The South China Morning Post has recently published the China Internet Report 2019, unveiling new marketing trends and hi-tech innovations, which are ready to cross national borders to influence the market on a global scale
It is official. China has emerged on the world stage with a ground-breaking internet environment made of the largest internet population and numerous tech companies, which are innovative and competitive on a global scale.
Today, the Dragon’s successes are studied all over the world but they are also increasingly replicated in other markets, especially the Western ones. This is what the China Internet Report 2019 is revealing, confirming China as one of the most influential markets again.
The South China Morning Post (SCMP), together with its unit on consumer technology in the PRC, Abacus, has recently published its annual China Internet Report. The report is a one-stop analysis of what matters in China’s tech landscape this year and it offers insights into the country’s tech forerunners and into the trends the world should keep an eye on.
The first important insight the report brings to the surface is that the number of internet users in the Middle Kingdom makes the same number in the US turn pale.
Although China’s internet penetration rate is only 60%, its dimension is three times bigger than that of the United States. The interesting fact is that today, more people pay with their phones in the PRC than there are people in the US.
Moreover, the two countries are growing in two separate tech ecosystem. While tools like Baidu and WeChat are often mistakenly considered as Google and Facebook’s doppelgangers, new apps like Little Red Book and Douyin started to attract even more users from all around the world, giving people fewer reasons to ever look for a foreign alternative.
In recent years, new e-commerce players are emerging in the PRC, threatening Alibaba and JD.com’s positions as China’s top e-commerce platforms. This is the case of Pinduoduo, the marketplace that allows users to participate in group buying deals.
Attracting price-conscious consumers and users in Chinese smaller rural cities, Pinduoduo has managed to dethrone JD.com to become the second-largest e-commerce player in the People’s Republic. However, according to news reports, although Pinduoduo’s daily active users have outnumbered those of JD.com, in terms of sales, Alibaba and JD.com still hold the majority of the share.
© South China Morning Post. China Internet Report 2019, China vs US Internet.
The China Internet Report 2019 highlights an increasing – although not new – trend among Western tech companies, that of borrowing successful concepts from their Chinese counterparts. Instead of trying to introduce their platforms in the Chinese market, overseas companies are launching their copycats.
Facebook is an excellent example. Emulating Chinese social-commerce, both Facebook and Instagram have introduced e-commerce features to their social networks. Facebook Messenger, as well, now provides multiple features including games and mobile payments, just like WeChat. And it has also launched Lasso, a short video app that shares more than a few similarities with Bytedance’s TikTok.
But Facebook is not alone, also the Tokyo-based Line and the internationally known Amazon started as one-use platforms and now transformed into a Chinese-like “super app”, a one-stop-shop for services from live shopping to money transfer.
Nevertheless, another trend is driving the country’s modern development, its race for 5G expansion. According to SCMP’s report, Beijing is close to launching commercial 5G in large and mid-sized cities, achieving 40 million 5G connections by 2020. And that number is expected to expand to 460 million connections, accounting for 28% of the country’s total by 2025.
According to several research firms, the Dragon not only leads the world in 5G patents but it is also best positioned to win the global race to roll out 5G infrastructure.
The 5G development goes hand in hand with China’s massive use of artificial intelligence (AI). Together with major investments in innovation, Beijing is rolling out AI in many areas, including customized recommendations, smart city solutions, access control, and surveillance. The latest of which is giving birth to the first social credit system, scheduled to be up and running by 2020.
From installing facial recognition cameras on the streets to assigning AI robots to serve hotel guests, the PRC is also selling some of these technologies overseas, allowing startups such as Sensetime and Megvii to become major exporters of AI solutions for security and surveillance in Southeast Asia, Latin America, and Africa.
© 123.rf. China’s three telecoms operators are piloting 5G in more than a dozen cities with a total population of 167 million.
According to the China Internet Report 2019, lower-tier cities are driving e-commerce consumption and growth. Although China’s internet population is the world’s largest, 128 million internet users in third-tier or below cities have never bought anything online. Instead of leaving those people behind, they have now become a prime target for national e-commerce giants, eyeing lower-tier cities as opportunity markets with a promising potential.
The power of the lower-tier cities is most evident in Pinduoduo’s rise, as 66% of its users come from these cities so much so that now even JD.com launched JD Group Buy to attract lower-tier city users.
For what concerns Chinese consumers instead, the SCMP’s report shows how consumers in China are increasingly embracing the sharing economy. Thanks to emerging startups, Chinese people are now sharing cars, vacation homes, clothes, and even kitchens. This fact is notable since it brings to the surface how the Chinese e-commerce industry is becoming more and more inclusive and customer-centric. Products and services are no longer the only factors that influence purchasing decisions but customer personalization and experience are now part of the action.
The rapid growth of the sharing economy is probably led by the need for Chinese customers for trust and transparency. As well as friends’ recommendations, the sharing economy builds a network of trust where 68% of users believe that the benefits of sharing platforms outweigh its risks.
Chinese e-commerce has always struggled with credibility, quality, and reliability issues. These uncertainties appear to be fueling the growth in live-streaming and social media introducing e-commerce features. Although the Chinese government is strengthening rules against counterfeited items or dishonest sellers, Key Opinion Leaders (KOL), or rather friends, still hold internet consumers’ utmost confidence that they can reassure with personal and live recommendations.
Nevertheless, even KOLs now start to lose their infinite credibility. While most influencers find fame organically by posting their content online, KOLs in China are increasingly carefully curated in what is called an “influencer incubator”. One of the Dragon’s largest KOL incubators is Ruhnn Holding, which offers training and resources to support influencer’s personal brand while receiving exclusive rights to KOLs’ endorsements.
Professionalized KOLs might lose some of their spontaneity but thanks to the emergence of new social apps like Douyin or Kuaishou, a constant wave of influencers keep producing spontaneous contents, demonstrating that the need for transparency still rules China’s marketing trends in 2019.
© Unsplash. Shenzhen. China has emerged on the world stage with tech companies that are innovative and competitive and now their successes are being studied and replicated in other markets.
The China Internet Report 2019 researched also the Dragon’s smartphone market, as well as blockchain and the gaming industry. While Chinese smartphones find their way to conquer foreign markets besides trade tensions with Washington, national tech giants are now also concentrating on developing their blockchain products. Moreover, their expertise in mobile is being recognized worldwide, allowing them to develop smartphone versions of some of the world’s biggest games.
Reading the China Internet Report 2019, there is no doubt that, after years of Western technological leadership, especially American, it is now Chinese digital innovations to export technological trends to the rest of the world.
The Celestial Empire keeps investing in key sectors, tirelessly developing and exporting technological and marketing trends. In a way, it is as the SCMP’s report is unveiling where the world is going tomorrow from what China is achieving today.