By the end of 2018, 12 of the world’s 21 largest Internet technology companies by market capitalization were from the United States, nine from China and none from Europe.
When the DOMESTIC BAT stirred the storm and Bezos of Amazon became the richest man in the world, The powerful Europe was just like a bystander. There was a feeling that I just watched you pretend and didn’t want to participate at all.
Why has Europe as a whole been so subdued in the face of the Internet revolution? Here we use the form of pictures, texts and data to sort out the reasons for you.
Demography constrains Internet growth in Europe
Leboncoin is the most used e-commerce App in France. Users can not only buy things on the App, but also rent houses and buy and sell second-hand goods, which is equivalent to Taobao + 58.com in China.
Such a universal App has only about 20 million monthly active users, accounting for one-third of France’s total population of 66.99 million in 2018.
That’s about as far as it can go, because the Chinese App Taobao has about a third of the Chinese population with 450 million monthly active users, out of a population of 1.4 billion.
Europe’s small population makes it difficult for local Internet companies to become big. Here’s how many people there are:
It can be seen that Germany, with the largest population, has only 82.93 million people, which is smaller than guangdong Province of China.
The same App, serving 50 million people and serving 500 million people, needs the same number of developers, but the revenue of the latter can be 20 times that of the former.
A large enough market is the prerequisite for the development of Internet business. However, the market is too small for venture capital and workers to start a business. Even if the business succeeds, they will lack funds for external expansion.
A multilingual environment is a natural barrier
In China, people speak different dialects from Inner Mongolia in the north to Hainan Island in the south, but everyone can read Chinese characters and understand Mandarin. An App can be used by 1.4 billion people only by developing a Chinese version, which is similar to the United States.
In Europe, however, each country has its own language. France has French, Germany has German, and Italy has Italian. The picture below shows the official languages of each member state in the History Museum of the European Union.
The Internet is highly speed and operational, and Europe’s multilingual environment is a natural barrier, making it costly to develop Internet projects.
In contrast to Domestic Zhihu, Gutefrage is the largest Q&A platform in Germany:
It was founded four years before Zhihu, but because Germany is sparsely populated, it has only 3.6m registered users, compared with Zhihu’s 200m.
In order to survive, Gutefrage opened up a lot of advertising space early and inserted a lot of advertorials into the Q&A, making the q&A quality and interactive experience significantly worse.
In 2017, Quora, the ancestor of the question-and-answer platform, launched a German-language version, and gutefrage’s users defected as it stormed into the German market with massive funding.
For markets with different languages and cultures, only large companies with abundant capital have the opportunity to enter, while small companies have a problem even surviving, let alone expanding.
European Labour costs are too high
The rise of Alibaba, JD.com and Meituan is inseparable from the huge team of couriers. China has both demographic dividend and cheap labor, which is the reason why China’s Internet giants can rise.
According to data from the National Bureau of Statistics in 2018, the average annual salary in urban private sector in 23 Provinces in China is around 50,000 RMB, which is about 7,000 US dollars
The average salary in developed European countries is six times that in China.
Similar to Meituan, The logo of Deliveroo, a Food delivery platform based in London, UK, was also kangaroo.
To cover riders’ high costs, Deliveroo charges users 2.50 pounds, or 22 yuan, for each delivery, which means delivery will not be a popular service in Europe. Deliveroo also focuses on high-end restaurants.
Deliveroo was valued at around $4 billion at the end of 2018, while China’s Meituan was valued at $59.2 billion.
High labor costs limit the development of E-commerce, O2O and other Internet sectors in Europe.
Europe has not only high wages, and welfare in all its aspects, such as education, France is 12 years on the implementation of free compulsory education, more than 9 years of compulsory education in China for three years, Germany has the longest 3 years of parental leave, can enjoy not only mother, father, also can apply for, and each having a kid has, most European countries have 20 days of annual leave a year.
These high benefits are high costs for start-up companies, which also causes Europeans to prefer to work in large companies for a stable job, and it is not cost-effective for them to start a business.
Take Germany as an example, the famous large companies in Germany have a history of more than 100 years
This also reflects the lack of entrepreneurial atmosphere in Europe. No startup has ever been able to influence or overturn these old companies.
There is no Silicon Valley in Europe
The development of the Internet depended on the rise of the computer, which depended on the semiconductor chip and Moore’s Law, which originated in Silicon Valley around 1956.
Why didn’t it originate in Europe? Because Europe was busy rebuilding after World War II, which had almost destroyed most of its industrial infrastructure, the United States was very little affected by the war and even made a windfall from munitions, which allowed it to invest in scientific research and development.
After World War II, American universities saw a surge in students returning home. To meet financial needs and provide graduates with entrepreneurial opportunities, Fred Terman, the former president of Stanford University, converted part of the university’s land into an industrial park.
In 1956, William Shockley, the director of Bell LABS, founded Shockley Semiconductor Laboratories on the campus. Eight engineers from the laboratory left to form Fairchild Semiconductor, and those who left Fairchild went on to form Intel and AMD, the chip companies.
From chips to computers, from computers to the Internet, the Internet has flourished in the United States for a reason that Europe does not.
China doesn’t have that history either, but thanks to its huge population, China is the best place in the world to develop the Internet.
Europe has no defense against American technological penetration
The Internet originated in the United States, so The Development of American Internet companies has a first-mover advantage for Europe. When American giants like Facebook and Amazon entered Europe, Europe was not able to defend against these giants.
Emotionally, Europe is close to the United States. In order to help the reconstruction of Europe, the United States launched the “Marshall Plan” after The Second World War. In three years, the United States provided 3.3 billion US dollars to Britain, 2.3 billion US dollars to France, 1.45 billion US dollars to Germany, 1.2 billion US dollars to Italy, 1.1 billion US dollars to The Netherlands and several hundred million US dollars to other European countries.
Europe’s post-war prosperity was, frankly, due to the United States.
In terms of culture, Europe is close to The United States. The United States is originally an immigrant country composed of people from various European countries. The United Kingdom speaks English, and the languages of other countries are also composed of Latin letters like English.
The European Union, too, is too loose for its members to come together to use administrative power to limit American Internet intrusions and to support local Internet firms, as China has done.
The chart below shows Facebook penetration in Each European country in 2018 (number of users/population)
Small but beautiful European Internet company
For all these reasons, Europe has failed to develop Internet giants, but it has plenty of small and beautiful Internet companies.
For example, on the track of e-commerce, there are two French companies:
The chart above shows the Top10 e-commerce companies in the UK, Germany and France in 2017, according to cheetah intelligence. It can be seen that the top two companies in the UK and Germany are all American companies, with the exception of France, where the top two are all local companies.
leboncoin
Leboncoin, mentioned above, was founded in France in 2006.
vente-privee
Founded in France in 2001, VipSHOP is the originator of tail-end flash shopping e-commerce, and viPshop is modeled after him. Currently, it has 80 million monthly active users and 4 million daily active users worldwide.
The social track has two companies, Badoo and Lovoo Chat.
Badoo
Momo, a social app for strangers, was founded in Russia in 2006 and moved to the UK. It first became popular as a small application in the Facebook ecosystem and later became its own app.
So far, there are 400 million registered users worldwide.
Lovoo Chat
An app for strangers to socialize was founded in Germany in 2011.
Europe is strong on the industrial Internet
Alibaba, Tencent these companies are strong in the consumer Internet, consumer Internet is an Internet type that meets consumer demand in the Internet with individuals as users and daily life as application scenarios.
For example, Alibaba satisfies people’s needs for shopping transactions and Tencent satisfies people’s needs for social networking.
According to the definition of “industrial Internet” by GENERAL Electric in 2012:
Industrial nature of the Internet, is through an open, global communication network platform, the equipment, production lines, workers, factory, warehouse, closely connected, suppliers, products, and customers to share the whole process of industrial production elements resources, the digital, network, automation, intelligence, so as to realize the efficiency improvement and cost reduction.
Europe does not have a large population and has little success in consuming the Internet, but it has a developed manufacturing base and has been using the industrial Internet to reduce costs and improve efficiency.
Take Germany as an example, the Siemens factory in Bavaria is a highly Internet-based factory.
The whole factory covers an area of 100000 square meters, staff 1000 people, all of the manufacturing unit contact through the Internet of things, can the independent processing production equipment and computer, 75% of the work done by the human, is only the beginning of the production process, the staff put the initial component in the production line, after all the work is done automatically by machines.
Relying on a high degree of automation, the factory can deliver products to 60,000 users around the world within 24 hours, and the product qualification rate is as high as 99.9988%, no other similar factory in the world can have such a low defect rate.
The Internet is a means of information transmission. The emergence of Tencent and Alibaba in China in the past decade is actually an “imported product” from the United States to serve 1.4 billion people, thus changing the consumption habits and living habits of 1.4 billion people.
Europe doesn’t have 1.4 billion people, so it has taken the Internet, an imported product, and adapted its factories to make them as productive as possible.
Is Alibaba awesome? Very cool, but its e-commerce carrier, the Internet, was invented in the US and its business model is modeled after Amazon and ebay in the US.
Alibaba was founded in 1999, and Jack Ma said he wanted to make Alibaba into a centenary enterprise, but Germany’s Siemens has 172 years, Mercedes Benz 133 years, Jack Ma’s boast has been realized in these European enterprises, Europe is low-key Niubi, niubi.
Hope that China in the future in the field of industrial Internet can as soon as possible with Europe and the United States.