Should companies in China be betting on the Metaverse?

British companies like Harrods and Jaguar Land Rover have dipped their toes into “the Metaverse”. But what actually is the Metaverse, and could it help companies that want to succeed in China? Tom Pattinson investigates

The emergence of the Metaverse has captivated the imaginations of millions and revolutionised the way we perceive and interact with digital realms. Originating from science fiction, this virtual universe concept has quickly evolved into a tangible one, blurring the lines between physical and digital realities and promising an exciting future.

The term “Metaverse” was first coined by author Neal Stephenson in his 1992 science fiction novel Snow Crash. Stephenson envisioned a vast virtual universe where users could immerse themselves in various interconnected worlds, engaging in real-time activities and interactions. Over the years, the concept has been further developed, with its definition evolving to describe a collective virtual shared space that encompasses augmented reality (AR), virtual reality (VR), and the internet.

While the Metaverse has been an intriguing concept for decades, the Covid-19 pandemic undeniably accelerated its adoption and widespread recognition. As physical distancing measures forced people to stay home, virtual environments became an escape and a means of social interaction. From virtual meetings to virtual events, the pandemic highlighted the potential of the Metaverse to bridge the gap between physical and digital spaces.

Additionally, the impact of the pandemic on industries such as retail and entertainment compelled businesses to explore new avenues for engagement and revenue generation. Many turned to the Metaverse as a platform to host virtual stores, concerts and exhibitions, creating immersive experiences that transcended physical limitations. With advancements in technology, the lines between physical and digital realities will continue to blur, offering new opportunities and challenges. Enhanced connectivity and AR and VR innovations will further enrich the immersive experience within the Metaverse.

The integration of blockchain technology and cryptocurrencies will also bring decentralisation, digital asset ownership, and a new economy to the Metaverse. Non-fungible tokens (NFTs) have already gained traction, allowing users to buy, sell, and trade virtual assets such as digital art, virtual real estate, and in-game items. This paves the way for new revenue streams and business models, empowering creators and entrepreneurs within the Metaverse ecosystem.

The Metaverse presents companies and retail businesses with a plethora of opportunities to redefine their operations and engage with customers in innovative ways. By establishing a presence in the Metaverse, businesses can transcend geographical boundaries, reaching a global audience without physical limitations.

Virtual stores within the Metaverse provide an immersive shopping experience, allowing customers to browse, try on virtual garments, and make purchases within the digital realm. Brands can also use the Metaverse for product launches, allowing consumers to experience new offerings in a dynamic and interactive manner.

The Metaverse also enables businesses to harness the power of data and analytics. By collecting user preferences and behaviour within the virtual environment, companies can gain valuable insights to personalise their offerings and improve customer experiences. This data-driven approach can drive sales, build customer loyalty, and refine marketing strategies.

Several British companies have embraced the Metaverse, using AR and VR technologies to enhance their retail experiences. In 2019, ASOS, the popular online fashion retailer, experimented with AR technology by launching the ASOS Virtual Catwalk, allowing users to explore different angles, details, and sizes of clothes with models walking in virtual outfits.

Luxury automotive brand Jaguar Land Rover incorporated VR into its retail experience by introducing the Jaguar I-PACE Concept VR Experience. Customers could virtually explore and interact with a life-sized version of the electric vehicle using VR headsets. This immersive experience allowed potential buyers to visualise the car’s design and features before its physical release.

Harrods, the renowned luxury department store in London, embraced AR technology by launching a virtual pop-up store in partnership with the British fashion brand Charlotte Tilbury. Customers could use the Harrods app to scan QR codes displayed in-store, which would bring up AR experiences showcasing Charlotte Tilbury’s products and tutorials, enhancing the physical shopping experience.

While the Metaverse is currently experiencing widespread adoption and capturing the attention of both individuals and businesses, its role in retail businesses is likely to evolve over time. Initially, it may be seen as an optional luxury, providing early adopters with a competitive edge and offering unique experiences to customers. However, as the Metaverse becomes more integrated into everyday life, it has the potential to become an essential part of retail businesses.

As consumers increasingly embrace digital experiences and seek convenience, retail businesses that fail to adapt to the Metaverse may risk falling behind their competitors, argues China business consultant Simon Boyd. By providing a seamless transition between physical and digital spaces, companies can future-proof their operations, cater to evolving consumer preferences, and tap into a rapidly growing market. However, John Gearing, an independent consultant who has had success with many companies in China, warns companies to take it slowly.

“There are always a lot of ‘shiny new objects’ for consumer brands and retailers to spend money on,” he says. “Remember holographic windows and smart mirrors? Certainly, the Metaverse could be huge but are we already seeing something bigger and better coming along with Apple’s virtual headset? Or will all of this come together somehow?

“In China, when technology sticks, it proliferates,” he says, using cashless payments as an example. “But not everything sticks, especially in its early incarnation. It’s wiser to be an early adopter than a trailblazer. The former allows a business to get on the bus quickly but lacks the inherent risk of the latter.”

China has a strong Metaverse ecosystem, and China has been a significant player in the development and adoption of VR and AR technologies, which are integral to the Metaverse experience.

Tencent, Alibaba and Baidu have been at the forefront of Metaverse development. Tencent, in particular, has made significant investments in the Metaverse space, with its social media and gaming platforms serving as key components of the ecosystem. Alibaba has also ventured into the Metaverse with its virtual shopping platform, Buy+, allowing users to browse and purchase products in a virtual store environment. The company has been exploring the integration of VR and AR technologies into various aspects of e-commerce, enhancing the customer experience.

In addition to these tech giants, a growing number of start-ups in China are focused on Metaverse development. These companies are creating virtual worlds, social platforms, and immersive experiences tailored to Chinese consumers. Many of them leverage advanced technologies like artificial intelligence, blockchain, and 5G to enhance the Metaverse experience.

China’s gaming industry is also closely intertwined with the Metaverse. The country is the largest gaming market globally, and Chinese game developers and publishers have been actively exploring the potential of the Metaverse within the gaming space. This includes the creation of virtual worlds, multiplayer experiences, and in-game economies.

Furthermore, the Chinese government has shown support for the Metaverse industry. It has included Metaverse development as a part of its national policy framework, highlighting its significance in driving innovation and economic growth. This support, combined with China’s robust tech infrastructure and a large user base, has contributed to the growth and success of the Metaverse ecosystem in the country.

Overall, China has a thriving Metaverse ecosystem, with strong participation from tech giants, startups, and the gaming industry. The country’s technological advancements, government support, and the enthusiasm of Chinese consumers have created a fertile environment for Metaverse innovation and adoption.

The Metaverse has evolved from a fictional concept to a tangible reality, reshaping the way we interact, work, and engage with businesses. The Covid-19 pandemic expedited its adoption, highlighting its potential as a virtual escape and a platform for immersive experiences. As we look to the future, the Metaverse promises to bring forth new opportunities for companies and retail businesses, revolutionising commerce and redefining customer engagement. While currently seen as an optional luxury, the Metaverse may soon become an essential component of retail businesses, enabling them to thrive in an increasingly digital world.China Consumer 2023

This article was produced as part of a series for China Consumer 2023.

Learn more about CBBC’s flagship consumer event of 2023 here.