Summary of Key Points
The “City Brain” app (Qujing Tong), developed in Qujing, Yunnan, with an investment of nearly 50 million yuan, has only 60 daily active users in a city with a population of 5.5 million. This incident exposes a hidden problem in China’s software industry: a large number of ToG (government-side) and some ToB (business-side) projects are initiated not to create user value or business benefits, but to achieve political achievements, use up budgets, or meet KPIs. Such “face-saving projects” can get by when budgets are generous, but are cut when they are tightened. Software companies that focus on these projects for a long time lose their true product development capabilities and are eventually eliminated by the market.
1. The Qujing Tong Incident: The Absurd Numbers Behind the Lack of Interest
50 million yuan resulted in only 60 daily active users, which means that less than one in 100,000 people in Qujing uses this app—this is not about “no one using it,” but rather “almost no one knowing it exists.” Ironically, no one asked during the project’s development or acceptance process, “What problem can this app actually solve for citizens or businesses?” For example, citizens may have more convenient apps or offline services for checking social security or handling other affairs, and businesses may not need the app for policy applications or approvals. It seems more like a mere formality to demonstrate the city’s “digitization” rather than a useful tool.
2. The Decline of the ToG Market: Tighter Budgets as a “Value Filter,” Not a Blame Game
Everyone blames the tightening of government budgets for the decline in ToG projects, but the truth is that these budgets simply eliminate ineffective projects. In the past, when funds were plentiful, as long as a project was labeled “digital” and leaders wanted to show achievements and departments had budgets, software companies would take on the projects without considering their actual effectiveness. Now, with tighter budgets, priorities must be set: projects that can genuinely improve efficiency at the grassroots level (e.g., quickly collecting data for communities) or improve people’s lives (e.g., handling medical insurance online) are kept, while those that are just for show are cut first. It’s like throwing away unnecessary decorations when money is tight and only keeping essential items.
3. The Fatal Misconception of Software Companies: Having a Contract Does Not Equal Having a Real Need
Many software companies think that a client’s willingness to pay indicates a real need, but often it’s just the client using the budget for a symbolic purpose. For instance, government departments may buy software to meet digitalization requirements, and businesses may buy it to appear up-to-date. However, such projects have two major issues:
1. Lack of repeat business and long-term profits: The software does not create value for the client, so they won’t renew the contract when budgets are tight; even if budgets loosen, clients will choose the cheapest option.
2. Wasting team capabilities: Focusing on such projects for a long time trains teams to create bid documents and implement features according to lists, rather than understanding real industry needs (e.g., hospitals need systems to reduce waiting times, not just attractive interfaces). When the market demands that software generates actual business results, these companies’ expertise becomes useless.
4. Choosing the Right Clients Is More Important Than “Transforming to AI”
All software companies talk about “AI transformation,” but if the client doesn’t truly need value, AI is just a new guise for superficiality. For example, a company that buys an AI attendance system for a company that only uses it for check-ins will still choose the cheapest option.
The right clients are those who truly benefit from the software, such as tech companies that need collaborative SaaS for efficient teamwork. They are willing to pay for value. The wrong clients, however, buy software just to meet budget requirements (e.g., companies that use it for clock-in purposes). Therefore, software companies should focus on their clients: ask, “What will the client lose without this software?” and “Will the project still be pursued if the budget is halved?” If the answers are unclear, don’t take on the project, no matter how large it is.
5. An Old Problem in the AI Era: Don’t Provide AI to Clients Who Don’t Need It
During the AI boom, many companies added AI features to existing software and sold it, but if clients don’t need the value, AI is meaningless. For example, adding AI recommendations to an unused city app or AI efficiency analysis to a company that only uses it for attendance won’t increase usage. AI is a tool, not a solution in itself. If software companies continue to target clients who use software for show, they will be eliminated by the market, which values functionality, not the presence of AI.
6. The Survival Rules of the Software Industry
The absurdity of Qujing Tong is not due to excessive spending, but to a fundamental mistake from the start: no one cared about the actual needs of users. For software companies, the biggest risk is choosing clients who do not require real value. Only by focusing on those who cannot function without the software and developing products that solve real problems can they survive in any budget situation. After all, users are willing to pay for value, not for formality.