By Eduardo Baptista

BEIJING (Reuters). – What will China’s metaverse look like in the future? Take a look at the letter “c”. Experts believe that clean, censored and compliant data is crypto-free.

These descriptions highlight the shadow cast by Chinese authorities, who already indicated they would have a strong regulatory hand in its development – something some China metaverse supporters fear will hinder its growth.

Many in the tech industry are rushing to create what they believe will become the next internet generation: virtual environments that can replicate real-life situations.

Experts believe that China’s efforts to create metaverses are behind those of the United States and South Korea. They cite less investment from domestic tech firms. China bans industry-leading products such as Meta’s Oculus VR headsets. The slow development of VR headsets made in China means that China is yet to experience a metaverse or VR platform gain substantial popularity.

Interest has started to rise. More than 1000 companies, which includes heavyweights such a Alibaba (NYSE) Group Holdings and Tencent Holdings have filed for approximately 10,000 metaverse-related trademarks according to Tianyancha.

Baidu (NASDAQ 🙂 set new standards in December by launching “XiRang”, China’s first metaverse platform. It has been criticised widely for not providing a rich immersive experience, but it was widely praised as being China’s best. Baidu claims that its app is still in development.

Start-ups also are receiving increased investment. According to Sino Global (a Chinese crypto venture capital company focused on China), more than 10 million yuan ($1.6billion) were invested in metaverse-related ventures during the three-month period ending November. This is far higher than the total 2.1 billion Yuan that China’s VR industry and its related industries received for 2020.

“Investors and managers of venture capital who haven’t spoken with me in years started to message me, asking if we could go out for dinner and to talk. Pan Bohang, a Beijing-based startup that plans to launch VR social gaming platforms, said they all wanted to discuss metaverse.

A REGULATED REALM

Experts claim that Beijing’s infancy with China’s metaverse gives it plenty of scope to co-opt its growth, especially considering the unprecedented crackdown by regulators on other industries and tech.

“Traditional Chinese internet companies were the first to develop and were later regulated. According to Du Zhengping (head of China Mobile Communications Association’s metaverse committee, which was founded in October), industries like the metaverse would be regulated when they are constructed.

However, China’s autoritarian approach to metaverse development is in direct contradiction to how it is evolving in other regions of the globe where users are attracted by new ways to express themselves. This will hinder growth, according to Eloi Gerard, who was a VR entrepreneur and worked for 10 years in China before moving to Los Angeles.

“The metaverse is already a place where you have religious groups, LGBT movements, gathering all around the world and using the virtual world to share ideas, this is what people are doing on VRChat right now…it is crazy progressive and liberal,” he said, referring to a popular San Francisco-based VR platform.

“The metaverse idea is one can move between virtual worlds…this directly goes against the idea that there should be one party, one voice and one vision.”

Experts note also that China tightly regulates gaming, which is considered the gateway technology for the metaverse.

All games must be approved and battle games may be allowed. However, bloody and violent content, such as depictions of dead bodies or blood, is strictly prohibited. Anything that is deemed obscene is also banned. Authorities have taken steps to curb gaming by minors and excessive celebrity adoration.

Tencent (NASDAQ:) Inc and NetEase, gaming giants like Tencent, have made it clear publicly that they would comply with all rules when developing their metaverse offerings.

REACH OF THE GOVERNMENT

It seems that the long arm of government will be felt in many other ways. A powerful app called Xuexi Qiangguo published a November article that suggested the use of the metaverse to enhance the quality and quantity of compulsory ideological education classes for children.

A state media report said that at Beijing’s January municipal advisory body meeting, the proposals made included a system of registration for metaverse communities. This was to prevent them from having an influence on wider public opinion, or creating economic and financial shocks.

While crypto currencies are now a key feature in many metaverses, they are not present in China’s because they were banned by Beijing. The many Chinese forms of digital payment, including the central government’s digital Yuan, are likely to take their place.

Although there are many restrictions that may be imposed, entrepreneurs claim China’s metaverse can flourish because Chinese users will try out new online entertainment.

Nikk Mitchell of the company, which is discussing metaverse projects based upon Chinese stories, will use up elements such Chinese calligraphy, traditional costumes, and other aspects. He is also a believer in progress in VR content and glasses in China.

When Chinese consumers are ready to give this metaverse-related tech another shot, “then there will be mass adoption at a level that I don’t think will happen in the West nearly as quick,” he said.