BEIJING (Reuters) – Wang Miaoyi’s small one-bedroom apartment, which doubles as her design studio, is overflowing with game magazines, figurines and boxes of sci-fi novels.
The 30-year old game developer is a child of the county’s tech boom: she studied at one of China’s top universities and her company hit it big with an award-winning game that was published on Nintendo’s Switch console and the PC gaming platform Steam, with plans for roll-out on other game platforms.
Now her ambitions – and those of many others across China’s giant tech industry – are facing a reckoning, amid rising state control over the sector, tightening regulation and a biting trade war with the United States stymieing growth.
“(In 2015) doing a start-up was popular. So many young people set up small businesses, like developing games, and dreamed of making big money as well as being free,” she said. “But they found out now it’s really unrealistic.”
Ms Wang says she has had to abandon for now hopes of releasing the game on new platforms in China, closing the original studio that developed it and working instead on updates with a skeleton crew of freelancers. She has moved from the Beijing tech hub of Zhongguancun to the city’s cheaper far-west outskirts to cut costs.
She is not alone. Reuters interviewed a dozen tech industry insiders, from gig economy workers to investors, who said that the boom days of easy returns looked to be over.
Until last year, China’s tech industry had enjoyed years of breakneck growth. Firms including Alibaba Group Holding Ltd and Tencent Holdings Ltd almost doubled in value in 2017 alone, making big-ticket investments as part of a multi-billion dollar expansion into cloud, offline retail and finance.
But now the market is feeling the pinch. Hiring numbers are down, company margins are thinner and tumbling technology stocks have wiped nearly half a trillion dollars this year from the value of China’s top listed tech firms.
The biggest names in tech have flagged concerns, including Alibaba and Baidu Inc, who revised down their full-year sales forecasts in recent weeks on the weaker outlook.
“Investments into the tech space have definitely cooled down, measured by almost every metric: number of deals, deal size or fund raising,” said Zhang Chenhao, Shanghai-based Managing Partner at technology-focused Prometheus Fund.
“I think this year is the first time over the last 30 years when greed yields to the fear.”
The technology sector is facing challenges on all sides.
A broader economic slowdown saw China’s third quarter GDP slow to its weakest pace since the global financial crisis. The currency has slid against the dollar and domestic markets are down sharply.
Alongside a series of tit-for-tat trade tariffs, the United States has accused China of stealing technology, barring tech acquisitions by Chinese firms and blacklisting others.
At home, tech companies from social media to gaming and fintech have seen tightening regulation and a heavier hand from the ruling Communist Party.
Gaming and social media giant Tencent has seen its stock price dive by more than 25 percent this year amid a temporary ban on licenses for games, its top revenue driver.
At the country’s top internet forum in Wuzhen this week, officials signaled they would look to rein in the country’s tech giants.
“They can be big but we should also be well-regulated,” said Gao Xiang, vice minister of China’s Ministry of Industry and Information Technology on Thursday.
China’s regulators have already cracked down on everything from rude joke apps to livestream bloggers disrespecting national anthem – sending a chill through the free-wheeling and innovative online arena.