What are some good ways to start a Web3 business in China? (Part 3)
Exploring the opportunities and challenges in China's Web3 entrepreneurial landscape, including innovative strategies, regulatory considerations, and success stories to help aspiring entrepreneurs find the right path forward.

null\n\nDigital collections, presumably everyone is familiar with them. 21 years ago, domestic players called it NFT, and after 21 years, domestic players called it digital collections. \n\nTimeline Back in March 2021, Beeple’s digital work fetched a whopping $69 million at Christie’s, giving the global market the first real value of NFTs and making this narrative a new focus beyond crypto assets. \n\nThis craze quickly spread to China. Since the second half of 2021, major domestic factories have entered the market to test the waters: Tencent’s “Phantom Core” was launched in August 2021, the digital collection business under the Ant Chain system has also begun to advance and gradually form the “Whale Exploration” brand in 2021, and JD.com’s “Lingxi” will be launched at the end of 2021. Subsequently, in the first half of 2022, a large number of small and medium-sized platforms poured in, and the expansion of the industry was further accelerated. According to industry statistics, as of June 2022, the number of NFT/digital collection-related platforms in China has increased by about five times compared with the beginning of the year, with more than 500 active platforms. However, while the market is rising, the platform narrative has shown signs of contraction. For example, the expression “NFT” has been gradually replaced by “digital collections” in public communication, and secondary transactions and financial expressions have also begun to be deliberately weakened. This shift became more pronounced in the second half of 2022. In August 2022, the leading platform represented by Tencent Magic Core announced the cessation of digital collection issuance and launched a refund arrangement, and the industry entered a stage of rapid clearance. A large number of platforms that relied on secondary premiums and speculative sentiment withdrew, and the first cycle of digital collections completed the transition from frenzy to contraction almost within two years. \n\nNow, looking back at domestic digital collections, the market has gone through a round and a round of clearance. The vast majority of the “storytelling by trading” model has proven to be unworkable, and even the room for it to continue to exist is limited. It stands to reason that such a track seems to be over. But why does Portal Labs think that digital collections are still a good way to start a Web3 business in China? You might as well look down. \n\nThe policy space is still there\n\nOne of the core reasons why digital collections are still worth discussing in China is that the policy does not negate itself. What is really suppressed by regulation is the path of financial speculation in the name of digital collections. In other words, digital collections are not a one-size-fits-all track in China, and it has been drawn a clear boundary. \n\nThis boundary is very clear: it cannot be financialized, it cannot be securitized, it cannot be traded. \n\nSince 2022, regulators have repeatedly issued risk warnings on speculative risks related to NFTs. The China Internet Finance Association, the China Banking Association, and the China Securities Association jointly issued an initiative in April 2022, clearly opposing the financialization and securitization tendencies of NFTs, and emphasizing the need to prevent risks such as secondary market speculation and illegal fundraising. This has almost become a policy watershed in the domestic digital collection industry. It is in this context that the concept of “digital collections” has gradually replaced “NFT” and become a more localized expression of compliance. The platform no longer emphasizes asset trading, but emphasizes the collection and cultural attributes of digital content. Many issuers have also begun to actively avoid secondary circulation, weaken the price narrative, and instead put digital collections into safer scenarios such as cultural creativity, branding, and cultural tourism. Judging from policy signals, this “de-financialized digital asset form” is not completely without space. On the contrary, when digital collections are embedded in applications such as cultural communication, copyright confirmation, and brand membership, it is closer to a digital voucher tool than an investment target. The reason why a large number of domestic digital collection projects can continue to exist is precisely because they have completed this positioning switch. \n\nMore realistically, China does not lack the policy soil for the digital cultural industry. Whether it is the digitalization of cultural tourism or the upgrading of cultural consumption, the direction of regulatory encouragement has always been “content industry” and “digital creativity”. Only by returning to this framework can digital collections become a sustainable Web3 entrepreneurial path. Therefore, the answer to whether digital collections can be made in China does not depend on the technology, but on which line you stand. Standing on the trading line, it must be a high-pressure area; However, standing on the line of cultural content and brand operation, it may become one of the few Web3 entrances that can be implemented in compliance. \n\nThe industry has been cleared\n\nIf the policy draws the boundary, then the market itself has completed a more brutal screening. The first round of digital collections in China is not “slowly cooling”, but quickly clearing. The platform expansion in 2021-2022 was almost explosive, but the contraction that followed was just as rapid. A large number of projects that rely on secondary premiums, speculative sentiment and gray trading leave little room under the dual effects of regulatory pressure and market ebb tide. \n\nAfter 2022, the structure of the industry has changed significantly. The once most crowded part – issuance is hype and collection is asset – is largely emptied. The remaining platforms and projects show more consistent characteristics: weak transactions, heavy content, weak finance, and heavy operations. They no longer try to replicate the free circulation logic of overseas NFT markets, but converge digital collections into a digital cultural product and brand tool. \n\nThis means an important change: the “entrepreneurial difficulties” of digital collections in China have shifted from “whether they can be distributed” to “whether they can be operated”. In the first cycle, the core capabilities of many teams are packaging, selling, and creating a sense of scarcity. But after clearing, the market no longer rewards this model. What can really stay is often those platforms with content supply, channel cooperation and long-term operation capabilities. \n\nThe “content supply” here does not refer to making a random picture, but whether you can continue to obtain copyrighted, IP, and culturally valuable content sources. For example, platforms like Only Art (theone.art) are essentially closer to digital art e-commerce: it works with artists and copyright owners to obtain licensed works, and then conducts limited distribution and serialization around the works. The platform does not sell “on-chain assets”, but a digital content system with sources, copyrights, and continuous supply. The so-called “channel cooperation” is not simply community communication, but whether digital collections can be embedded in real consumption scenarios. Many more sustainable practices in China often occur in cultural institutions and brand systems. For example, museums, scenic spots and platforms cooperate to issue cultural relics-themed digital collections, which essentially treat digital collections as part of cultural dissemination and commemorative consumption, rather than a freely tradeable target. Similarly, the logic of Starbucks and other brands promoting NFT membership systems overseas also shows that the real value entrance of digital collections often comes from membership rights and consumption ecology, rather than secondary market pricing. \n\nAnd “long-term operation capability” is the core watershed of the domestic digital collection platform. The issuance is just the beginning, and the real answer of the platform is: why do users stay? How to cash in on the rights? How does the event last? Many projects fail not because they can’t be sold, but because there is no next step after selling, and the collection becomes a static picture, and users naturally lose it. For example, the “Lingjing People’s Art Museum” under the People’s Daily emphasizes the cultural communication attributes of digital collections, forming a continuous content rhythm through artist cooperation, theme curation and content column distribution, rather than one-time sales. Similarly, Xinhua News Agency has launched a distribution plan that combines digital collections with public welfare, embedding digital collections into public narratives and brand activities, making them more like long-term cultural projects than trading assets. Looking at the cultural tourism scene, the key to the continuation of the digital collection practice of some museums and scenic spots is not in the “price”, but in the “scene”. They often bind digital collections to exhibitions, commemorative ticket stubs, and offline activities, allowing users to hold not a picture, but a record of cultural participation. The operating logic of such projects is closer to cultural and creative products than crypto assets. Because of this, the commercial closed loop of platforms that are still in operation today is often closer to a “content consumption platform” than an “asset trading market”: obtaining content through IP cooperation, completing sales through limited distribution, and then maintaining user retention through membership activities and equity design, rather than relying on secondary market price increases. This model sounds “less Web3”, but it is precisely why it has been able to exist for a long time in China. The real path that digital collections can take in China is not a financialized narrative, but a platform-based operation. \n\nThe demand side really exists\n\nIs there a real demand for digital collections? If it is just a concept of “compliance existence” and no one is willing to pay for it, then it still cannot become a Web3 entrepreneurial path. The answer is yes. Especially in the field of culture and cultural tourism. As a historical and cultural power that has lasted for 5,000 years, the most important thing for China is content assets. However, museums, scenic spots, and local cultural tourism projects have long faced the same problem: how to turn cultural content into products that can be disseminated, consumed, and precipitated. Digital collections provide a new form of digital souvenirs. It can carry the extension of the exhibition and become a part of cultural tourism consumption. For many institutions, this model is lighter and easier to spread than traditional cultural and creative products, and is more in line with the digital consumption habits of young users. In addition, the real business opportunities for digital collections in China largely come from the “user operation needs” on the brand side. Consumer brands are always looking for new membership carriers: they must have a sense of identity, scarcity, and long-term operation. The role of digital collections here is more like a digital membership voucher than a single image product. Brands are not short of budget, but a sustainable membership tool. If a digital collection can be bound to points, activities, and rights and interests, it can enter the brand’s operation system instead of staying on a chain island. \n\nMore importantly, these requirements have very clear B2B attributes. Cultural institutions need digital content solutions, brands need membership and marketing tools, and platforms provide distribution, rights confirmation, operation and technical services. The payment logic of the entire chain comes from the content industry and the consumer industry, not from speculative funds in the secondary market. \n\nThis is also the most critical practical significance of digital collections in the Chinese context: its buyer is not an “investor”, but a “content party” and a “brand party”. Its value does not lie in the price increase, but in whether it can become a digital infrastructure for cultural consumption and brand operation. \n\nBiggest resistance: User cognition is still stuck in “financial speculation”\n\nEven if policy space exists and the demand side is really established, digital collections still face an unavoidable resistance in China: user cognition. \n\nDigital collections, or the entire Web3, have left too much “historical baggage” in China. The market expansion from 2021 to 2022 is not essentially a “cultural digital experiment”, but more like an asset speculation in the cloak of content. A large number of users are exposed to digital collections for the first time, not because it is bound to cultural rights or memberships, but because “will it rise”. Although this path has brought heat in the short term, it has almost determined the subsequent collapse of trust. Therefore, the biggest difficulty with digital collections today is that many people still understand digital collections as “NFTs” and see them as a castrated speculative product rather than a new digital credential tool. This cognitive misalignment will directly affect the operation of the project: users are unwilling to pay for content or stay for rights, and only care about whether there is a secondary market and whether there is room for appreciation. Once digital collections are regarded as “hype targets” by users, it is difficult for brands to continue to invest, because they will quickly slide into regulatory sensitive areas and deviate from the original intention of brand operation. \n\nA more realistic problem is that the value assignment mechanism of digital collections has not yet been fully implemented in China. Many projects stay in the stage of “issuance is over”: send a picture, do a sale, complete a marketing, and then there is no next step. Users only get a static asset, which can neither be traded, nor can their rights be cashed, let alone a reason to continue to participate. So users will naturally return to the original judgment: if it can’t appreciate, then what is it worth? Why should I buy it? \n\nThis is also a watershed moment that digital collection entrepreneurs must face. In the first cycle, everyone relied on emotions and scarcity to drive trading; In the second cycle, the only thing that can truly survive is to redefine value by redefining the equity structure, scenario binding and long-term operation. \n\nThe dual problem of membership system and on-chain transparency\n\nThe question on the brand side is more realistic: can digital collections enter the long-term operation system? \n\nIn the past few years, many domestic and foreign consumer brands have tried NFTs or digital collections. Starbucks has launched an NFT-based membership system exploration, luxury brands have also done digital collection co-branding, and many domestic brands are also testing the waters on marketing nodes. But a common phenomenon is that many brands have no follow-up actions after the first issue. Because they are all stuck on “how to use it after sending it”. \n\nWhat brands really need is membership tools. The core of the membership system is not issuance, but operation: level, rights, points, repurchase, and activity reach. These things must form a closed loop. However, digital collections are only one-time souvenirs in many projects and lack continuous rights and interests design. It’s hard for brands to answer a key question for users: What exactly does it mean to hold it? What long-term value does it bring besides “I bought”? \n\nWhen digital collections cannot be embedded in the membership system, they can only stay at the level of marketing gimmicks. Posting once can create a topic, but posting it twice will become a repetitive action and even cause users to question. This is why many brands choose to stop after trying, because it lacks a sustainable operational starting point. \n\nA deeper concern comes from the commercial sensitivity brought about by on-chain transparency. In the context of Web3, on-chain transparency is an advantage because it is verifiable and traceable. However, in the context of brand operation, on-chain transparency can become a burden. Once the membership structure, user behavior, and consumer preferences are precipitated on the chain in the form of public addresses, it means that competitors may speculate on the brand’s user portraits and operational strategies. For traditional brands, this “open membership system” is not naturally safe. Therefore, for digital collections to become a long-term tool, they need to help brands truly embed digital collections into their membership systems and provide controllable tools within the boundaries of compliance and privacy. What is the Web3 startup incision for digital collections? \n\nAll in all, the truly feasible Web3 entrepreneurial incision for digital collections in China should focus on content, brand, and scenarios to provide sustainable infrastructure and service capabilities. \n\nThe first incision is the digital distribution service of cultural tourism and cultural content. China’s cultural assets are extremely rich, but cultural institutions lack digital product capabilities. The value of digital collections here is not financial transactions, but as digital souvenirs, cultural communication carriers and content consumption products. If the entrepreneurial team can provide a complete set of tools from copyright confirmation, content packaging to distribution and operation, they can find stable demand in the long-term trend of cultural tourism digitalization. \n\nThe second incision is the digital credential of the brand membership system. What brands really lack is not “NFT gimmicks”, but sustainable membership management tools. If digital collections can be bound to points, activities, levels and rights exchanges, it can become a new carrier of membership status. The opportunity for entrepreneurial teams is to help brands design equity structures and provide a controllable digital voucher system, rather than just selling pictures. \n\nThe third incision is the enterprise-level digital collection infrastructure on the consortium chain or licensing chain. The transparency of the open chain is not naturally adapted to the context of domestic brands. Many organizations need an auditable, traceable, but at the same time controllable and isolated digital credential system. This means that entrepreneurial teams can provide underlying capabilities in the direction of “compliance on-chain credentials”: permission management, privacy isolation, user data protection, and integration with existing CRM systems. \n\nThe fourth incision is the operation service provider of digital collections. \n\nAfter the clearance, the competition of the platform is no longer “who can send”, but “who can operate”. A large number of cultural institutions and brands do not lack distribution channels, but what they lack is operational methodologies: how to make serial content, how to design rights, how to keep users, and how to turn digital collections into long-term projects. Entrepreneurial teams can exist as service providers, obtaining cash flow through project systems and long-term service fees, rather than taking the high-risk assetization path. \n\nDigital Collection Entrepreneurship Action List\n\nThe entrepreneurial opportunities of digital collections in China are not over, but the core has shifted to operation and embedding. This road will not return to the frenzy of 2021, and it is difficult to produce a “fast money effect”. However, under the premise that the policy boundaries are clear and the demand side really exists, it may become one of the few Web3 entrepreneurial entrances that still remain in the compliance space and can form long-term cash flow. If you take digital collectibles as a Chinese Web3 entrepreneurial path, then you and your team need to answer a few very realistic questions before doing so:\n\nFirst, where does your content come from? Is there a stable supply of copyright and IP? \n\nSecond, who is your paying party? Is it a cultural institution, or a brand budget? \n\nThird, how does your product work? How to cash in on the rights after issuance? \n\nFourth, where are your compliance boundaries? Is it completely avoiding trading and financialization? Fifth, can you offer long-term service instead of a one-time offer? \n\nDigital collectibles are not a fast money track. On the contrary, if you really want to treat it as an entrepreneurial path, the above difficulties must be faced and you need to disassemble and solve them one by one. Therefore, although this road may indeed be one of the few directions in China’s Web3 that can legally survive, it is not easy and is not suitable for entering with the expectation that “you can start by trying”. You need to be more deliberate and you need to be more long-term. You want to see it as a content and operation business that needs to be deeply cultivated, rather than a market opportunity that can rely on emotions and cyclical arbitrage.