Online black market for adult content thrives behind China’s firewall I China’s cheese tea pioneer

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A WEEKLY PREMIUM NEWSLETTER ON CHINA'S TECH
  • Insights: The power of prurient pleasure
  • The week
  • Featured: Online black market for adult content thrives behind China’s firewall
  • China voices: The rise of China’s cheese tea pioneer
  • Smart reads
CHAPTER 21

The power of prurient pleasure

July 27, 2019
Let’s face it: Pornography is becoming mainstream.

Around the world, adult content is available in almost any medium you can imagine (and perhaps some you couldn’t 😉. However, some countries—like China and many others—have gone to great lengths to ensure that the production, distribution, and/or consumption of erotic media is difficult if not impossible.

But, as the old saying goes: Where there is a will, there is a way.

When Tony Xu, the author of the great piece you’ll find below, first proposed looking into pornography on WeChat, I was skeptical. With all the reports of how WeChat facilitates China’s control of information, surely porn would be an easy target for the platform’s automated control systems. Well, apparently I was wrong. People in China are watching porn just like everyone else.

Bottom line: The will for sexual content in China is not only there, but it’s growing. Not only do more young Chinese people report that they consume pornography, the consumption channels are also increasing. Like many civilizations, China has a long and complicated relationship with sexuality and its display. In modern times, China’s leaders have tried their best to control its expression. Ostensibly illegal behind the Great Firewall, it is surprisingly easy to find if you know where to look. In the Soviet Union, samizdat literature was distributed on carbon paper and pirate copies of Beatles records on chest X-rays. In China, links to porn float around in notionally private group chats. That doesn’t mean, however, that “vulgar” content is tolerated publicly. Quite the opposite: China’s enforcement bodies increasingly use titillating content as an excuse to force content platforms to offer more politically correct material.

A brief history

  • During the Han (206 B.C.–220 A.D.), Tang (618–906), and Ming (1368–1644) dynasties, erotic literature and depictions of sexual acts flourished.
  • Under the Qing (1644–1911), state ideology connected chastity with stability and asserted that “the obscene and erotic in literature lead to promiscuity in real life.
  • Under Mao Zedong, sexual activity came under the authority of the state. Labeled as “bourgeois predilections,” pornography, prostitution, extramarital and pre-marital sex, as well as recreational sex, were all banned.
  • Under Deng Xiaoping, pornography and obscene behavior were labeled “spiritual pollution,” together with individualism, existentialism, and bourgeois liberalism under the “Anti-Spiritual Pollution Campaign.”
  • In 1997, the Chinese government included the production and dissemination of obscene material in the country’s criminal law.
  • In 2002, the Ministry of Information Industry ordered service providers to screen e-mail for and delete from public sites” sensitive materials” including state secrets, slander against China’s reputation, incitement to overthrow the Communist Party, ethnic separatism, evil cults, pornography, and violence.
  • In 2004, Wang Yanli was jailed for four years for putting on “lewd” webcam shows. She was the first person to see jail time after strict anti-internet porn regulations came into effect.

A golden age long gone

Wind back the clock seven to eight years and you’ll arrive at one of the golden ages of adult content in China—internet connections were becoming better, forums were springing up, downloaders and storage platforms enjoyed lax oversight, and regulators were still figuring out where most sexual content came from.

One of the most useful and possibly most widely used porn-watching tool was the now-defunct peer-to-peer (P2P) video player and downloader Kuaibo. The platform allowed users to view pirated videos—often pornography— and was widely referred to as a kanpian shenqi, or “divine artifact for porn-viewing.” Kuaibo’s glory days didn’t last long. On April 22, 2014, company headquarters were raided by police, and on September 13, 2016, Kuaibo’s CEO was sentenced to 42 months in prison.

Starting around 2012, P2P downloader Xunlei and Baidu Wangpan (Baidu’s cloud service) also emerged as porn repositories. As long as users could find torrents or magnet links to pornography, often hidden in images using compression tools—a technique referred to as tuzhong, or “image torrent”—they could locate copies of porn that were already in the cloud and download them at max bandwidth. It wasn’t long before these cloud storage spaces came under scrutiny, with torrents and magnet links routinely getting flagged or reported for vulgar content. This cleanup gradually escalated, resulting in an almost “barren” cloud storage environment, save for password-protected Baidu cloud links.

As free pornography sources within the Great Firewall died down, paid sources began to emerge. Paying for porn used to be just another option, but now people have no choice.
 
Sex in society

After restrictive and prudish policies against all manner of sexual activity, China’s sexuality is changing:

  • Sex toy shops and prostitution (in the form of barber shops and massage parlors) have become common.
  • A 2015 study showed that 30% of respondents aged 18-61 had viewed pornographic material in the past year.
  • That same study also showed that from 2000-2015, more women were watching porn: from 37% to 51%
  • A different study conducted in 2015 of undergraduates aged 18-25 found that 55.6% had received sexual and reproductive health education.
  • Li Yinhe, the famous (or infamous, depending on who you ask) sociologist and sexologist, claimed in 2013 that pornography was the only source of sex ed in China.
  • Since then, China has tried to introduce more sexual education into public school curriculum, with many parents scandalized by the material.
Note: All the data above is from 2015 and earlier. I was not able to find more up-to-date information, possibly because it is getting harder to do such research.

Politicized pornography

It’s clear, however, that no matter what people do in private, the government of China takes a hard line against “vulgar” behavior both online and off.

  • In 2009, 22 members of a “wife-swapping” chat group were jailed under Article 301 of the criminal law. They were charged with “group licentiousness.”
  • In 2014, a Beijing-led crackdown meant to clean up the country’s image was launched against prostitution in Dongguan. However, it seems that the sex trade is alive and well again in the city, albeit in diminished form.
  • Since 2011, TechNode has published almost 200 articles about government action against “vulgar” and “obscene” content on China’s internet.
  • The specifics of the government actions in most cases of “vulgar” content remain unclear. However, we can see that over time, enforcement bodies have become more proactive and stricter in their treatment of content platforms as they apply a chilling effect to publishers, authors, and platforms alike.

Sex drive

Through millions of years of evolution, our bodies come encoded with certain drives and behaviors. The strongest are the most basic: fight, run away, consume, dispose of waste, and reproduce. For a vivid reminder of this, watch the BBC video “Iguana vs Snakes.” Both animals, with primitive brain structures, behave purely on instinct; the various systems of their bodies are perfectly tuned to react to certain stimuli in a certain way.

The drive towards reproduction (and the pleasure humans receive from the activity) are innate features of the human body. With the internet, more and more people are discovering and exploring their sexuality in ways that were never possible in previous eras. In China, online pornography is not only increasingly common, but it is also more in demand. However, that doesn’t mean it’s easier to find. Much like wall-jumping technology, adult content has joined the “dark forest” of China’s internet where word-of-mouth is the only guide.

– John Artman, Editor-in-Chief
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The week
New ventures

San Francisco-based enterprise software company Salesforce.com has entered into a strategic partnership with Chinese e-commerce giant Alibaba Group in a bid to make deeper inroads into mainland China, Hong Kong, Macau, and Taiwan.

Tencent and Nintendo will hold a press conference on August 2 in Shanghai regarding the China launch of gaming console Nintendo Switch, Tencent confirmed to TechNode on Thursday.

Bytedance has acquired Jukedeck, a UK startup that enables users to create music generated by artificial intelligence.

Smartphone maker Xiaomi was the youngest company on the Fortune Global 500 list in 2019, placing 468th in the world with its 2018 revenue of $26.4 billion. However, it has faced slowing smartphone sales and sinking share prices since its IPO in 2018.

China’s central bank has approved the expansion of Ant Financial’s independent AlipayHK e-wallet throughout mainland China, allowing for visitors from Hong Kong to pay using their own currency.

BMW will set up a computing center with online gaming giant Tencent to push the commercialization of driverless vehicles in the world’s biggest vehicle market.

Social credit

The Chinese government is expanding its social credit blacklists to online platforms and their users, aiming to punish “untrustworthy conduct” on the internet, according to draft regulations published this week by the country’s internet regulator.

Lunch date

Crypto entrepreneur Justin Sun is facing a series of allegations after announcing his decision to postpone a lunch date with Warren Buffet for which Sun bid $4.7 million. Local media reported that Sun was barred from foreign travel due to allegations including illegal fundraising, money laundering, and gambling. China’s internet finance regulators have called for the public security department to launch an investigation.

Stockpiling

Surveillance camera manufacturer Hikvision dramatically increased its stockpile of components in the first half of the year, the South China Morning Post reports, drawing attention to the uncertainty that the Hangzhou-based company faces amid increased US government scrutiny.

EV expansion

The government of Hainan province in southern China is significantly expanding its electric vehicle charging infrastructure network as part of a larger push for EV adoption across the island.

Banning content

The National Press and Publication Administration formally reprimanded 12 online reading platforms from July 15 to 17 for spreading vulgar content.
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Featured: Online black market for adult content thrives behind China’s firewall
For foreigners living in China, it is generally understood that specialized software is needed to bypass the country’s internet restrictions and gain access to outlawed content such as pornography. But for locals, it is often not possible to obtain the tools to secure their connection and scale the Great Firewall.

While it may be risky and complicated to find adult content online within China, locals are nothing if not persistent. TechNode recently conducted a month-long investigation into how locals access the forbidden fruit.

WeChat is the platform of choice for those who disseminate explicit content in the country. Based on TechNode’s observations, personal accounts and private groups that spread pornography are very much alive, if not thriving, despite constant crackdowns from operator Tencent and regulators.

The long road to find porn

With regulators designating pornography not only illegal but also corrupting, users must jump through many hoops even to make first contact with sellers. The first step is to search for porn-related keywords on Baidu, China’s only major search engine. Some explicit phrasings occasionally escape Baidu’s censors, and the most effective combination appears to be “WeChat” coupled with xiao dianying(literally “small movie”), a euphemism for pornography.

Sellers’ WeChat accounts are most commonly found via Baidu Tieba, the site’s bulletin board system where users post topics for online discussion. They are also found on WeChat QR code-sharing websites and Jianshu, an original-content community platform. Due to an ongoing clean-up campaign started by the Cyberspace Administration of China in April, posts disappear quickly—one Tieba board that hosted hundreds of porn-selling WeChat accounts was shut down within a week of first being spotted by TechNode.

QR code-sharing sites are generally more resilient, but they require an even deeper understanding of the underground lingo of the business. Users have to look under tabs labeled “beauties,” “models,” “movies,” and then further filter for descriptions that contain certain words such as fuli (“perks” in English), another tag used by Chinese netizens to refer to sexually explicit content.

No free trials

If users are successful in scanning a QR code before it is purged, they gain access to a limited selection of content, but not before they pay. One seller warns: “No free trials! For low-price bonuses, add me on QQ” [our translation]. Business appears to be flourishing; a number of dealers advertise their alternative accounts due to demand being so high. (WeChat accounts are capped at 2,000 contacts.)

Sellers distribute content in diverse ways. The most straightforward way, TechNode discovered, is to post videos directly into the group using WeChat’s “note” function, which enables users to embed short videos into an empty form. Those who access them can then play the video using the app’s native player. The content is generally grainy footage shot on phone cameras.

Other sellers send out links to pornography in the form of group chat histories. One of them updates links each day to five professionally produced movies—sometimes up to 120 minutes in length—via this method. These can also be played using the built-in video player. However, users using English as their operating language for WeChat are unable to play these links. The group had 85 members as of July 12.

Secret apps

A more covert method involves redirecting users to download a video app via QR codes. Several WeChat accounts that TechNode tested led users to a link for an app named Yueguang Yingshi, or “Moonlight Videos.” The app is not approved on iOS but circumvents restrictions by asking users to trust a certificate from a developer named “People’s Military Medical Press,” which allows it to function without going through the App Store.

Pornographic movies on Yueguang Yingshi number in the thousands and are frequently viewed by users. One video in the category “incest,” for instance, had more than 400,000 views and 4,221 upvotes as of July 12. The platform also links to around 200 external porn live-streaming platforms, many of which are shown to have more than 2,000 concurrent users. “Come on come on come on, strip,” an anonymous viewer commented in the chat of a show hosted by a live-streamer named “saosaoai.” “Guys can’t handle a girl like you. You will suck them dry,” another user commented a few seconds later.

All of these services come at a cost, which is not always determined by the quality of the product, and users are vulnerable to scam attempts. The WeChat group that used notes to distribute porn, for instance, charges RMB 73 (around $11) to remain in the group. “We won’t take your money and you’re out. Honesty is the most important thing,” said the administrator, who goes by the handle “Xin.” Six hours and three short videos later, “Xin” kicked out TechNode’s test account, marking the tenth member to be removed that day.

One group owner offers seven different viewing plans with fees ranging from RMB 10 to RMB 128, granting access to video sites, live-streaming platforms, and premium WeChat groups where “high-resolution movies of different genres” are posted. Yueguang Yingshi similarly gives users the option to purchase access of various durations, with a permanent one costing RMB 298.

In addition to pornography, some sellers also peddle escort (and other more extreme) services on WeChat. One user, for instance, regularly posts screenshots from an explicit live-streaming platform on her WeChat Moments, promising premium services and occasionally listing the price of a “session.” Another female user sells her used bras and underwear at RMB 138 per set.

Tencent’s reactions

Tencent has been cracking down on pornographic material on the platform for years. “Posting malicious content such as sexually explicit and lowbrow content is in severe violation of related laws and regulations, as well as WeChat’s platform standards. WeChat has zero-tolerance for behaviors like this,” a spokesperson told TechNode in a statement.

The company has banned over 38,000 official accounts for sexually explicit content and more than 115,000 official accounts for lowbrow content in 2018. Personal accounts and groups that spread such material are also penalized, though the numbers are much lower. In 2018, 810 WeChat groups and 3,500 personal accounts were punished for such dissemination.
Punishments for personal accounts include restrictions of WeChat functions like location-based services, as well as temporary suspensions, or even permanent bans, depending on the severity of the violation.

However, the number of accounts banned for pornography still only make up a tiny fraction of the app’s daily active users, which hit 1 billion at the end of 2018. In a set of standards for external links on WeChat, Tencent stated it could punish accounts for posting links to any lowbrow content. Although the company aims to create a healthy WeChat ecosystem, the standards do not indicate that Tencent has any additional legal obligations, nor do the standards constitute any commitment to carry out the listed punishments.

Meanwhile, the platform has no automated or artificial intelligence-powered censoring system for private or group chats, the spokesperson said, adding that it still relies on users to identify and report misbehavior.

Since these group chats usually charge for entry, they are not likely to be reported unless users find the content to be of inferior quality. During the several weeks that TechNode observed three porn groups with more than 70 people, only one user voiced dissatisfaction at the quality of the movies and hinted at reporting the group if it didn’t improve. That user was quickly kicked out, at which point it would have become impossible for them to report the group.

Scaling the firewall

With pornography relatively hard to come by inside China, not to mention pricey, why don’t users simply use software to access the free sites from overseas?

One reason is a lack of awareness among online users. “I think one big reason that people don’t use such tools is that they don’t know what is available outside of China’s Great Firewall,” Wang Yaqiu, a China researcher at Human Rights Watch, told TechNode. “You don’t know what you don’t know and you don’t desire information that you don’t even know exists.”

The private use of such tools is also prohibited in the country, of course. According to state provisions, internet users may only access connections to the international internet using “the international access and exit information channel provided by the state public telecommunication net under the Ministry of Post and Telecommunication.” Additionally, only institutions can gain access, which means that all personal use of such software is essentially illegal.

Punishments for such violations are rare, but they do happen. In December 2018, a user in Guangdong province was fined RMB 1,000 for illegally connecting to the international internet using software called “Lantern Pro.” One month later, another user in Chongqing was summoned before authorities for similar reasons.

Another reason why local users turn to WeChat to find porn is the sense of familiarity, according to Wang. “People tend to get information from channels that they are familiar with, even if it means higher costs or lower information quality,” she said. “Humans are creatures of habit and routine.”

– Tony Xu
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China voices: The rise of China’s cheese tea pioneer
There’s nothing very “delightful” about the Chinese consumer experience. Most stores and restaurants optimize function over experience, expending little creativity and capital on interior design and customer service.

And then there’s HeyTea, the new-age tea shop chain that invented cheese tea. Its drinks, which run around RMB 25 ($3.50) apiece, are so good that I plan weekends around them. At a price point 25% higher than its utilitarian bubble tea competitors like CoCo and Happy Lemon, HeyTea delivers airy cheese teas, seasonal fruit teas, soft-serve ice cream, and the best product innovation department in the business. Hour-long lines are mitigated by its WeChat mini-app, which allows for remote ordering, as well as its pleasant and varied interior design. For me, it’s the best consumer brand.

With the tea beverage market fast becoming a new battleground for coffee chains in China, HeyTea is well prepared to deal with a possible onslaught from Starbucks and Luckin. In the seven years since its first location opened in Shenzhen, it has built up a network of 226 shops nationwide.

What follows are abridged translations of a report on HeyTea from a WeChat-based commentator and an interview with the founder Neo Nie from a Chinese financial news outlet.

HeyTea is a miracle

Jia Yun, Where Startups and Finance Meet (Chuangye Cajinghui).
July 16, 2019

Together we as tea drinkers have brought HeyTea to a RMB 9 billion ($1.3 billion) valuation, from 30 square meters to 227 stores nationwide. But are they for real?

In China, the next Starbucks is likely to grow out of the tea industry.

According to a Meituan report, the potential size of the milk tea industry is close to RMB 100 billion, which is roughly equivalent to China’s coffee market.

The performance of HeyTea has demonstrated to capital markets that an industry that started with streetside stalls can also give rise to a premium brand. What’s more, the tea industry can evolve like coffee has, going from just selling products to selling brands and social spaces.

Unlike past founders we’ve covered in China Voices, like Tsinghua grad and fuerdai Wang Xing, who went on to found Meituan, or Ofo's founder Dai Wei, a Guanghua PKU grad, the HeyTea founder truly started from the bottom.

With no particular background or educational achievements, Neo Nie truly has a founder’s “Pirate spirit,” having already reached the summit before turning 30. On the Baidu Encyclopedia [China’s Wikipedia equivalent], his resume is only two sentences long, and the main achievements section consists of only two words: “HeyTea founder.”

In 2012, this young man who had no background in tea, opened up his first store in Guangdong province. Every day he drank 20 cups of milk tea, messing around until he invented cheese tea. Then business got better and better, and he began expanding province by province across China.

At the time, China’s tea brands were still in the desktop age and Nie was unaware of the power that the capital sector could unleash on the whole tea sector. He took IDG’s money [$15 million in 2016], and proceeded to raise the bar for what was possible.

Focus on the youth

What follows are excerpts from an October 2018 interview by 21st Century Business Review with Nie about the decisions he’s made over the course of HeyTea’s life.

Most young people don’t like the bitter taste of tea, but enjoy the texture, so we use cold-brewing technology to reduce bitterness.

We don’t spend on marketing, and put more money into the product. My hope is that our products bring their own “taste memory points," which is the best advertising we can hope for.

Just making the first cup of cheese tea doesn’t mean we’ve automatically made ourselves a top-notch brand. I know clearly in my heart that we don’t just want to be a cheese tea store, but rather give young people more access to tea. We hope to one day spread Chinese tea culture, make it more youthful, and internationalize it.

Our key point is to use the best possible products. Our friends sometimes laughed at us, asking if we’ve gotten out of the tea business and become designers or architects? But this is to be expected as we go through the process of upgrading. For a long time now, I’ve been leading product development and design. For example, I used to really care about color, but now I’m more focused on texture. That said, the original instincts are the same.

HeyTea has never thought of itself as “internet-famous.” Most people see that as a negative attribute. When you get more attention, many things get magnified. Some people think that you’re paying people to stand in line. [Ed.– The irony being that these people are pretty easy to pick out as being from a different social class as the target customer. On occasion, though, at the Sanlitun store, there would be people you could pay to switch your spot with theirs.]

The queueing phenomenon may be similar to when McDonald’s entered China in the 1990s. The first McDonald’s store in any given province had six- to seven-hour queues. Later, McDonald’s grew fast, which is what HeyTea is now doing.

But frankly speaking, I was happy about our big lines, especially in the early days, because it represents how the customers feel about you. Later on, the queues just became too much, which made me worried.

Today our individual city stores do nearly $600,000 in business a month, with daily income around $15,000. Our best shops can make 3,000-4,000 cups per tea a day, which is higher than any of our peers and even some foreign brands. At our average store, we’re already at a few hundred cups per day.

Hard to copy

HeyTea’s method is all about rarity, so we’re always putting out new products while at the same time looking for new ways of making products so that it’s not easy to copy us. But what’s most hard to copy is the brand.

In a HeyTea store, we don’t do business KPI. We don’t want to just drive sales, but instead we’ll put everything in service of the brand. Focus on providing good things and the consumers will naturally come to your door.

We’re always working on lots of different creative ideas, even if they sound ridiculous. Once new ideas emerge, we don’t consider issues of standardization and cost.

In addition to the mainland market, HeyTea will be entering Hong Kong and Singapore [Ed.– As of today, they already have three stores in HK and two in Singapore]. Going abroad isn’t that much different for us. From the beginning we’ve tried to make universal products that can reach the world, just like Coca-Cola and Starbucks.

– Jordan Schneider, TechNode contributor
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Smart reads
Natural language. A new study discovered new materials by processing words from hundreds of scientific papers. (Nature)

Good greens. Adding 1 billion hectares of forest could help check global warming. (Science)

Inequality. Not counting China and India, global interpersonal income inequality in 143 countries was higher in 2015 than in 1988. (ScienceDirect)
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We're looking forward to telling you all about the latest tech developments next week. Till then,

Have a nice weekend!
 
Alberto Sperindio
Newsletter Editor
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