Both Didi and Uber were taking aim at traditional taxis
Liang Jianzhang and Huang Wenzheng


BEIJING â€" The Didi-Uber deal this month was huge business news around the world. It's the story of a local Chinese brand that acquired the entire assets, including the rights, the business and the data, of the American deity of digital car hiring.

The accord marks another defeat for global Internet titans, mostly American, by Chinese companies in their home market. Previous examples included Microsoft's MSN defeat by Tencent’s QQ in instant messaging, Yahoo crushed from the outset by Sina, eBay beaten back by Alibaba’s Taobao, and Expedia falling by the wayside to Ctrip, an online travel services provider.

So why do these Internet companies enjoy success in other regions and countries outside of America, such as in Europe or Japan, but not in China? The answer is not as simple as one might think.

The scale effect

Two basic factors ultimately determine the success of online services. First is the technology advantage, the other is size of the market that the enterprise relies on for its growth. Meanwhile, demographics and economic development levels within any one cultural, linguistic and political boundary determines the market size. As long as the local market has a sufficient scale, then the advantages possessed by a local enterprise can offset the technology advantage from a foreign competitor.

In comparison with the standardized production of industrial goods, Internet businesses have to offer personalized services and solutions. This highlights the importance of Internet business’ ability to adapt to a local market. So even when a new technology or business model rises, the key for an Internet company doesn’t simply depend on the level of the technology itself, but rather on whoever possesses the best market adaptation so as to be the first to achieve the scale effect.

So, suppose a new Internet business model requires a scale of 10 million users to survive. In China, as long it can penetrate 1% of its total population, a business will be able to survive. By comparison, an American enterprise in such a sector would need to reach 3% of the population, and a Japanese firm 10%, to survive.

Alibaba founder Jack Ma in Hangzhou in 2014 â€" Photo: Ju Huanzong/Xinhua/ZUMA

This also explains why in the past the United States has been favorably positioned in the Internet industry, since it’s the most populous nation in the advanced world. With a market far bigger than any other developed country, America’s high-tech firms need a relatively low penetration rate to exist. And, once they succeed in America, they can rely on first-mover advantage to launch abroad.

Change of rules

But China’s rapid rise has changed the rules of the game. Taking into account both population and economic development, China has become the only market larger than the United States. For example, the number of broadband Internet and smartphone users in China easily surpasses that of America. This signifies that, given the same conditions, China’s Internet firms can reach economies of scale earlier than their counterparts in the United States, and thereby succeed more easily.

In the more distant past, China's smaller middle-class population meant that American Internet giants were able to seize the initiative when entering the Chinese market. As China's middle-class population tops America's, the balance will gradually tilt toward both Chinese innovators and imitators. If the technical threshold is too high or America’s innovation is too far ahead, Chinese companies will fail to effectively copy. But if not, Chinese enterprises will learn and reproduce rapidly, and eventually overtake their American rivals with the help of a bigger market.

Chen Yidan (C), one of the founders of Tencent, one of China's leading Internet companies in May 2016 â€" Photo: Li Peng/Xinhua/ZUMA

That great firewall of China?

Some people tend to attribute Chinese firms’ local success to China’s regulatory measures. For certain technological fields this is true, because foreign companies are more restricted and cannot fully compete with Chinese companies. But this is clearly not the explanation for the success of companies like Didi.

As a matter of fact, strict Internet control does more harm than good to Chinese companies’ growth. China’s fast rise of the last three decades is in fact largely attributed to its reform and policy of opening up to the world. A more open Internet would help China to learn advanced technology, allow Chinese enterprises to participate more deeply in global competition and raise their level in competition at home.

The value of the Internet can be measured in the exchange of information among different individuals. The larger the number of individuals connected, the larger each individual’s scope of choice and the higher the average communication frequency and quality. Thus the value of the Internet has a positively accelerating relation with the network node number. Meanwhile language and culture are the Internet's main boundaries, which explains why demographics play an ever increasing role in competitive advantage. Not only does China have a huge market, but also the biggest pool of talent, and countless young people with entrepreneurial aspirations. Once the favorable elements of an innovative economy are put together, China’s eventual and overall rise will be inevitable.

Breaking through

Of course, complacency can also turn Chinese companies’ advantage in their domestic market into a disadvantage. A huge market at home limits Chinese companies' ambitions in exploring abroad. For instance, though WeChat (Weixin in Chinese), a cross-platform instant messaging service, is probably even more powerful in function and convenience than WhatsApp or Line, its number of users lags behind the latter two, and it remains used mainly in China. To be invincible in the long term, Chinese companies have to be more enterprising and target a larger market. This is one more reason that loosening Internet controls would benefit development.

All that said, an even more worrying factor is China’s dangerously low birthrate and aging population today. Due to the one child per family policy, China’s population has shrunk by 32% over the last 20 years â€" from 219 million people born after 1980 to 147 million born after 2000. At this rate, America and India are destined to overtake China. Yes, as much as politics and technology, economic prospects are largely determined by demographics.

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Reading Rumi In Kabul: A Persian Poet's Lesson For Radical Islam

Born some eight centuries ago, the famed poet and philosopher Rumi offered ideas on religion that bear little resemblance to the brand of Islam being imposed right now in Afghanistan by the Taliban regime.

The work of 13th-century poet Rumi still resonsates today

Mihir Chitre

Among the various Afghan cities that the Taliban has invaded and apparently "reclaimed" in recent weeks is Balkh, a town near the country's north-western border. Interestingly, it was there, about 800 years ago, that a man called Jalal ad-Din Mohammad Balkhi, better known as Rumi, was born.

Some see the grotesque exhibitionism of the Taliban advance as a celebration of Islam or a "going back to the roots" campaign. As if followers of Islam were always like this, as if every willing Muslim always propagated austerity and oppressiveness. As if it was always meant to be this way and any shred of liberalism was a digression from the quest of the religion.

In fact, a look at the history of the religion — and of the region — tells a different story, which is why there's no better time than now to rediscover the wisdom of the poet Rumi, but without doing away with its religious context.

In a world where Islam is a popular villain and lots of terrible acts across the world in the name of the religion have fueled this notion among the West and among people from other religions, it's paramount that we understand the difference between religion as a personal or spiritual concept and religion as an institution, a cage, a set of laws created to control us.

Why do you stop praying?

To begin with, and largely due to the film Rockstar, the most famous Rumi quote known to Indians goes like this: "Out beyond the ideas of wrongdoing and rightdoing, there's a field. I'll meet you there."

Rumi's original Persian verse, however, uses the words kufr (meaning infidelity) and Imaan (meaning religion), which was translated as "wrongdoing" and "rightdoing." To me, the original verse surpasses the translation with a vital, often missed, often deliberately forgotten, interpretation, which is to highlight the fact that there is humanity, love and compassion or a certain kind of mystical quality to life beyond the concept of religion and that is the ultimate place, the place where Rumi invites us to meet him.

It would be incorrect now to read this and think of Rumi as irreligious. In fact, he was quite the opposite. But his interpretation of religion was personal, spiritual and not institutional or communal or exhibitionist.

In one of his poems, translated by Coleman Banks as "Love Dogs" in English, a man who has stopped praying to God because he never got a response meets "Khidr," an angel messenger, in his dream:

Why did you stop praising (or praying)?

Because I've never heard anything back.

This longing you express is the return message.

To me, through this poem, it's clear that Rumi advocates for a personal relationship with God. In fact, he goes on to say that being true to God is to long for his validation or nod, that life is longing.

A copy of Rumi's spiritual couplets at the Mevl\u00e2na Museum in Konya, Turkey

A copy of Rumi's spiritual couplets at the Mevlâna Museum in Konya, Turkey — Photo: Georges Jansoone/Wikimedia

Don't sweep the history of Islam with the broom of radicalism

For those familiar with the European literature of the 20th century, I could say that this echoes the ideas of Samuel Beckett. But remember: Rumi lived 800 years ago, at the heart of what we call the "Muslim world." To equate Islam on the whole with repressiveness and hostility, as many of us do today, might just be a criminal contradiction then.

It's also interesting to note that after the Quran, Rumi's is probably the most widely read work in the Islamic world, which suggests that Rumi's ideas, which may sound too progressive for anyone remotely associated with Islam in today's world, have, in fact, been accepted and cherished by the Islamic world for centuries. Sweeping the whole history of the Islamic world with the broom of radicalism wouldn't then be the fairest assessment of either the religion or of radicalism.

This physical world has no two things alike.
Every comparison is awkwardly rough.
You can put a lion next to a man,
but the placing is hazardous to both.

(From the poem: "An Awkward Comparison")

It's tragic that the Taliban has ravaged the same place with their own power-hungry, totalitarian interpretation of the religion which once produced a mind that embraces it with wide arms of warmth and peace and refuses to be compared with other followers of the same.

How to cure bad habits?

It is vital for us to separate groupism or communalism, which often escalates to barbarism, from the thought it is based on. It is vital then to read and reread that what Rumi sees as religion is the private association with God. It is also vital to mark the emphasis on individuality in Rumi's thought.

All the Western ideas of liberalism are based on the idea of individuality, which in turn is based on post-renaissance European thought. Asian philosophy is contrasted with its Western counterpart in the fact that it is rooted in mysticism as opposed to individuality.

Islam itself has long had a tradition of mysticism that is known as Sufism. Sufism is a sort of an inward dimension of Islam, a practice that encourages a direct, personal connection with the divine, a spiritual proximity to the omniscient that transcends the physical world and temporarily subverts immediate reality.

Sufism is the quest for the truth of love and knowledge, without necessarily always distinguishing between the two. Rumi was known as the Mevlana (Maulana) and his poetic collection Masnavi meaning "the spiritual couplets" is known as the Persian Quran. He was no doubt a mystic, a Sufi, and one who strongly endorsed the personal, for the most intimately individual is the truly spiritual.

Rumi might remain unparalleled in not just the Islamic world but also in the world of philosophy and poetry across the globe. Another thing that he will remain is dead. The Taliban, on the other hand, at least for now, looks rampant and alive.

It is now up to us, the other people who are alive, and the ones who are going to be born — not just Muslims but everyone else as well — to choose which interpretation of Islam we uphold or react to, how we read history, and what we borrow from it.

How to cure bad water? Send it back to the river.
How to cure bad habits? Send me back to you.

(From the poem: "My Worst Habit")

I think what we, as a world, need now more than ever is to be sent back to Rumi.
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