggest venture capital firms in China with

numerous well-known products, such as its messenger Tencent QQ and its mobile chat
service WeChat, which have predominant penetration within China. However, even Tencent,

who seems to be on the cutting edge in the new generation, has some issues to be addressed.

According to Davis, the primary income of Tencent is neither from WeChat nor QQ but from
Tencent Games, which accounts for around 30 percent of Tencent’s total revenue. However,

most of Tencent Games, such as popular League of Legends and PlayerUnknown’s
Battlegrounds, is not conceived by Tencent itself. Instead, Tencent invests in various video

game companies to claim the ownership of those favorite video games. Of course, holding
innovation as the core value, Tencent continually tries to develop its own game. However,

games devised by Tencent are unremarkable that they cannot make Tencent a leading role in

the video game industry. As a result, Tencent heavily relies on its investment, which keeps
throwing money to make money. In addition, like Tencent’s original game, Tencent’s other

products, such as WeChat and Tencent QQ, face a fatal flaw––censorship in China. Although

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