The Asian giant is investing in the technologies behind the three- dimensional virtual space, considered as a strategic industry for the country’s future economy. China’s first NFT exchange platform will also be a major opportunity for leading international brands.

By the end of 2023, China will establish itself as the leader of the Metaverse, surpassing the Western economies. The country has greatly increased its investments in the industry, considered of primary importance for its potential and for the impact on the future economy. The advancements of technologies such as Artificial Intelligence, Virtual Reality, Augmented Reality and 6G, will help China gain a position of global dominance as the main digital ecosystem hub. A strategy that currently places the country at the top of the podium of the Metaverse, followed by the United States and South Korea. As a result, China has reconsidered its stance with regards to NFTs - Non-Fungible Tokens - and the business associated with them.

Current interaction of countries with the Metaverse and related technologies.

(Source: GlobalData)

Renewed confidence in the Metaverse

Globally, in 2022, companies cut their investments in augmented and virtual reality technologies by more than half compared to 2021. The department of Meta that deals with the construction of the Metaverse - Reality Labs - recorded the greatest annual losses ever: over 13 billion dollars. Despite this, the Menlo Park giant believes in the potential of the new virtual worlds and despite anticipating further losses in 2023, it intends to continue investing in the industry. The Metaverse is also a momentous challenge for companies: certainly a novelty to develop, but above all an innovative concept that must find its place in society and the economy, also from a legal standpoint. Its impact on the lives of people and businesses will need to be assessed and, most certainly, governed. The Metaverse raises issues about cybersecurity, intellectual property, content licensing, and energy-voracious data storage technologies. In general, analysts predict a reinvigoration of the industry and China is focussing on the Metaverse as a tool for the continued economic development of the country, especially in its industrial processes applications, overcoming the concept that this technology is aimed mainly at consumers.

"China’s growing interest in VR, AR, AI and 6G aims to beat the progress made in the West and position the country as a global hub for the metaverse"

There’s something about NFTs’

In 2021, the Chinese government had adopted a firm position of closure with respect to cryptocurrencies, NFTs and all related resources, going as far as forbidding trade in cryptocurrencies. In the light of the Metaverse’s new development prospects, it is seriously re-assessing the issue, formally pronouncing NFTs as legally protected, thus equated to physical objects, with regards to value, rarity, controllability and marketability. In collaboration with Chinese Technology Exchange, Art Exhibition China and Huban Digital Copyrights, the Chinese government established the first regulated platform for NFT digital assets trading, the China Digital Asset Trading Platform. The new marketplace was created with the aim to regulate and mitigate the speculation plaguing the secondary market of Non Fungible Tokens, and the exchange between copyright users. In addition to NFTs, the platform will also allow the exchange of copyright related to other digital domains.

"The Chinese government’s marketplace aims to regulate NFT and avoid excessive speculation in secondary markets"

The success of digital collectibles

From luxury to digital art, there are several industries that are trying out this form of innovative and technological proprietary products. State-owned companies and media outlets have engaged in the production of NFTs, backed by a growing demand. According to the forecasts of AntChain (Alibaba Group), this market will grow by 150% and will exceed the four billion dollars mark by 2026. This incipient industry of NFT ‘the Chinese way’, is founded on a local hybrid, autonomous blockchain network, protected from the risks of fraud and other financial criticalities belonging to cryptocurrencies. With the same characteristics of authenticity and uniqueness, NFTs in China take the name of digital collectibles.

On the occasion of the ChineseNew Year 2022, for example, Alipay (Alibaba Group) created a series of 3Dcollectibles of historical artefacts related to the year of the tiger. JD, anonline direct sales company, put a rendering of its mascot Joy on sale. Investmentfirm Tencent began experimenting with a digital real estate business for itsMetaverse future. Also famous is the Bored Wukong art collection, aChinese-style interpretation of Bored Apes that was popular with China’s youth.

The development of Chinese NFTs is in itself a market opportunity. For international brands, digital collectibles that can be linked to IRL (in real life) products can be an effective and innovative way to address counterfeiting. The uniqueness of NFTs, beyond the personal shopping experience, guarantees the originality of the product and the brand. Perfumes, jewels and luxury accessories have been the object of campaigns and collections of digital products and, for instance, Alfa Romeo have created an NFT collection associated with the Tonale model.

"With its character of exclusivity and uniqueness, the NFT also becomes a seal of quality"

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