Empowering Innovation: How China’s Internet Sector Navigates Social Impact and Economic Growth

June 07, 2024

Since China’s opening up of its internet industry in April 1994, the sector has gone through a 30-year development process, marked by challenges but also notable advancements. CKGSB’s Professor of Marketing and Director of ESG and Social Innovation Center, Zhu Rui shares her insights and highlight how Internet companies have played a pivotal role in addressing societal challenges, leveraging technology to create large-scale solutions.

Q: Can you give us an example of social innovation implemented by a Chinese company that you think is worth highlighting?

Zhu Rui: Tencent stands out for establishing a corporate foundation in 2007, ten years after its inception. This move led to initiatives like Tencent’s donation platform. At first, Tencent made donations to schools but realized that the donated hardware was not always being used. They realized that what schools lacked were experienced teachers and educational software. After a series of explorations, they established an online donation platform to promote public welfare for those in need, which later became their “For the Village” project which connected China’s countryside with the outside world. As companies mature, so should their responsibility.

There have been other forms of corporates using innovative methods to carry out social innovation. Baidu, for example, uses facial recognition software to help parents find long-lost children and Alibaba has launched a reunion plan to help reunite families.

However, innovation have also had negative impacts on society. Around 2017, there were many media reports about children being addicted to online games and parents were angry at gaming companies for not doing more to protect their children from harm.

Often times, public opinion plays a driving force for companies to innovate for the good of society. I call this concept of “business for good”. The so-called “business for good” means that enterprises must truly use your core capabilities to solve actual social problems and create business value while creating social value, rather than just making money. Around 2017, we saw large Internet companies begin to consciously consider seeking healthy and sustainable development, and striking an important balance and trade-off between justice and profit.

Q: Can you share examples of technology-driven solutions for societal problems?

Zhu Rui: An example is Tencent’s Internet donation platform, which has designed a very clever model to connect multiple different parties with those in need. People who are seeking donations can publish their story and wealthy companies or individuals can donate money directly. People can also donate actions or time. Tencent successfully built a platform to connect multiple parties. The vast majority of donations on this platform come from small donations, which has done a lot to promoted the idea of public welfare in China.

Ant Forest launched by Ant Group encourages everyone to do low-carbon and environmentally friendly things, such as taking the subway instead of driving. Users receive “green energy” on the Ant Forest platform for every environmentally friendly task they do. After accumulating a certain level of points, you can plant crops which leads to Ant’s team actually planting trees in real life. They have a team who monitors the process in real time and are responsible for planting the trees. I think this innovative idea is really interesting and makes doing good deeds more interesting and interactive.

I recently saw another good innovative case – Amap’s wheelchair map. Amap is helping those who need mobility assistance travel more easily. In China, we rarely see wheelchair users or visually impaired walking on the streets. This isn’t because they don’t exist but because our public facilities do not allow them to travel safetly. There are 80 million disabled people in China. With Amap’s new feature, you can search for the wheelchair map and receive instructions on how to get from point A to point B in a wheelchair.

Didi has also launched mobility assistance services. If you are visually impaired, you can authenticate on the Didi APP and become a Didi accessible user. When you take a taxi, you will enjoy the priority dispatch service. The driver will help the visually impaired rider into the car, drop them off at the location, and help the rider find their final destination.

Many of these innovations happened because the company paid attention to their customer or employee’s feedback. When companies really start to pay attention to people and the environment, they can do something valuable, and I think these cases are particularly inspiring.

Q: What’s the current stage or social innovation in China’s internet industry?

Zhu Rui: I think social innovation in the Internet industry is at a very exciting stage of development. For example, the development stages of a product start in the early stage, then the mid-term development stage, then the maturity stage, and then the decline stage.

Q: How has social innovation impact broader business practices in China?

Zhu Rui: I think overall it has a very positive impact because it provides new models and new ideas, and it can use the characteristics of the Internet to generate scale. Scaling is very important for a country as big as China. With a population of 1.4 billion, the solution must benefit hundreds of millions of people to make a difference.

Q: China’s economic development is currently facing various new challenges. What suggestions do you have for Internet companies navigating social innovation amidst economic challenges?

Zhu Rui: When economic development is challenged, I think the first thing companies need to think about is, what are the real social challenges? If the establishment and development of an enterprise does not start with a good intention and does not have an ethical compass, I think it will be difficult for such an enterprise to succeed and be sustainable.

Therefore, I think it is the first and most important point for all enterprises, including Internet enterprises. They need to think about the real social challenges, not to be solely guided by self-interest.

The second thing that is particularly noteworthy is not to aim for short-term gains. If you want to become a respectable Internet company that can develop in the long term, then you need to have a long-term perspective. When we only consider short-term profits, a series of problems will arise, such as your algorithm design, charging methods, customer acquisition methods.

Therefore, my biggest suggestion for the future development of Chinese Internet companies is to pursue becoming a great company and a respectable company. When you have this idea, you will have the right choice for your technology application. This is what a real entrepreneur should do.

In essence, China’s Internet industry showcases a remarkable journey of social innovation, guided by a commitment to societal welfare and long-term success. By staying focused on addressing real societal challenges and maintaining an ethical compass, internet companies can continue to drive meaningful change while thriving in a dynamic economic landscape.

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