The Impact of the COVID Crisis on the Innovative Potential of China's Internet Platforms

Her Russ Acad Sci. 2020;90(6):779-788. doi: 10.1134/S1019331620060271. Epub 2021 Jan 21.


Although the COVID-19 crisis has hit the Chinese economy hard, China's Internet companies have benefited from the quarantine. However, the long-term consequences of the 2020 crisis for the development of the innovative potential of Chinese Internet corporations, primarily the largest platforms such as Alibaba, Baidu, Tencent, and as integrators of the Chinese Internet economy, are still unclear. This article provides a general overview of changes in the consumption of services of large platforms, including moderate growth in demand, strengthening of the segment of high-tech services (cloud solutions for business, digital healthcare, etc.), digitalization of small and medium enterprises, and expansion of the user audience. The innovative and technological initiatives of the platforms are analyzed. Within the framework of the announced state plans, large platforms, in partnership with regional authorities, business, and universities, intend to develop an advanced digital infrastructure (5G, data centers, etc.) and innovation infrastructure (digital clusters, technology parks, and research centers). Despite the lack of new breakthrough initiatives, the innovation capacity of the platforms is expected to strengthen in the long term. Presumably, the key role will be played by qualitative changes in the markets owing to the diffusion of digital technologies and competences, which will lead to an increase in demand for Internet innovations. The mechanisms of transforming market changes into a resource for innovative development of the platforms are associated with the expansion of market data, the emergence of a complex system of services, and unique innovative ecosystems of the platforms, making it possible to organize and coordinate the innovative activities of various entities, as well as to coopt promising start-ups able to create breakthrough innovations during the crisis.

Keywords: COVID-19 pandemic; China; Internet platforms; digital innovation; knowledge-intensive online services; technology diffusion.