A parallel software cosmos
In many aspects, China has its own ecosystem, separate from the rest of the world. The same goes for the software industry where in China the default choice is a domestic product instead of the market leader from most markets overseas. This is due to a multitude of reasons including China’s Great Firewall serving as a barrier to accessing the country and foreign investments in China balancing between meeting strict regulations and avoiding U.S. sanctions on China.Naturally, without strong competition from abroad, domestic companies can thrive. Software start-ups can access the large pool of human resources as well as tap into China’s huge market which allows them to mature without outside pressure. Chinese companies provided the software as the country digitalized in recent decades. This rise created tech giants such as Tencent, Alibaba, and Kingsoft. And as the industry develops, the compatibility and overlap with overseas software decreases, which further acerbates the manifestation of the two spheres.
Growth by subsidy
The Chinese government clearly states that it carries out industrial policy which also includes the software industry. Subsidies targeted all activities along the innovation process, from research and development to commercialization and technological upgrading. They often came in the monetary form of tax deductions, cash rewards, or lines of credit from government institutions, but the state also provided infrastructure, for instance by building innovation parks. Supportive instruments cast a wide net enabling many companies to tap into these resources.However, in the past years, Beijing began shifting its strategy towards targeting high-tech innovation. As stated in the latest iteration of the Five-Year Plan, the nation's interests lie in the development of key technologies. To achieve this, the allocation of resources had been revised. In the case of the software industries, policymakers tightened the requirements for what businesses qualified as “key software enterprises”. While for many enterprises it results in losing financial support, companies like AI and cloud computing companies would gain more access to China’s R&D resources.