Why 2013 Will Be the Worst Year Ever for China Tech

Amidst all the 2012 in review madness, I thought it might be fun to turn our eyes to the future for a moment and make some predictions about what’s coming in 2013. Well, “fun” is a relative term. Call me a pessimist, but I think 2013 is going to be the worst year ever for China’s tech industry. Why?

Internet censorship will get worse. China’s Great Firewall got an upgrade this month, and the blockage of many popular VPNs has already begun to affect businesses. There’s no reason to expect that will get any better in the new year, with government mouthpiece the People’s Daily calling for stricter internet regulation and reports suggesting the government may implement mandatory real-name registration for anyone who wants to get on the internet at all. All indications are that next year, China’s internet is going to be less free than ever before.

Social media censorship will get worse. Sina Weibo had a pretty ridiculous year when it comes to censorship, but with the new 7-day search delay and rumors of a new, more thorough real-name system don’t make the future sound all that bright. But the bad news isn’t just limited to Weibo; we have seen indications that the government is concerned about newcomer WeChat — even as it uses the service to track dissidents — so expect that to get a censorship smackdown in the coming year, too.

The mobile market will be restricted. One of China’s tech regulatory bodies, MIIT, is planning to reach its cold, bony hands into the world of mobile app development and sales. Exactly how that will turn out isn’t yet clear, but MIIT’s regulatory processes are the reason an iPhone takes an extra three months to come out in China. App developers are understandably concerned that they’re going to be slowed down — which can be a death sentence in the fast-paced mobile ecosystem — or censored, or very possibly both. Whatever happens with this round of regulation, I would guess that this won’t be the only time we see MIIT interfering in the mobile space in 2013.

More state control is coming, or at least is planned. While the government has been pushing state-owned companies to operate like real companies and try to actually make money rather, it hasn’t gone to much effort to support domestic innovators in the private sector. For example, SARFT (China’s fun police and film censorship bureau) recently smacked-down Chinese startup Xiaomi’s attempts to get into the TV game, and it has also established a state-run subsidiary company that it hopes will control the domestic internet, mobile, and television industries.

All of this is bad for business. In addition to just being off-putting and restrictive, almost all of this is bad for business and development. China’s internet is increasingly isolated from the rest of the world’s, which stifles domestic innovation and discourages foreign investment. And China’s restrictive policies, coupled with the unethical behavior of some high-profile Chinese tech companies, have helped ensure that it is tougher than ever for Chinese tech companies to expand overseas.

Now, are there some signs of good things, too? Of course. Smartphone and broadband penetration are up and will likely continue climbing rapidly throughout next year. Internet speeds are getting faster, and we might even see China’s first 4G network in 2013 (but probably not). Still, though, speed and access are less meaningful when the number of things you can actually do on China’s internet seems to be dwindling by the day.

I think 2013 will be the worst year ever for the web/tech industry in China. Here’s hoping that I’m really, really wrong.