Impact Of China’s Ban On World’s Greatest Companies
- 4 October 2021
- Posted by: btcbros12
- Categories: Articles, Bitcoin, Blockchain, Cryptocurrency, Economics, Regulation, Technology
China’s ban on the world’s greatest technology is a popular and fascinating subject of discussion with numerous facets. There’s, of course, the political angle besides the economic and technological angle.
Needless to say, there’s a pattern in the series of bans, and although people inside the Chinese Communist Party can only confirm China’s motives, it is still a little easy to make a few calculated guesses.
But before I get into that, there’s clearly another pattern we see from the perspective of these banned tech companies. All of these have gone on to become the biggest names in their niches. When they were functioning in China, they had steady popularity. However, post the ban, their popularity among other countries has increased in the past. There can be enough reason even to attribute some of the credit to China itself. Here’s how:
China’s population potentially serves as one of the biggest markets for any company. The sheer number can garner tech companies a lot of users and hence revenue. However, this potential to date hasn’t been accomplished by any company for just one simple reason – censorship.
China’s laws and regulations explicitly promote censorship. For instance, when Google launched its search engine in China, it wasn’t allowed to show all relevant search results. Over its short stint in the country, it, of course, didn’t work between both parties, and hence Google decided to quit.
Other companies such as Twitter, Facebook, Instagram, WhatsApp, Reddit, Netflix, and more are blocked in China. Most of these bans seem to have started around 2009 with companies like YouTube, Facebook, etc.
Since 2009, China’s technological advancements have also been on the rise. Everything it bans, it indigenously builds an alternative for. For instance, Google was replaced with Baidu, Amazon with Alibaba, and now cryptocurrencies are being replaced with Digital Yuan, which the government itself develops.
However, what is the impact of China’s ban on these companies?
Companies After China Ban
Most of the companies that China banned were well on their way to becoming big, even before entering China. For instance, Google had gone public two years before launching its search engine in China.
Facebook launched in 2004, and by the end of 2005, it was already operating in Australia, New Zealand, Mexico, Canada, UK, and Ireland. All this much before China’s ban in 2009.
YouTube opened its beta service in 2005, and by 2006, the website was getting 20,000 uploads per day. Once again, it was before China’s ban in 2009. In fact, YouTube had already started partnering with brands and companies such as Hulu, CBS, NBC, Verizon Wireless, etc., for various purposes.
If you observe, there’s a clear pattern here when it comes to companies going global and trying to get a foothold in China due to its large population and the sheer volume of userbase companies can establish.
However, the China ban has created both a setback and an advantage for all these tech giants. The setback, for obvious reasons, is immediate loss in revenue. Companies exiting China face a loss of hundreds of millions of dollars due to loss in their user base. Although this number seems enormous, it still is less significant in the larger scheme of things. Here’s why.
None of these companies ever banked on China for their survival. They already had a well-established revenue system, offerings for their customers and audiences, and China was merely going to be an expansion. So the loss of money is more due to the lack of growth, which historically hasn’t affected the success of these giants.
The advantage in the most indirect ways is publicity. After all, even negative publicity is publicity. While these companies tried negotiating terms with the Chinese government to operate in the country, the news about it was spreading across the globe. Furthermore, all these companies didn’t have China as their endgame. It was merely thought of as a milestone along the way.
So two primary simplified ways in which I believe things panned out for companies are as follows.
People became more aware of these companies and started accessing them, using their products/services, and becoming loyal users. On the other hand, all these companies were expanding across different countries and places. As a result, the growth of companies was inevitable.
Furthermore, China’s reputation and stance on censorship are pretty popular. So a question on the companies’ credibility and legitimacy or any kind of negative sentiment never came up.
If I had to apply the same logic to Bitcoin, it’d still hold. Here’s how. China had one of the largest users of Bitcoin. So when a ban was announced, exchanges started dropping users from their platform, companies in China stopped providing miner hardware, miners were either made to stop their source of earning or were moving out of the country.
As a result, the price of Bitcoin took a massive fall. However, Bitcoin being a community and user-driven cryptocurrency is still making progress. Moreover, the monetary setback was temporary. Companies such as Amazon are announcing initiatives to accept Bitcoin payments, and Bitcoin, in general, is becoming more popular and widely adopted. Finance experts are even predicting that the value of Bitcoin will hit $100K in 2022.
So despite losing one of its largest user bases, Bitcoin still looks promising.
The largest companies such as YouTube, Facebook, Twitter, or even cryptocurrencies such as Bitcoin have a couple of things in common.
They have provided a unique value to the audience in the best way, and the network effect plays a huge role in their business. Put those two together, and you have companies like Google as market leaders. So in the larger scheme of things, China’s bans are merely a minor setback.
Despite being the biggest potential market any company can gain hold of, companies are still proliferating without it, and it looks like the trend hasn’t changed much since 2009.
Keep watching our news page for updates on China’s ban of all things crypto!