China, sensational chance on the metaverse: decoupling, this unknown
Decoupling, ergo decoupling. A word that is gaining traction almost everywhere. As if overnight a line could be drawn and the economies of the West and China could be clearly divided as if nothing had happened. Sign of the times and of the dispute between United States and China, but also a mirage. One of the next “big things”, one of the next great frontiers of the global investments. Namely the metaverse.
First of all, what is the metaverse? It is a term coined by Neal Stephenson in Snow Crash (1992), cyberpunk science fiction book, described as a sort of virtual reality shared via the internet, where one is represented in three dimensions through one’s avatar. Examples of metaverse are considered to be MMORPGs and three-dimensional chats such as Second life or Active Worlds.
This is a fundamental dimension for understanding future dynamics. As always happens when it moves en masse, China can become the true vanguard of the metaverse, as happened with other technologies starting from 5G. In September 2021 Tencent registered 100 trademarks with the word metaverse. And in October, Alibaba also arrived. Among other things, Beijing is the capital of virtual influencers. The Chinese government has for now maintained a cautious stance on the metaverse. However, as a telecom service provider in many countries, China has the potential to lead the global metaverse applications.
China eldorado of the metaverse
According to a study by Morgan Stanley in China the sector could be worth 8 billion dollars. On the other hand, the metaverse is a sector that will also cover e-commerce, semiconductors and entertainment. As Financial Lounge explains, online gaming will be the key to experiencing the metaverse, but soon also usually physical experiences such as concerts or shopping could move into the new digital reality.
And the opportunities in this area show that decoupling is a long way off, if not impossible to achieve. According to Morgan Stanley, the Chinese metaverse market hides great opportunities for companies such as Sunny Optical, GoerTek and Luxshare. There is also huge space for semiconductors. For this great space for Taiwanese giants such as MediaTek, Will Semi and TSMC.
But be careful, because it is all of Asia that is moving on the front of augmented reality. For example the South Korea, whose gaming market is the fourth largest globally and is expected to reach $ 18.6 billion in value within the next few months. Gaming accounts for more than 6% of South Korea’s total cultural exports, including movies, music, TV shows, animation and video games, according to TechWire reports. Nexon, South Korea’s leading gaming company, plans to release new metaverse content using its popular IP Maplestory. But in Seoul the metaverse also finds fertile ground for another specifically South Korean trait, namely the strength of the K-Pop industry. Bands like i BTS or the Blackpink they are global phenomena and now the insatiable production of new idols is also focusing on the virtual front. It is no coincidence that Netmarble founded a Metaverse Entertainment subsidiary to develop a virtual reality platform for virtual K-Pop idols.
Decoupling? More in words than in deeds
The reality is that decoupling is more in words than in deeds. While the commercial talks have yet to materialize, at the end of February Biden has signed an executive order to create a supply chain of “essential” products (active ingredients, semiconductors, rare earths and large capacity batteries) “more resilient and safe”, or to reduce dependence on China.
Meanwhile, however, Chinese imports from the United States set a new record in the first quarter of 2021, reaching i 46.5 billion dollars. But exports have grown faster than imports ($ 119.2 billion) and consequently the trade deficit to Beijing’s advantage has started to increase again. The data therefore shows that, despite the many disagreements and the persistence of most duties, the commercial intertwining between US-China is still solid and that, at least for now, decoupling appears far away.
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