Chinese tech companies that are changing the world October 28, 2016 http://www.news.com.au/technology/innovation/chinese-tech-companies-that-are-changing-the-world/news-story/24a6929c4a8d23d7c4c52612a009ba5d
IF YOU have travelled to China in the last six months, you would know something was up. But it’s something you wouldn’t believe was happening if you didn’t see it with your own eyes. Once considered a backwater of innovation, technology has become so integrated into Chinese people’s lives that some restaurants no longer offer physical menus. During a visit to the country a couple of months ago, Sydney University Business School lecturer Dr Barney Tan saw the transformation first hand. “I asked for a menu, they said ‘sorry we don’t have a menu anymore’,” he told news.com.au. Instead the group was asked to use their mobile phones to scan a QR code. Using the app WeChat, they could look at the menu, order collaboratively and once satisfied with their order, they could send it to the kitchen. “It’s a simple innovation enabling businesses to use e-services,” Dr Tan said, and it has the ability to change the western world too. WeChat is owned by Tencent ... one of the group of three mega companies referred to as BAT in China ... Baidu, Alibaba and Tencent. “They are the e-commerce giants of China,” Dr Tan said, “and they are the ones driving innovation”. Dr Tan said they do this mainly through providing platforms for business to innovate using services they provide, and have enjoyed huge success. In contrast to western countries, where different products such as Facebook, Skype, Uber, Amazon, Instagram, Yelp, Paypal, Expedia, Spotify and Tinder are separate services, in China they are rolled into one super app. Chinese people can order food, post photos, make a doctor’s appointment, access investment services, pay bills, buy cinema tickets, train tickets and interact with their friends and family using WeChat. One Bloomberg reporter said refusing to download WeChat in China was seen as “socially weird, like refusing to wear shoes”. Dr Tan said WeChat, which is owned by Tencent, started as an imitation of WhatsApp, with the added feature of voice messages, but it had grown into much more. “It’s become an integrated thing that’s just massive, most importantly it offers a digital wallet service,” Dr Tan said. “Friends tell me when they go out they don’t need to bring a wallet anymore,” he said. The app is just one way that e-commerce is transforming China, leading western countries to look to it for inspiration. “If you want to know what’s possible with e-commerce, to find the answer you have to look at China,” Dr Tan said. “At least in e-commerce they are already leading the way. Anyone who has been to China in the past couple of months, it’s apparent to see. “The extent to which e-commerce has been integrated into the lives of regular people is just amazing and you cannot imagine it happening in the west. We are so far behind, we are playing catch-up.” FROM COPYCAT TO INNOVATOR Up until recently, China has been known as a ‘copycat’ nation which has imitated the innovations of other countries. But the country is amping up its start-up culture and is looking to people like Jack Ma, the founder of Alibaba, as an example of the rewards of innovation. There are many reasons why China has emerged as a tech player but many of them come back down to what western countries would see as limitations. One reason why WeChat became so big was because text messages were expensive to send in China and many people didn’t have computers at home so most people accessed the internet via their mobiles. This provided a powerful incentive for the development of mobile technology and mobile e-banking. The lack of maps in China, where many places don’t have a street address, is another area where technology has filled a gap, with advanced point-to-point geolocation and GPS-enabled devices. Online shopping giant Alibaba benefited from the lack of retail stores in China. “There’s not much of an established physical retail infrastructure, so people are going directly to a purely online world,” Doug Gurr told McKinsey. “They don’t go to a physical store at all — they simply look online and then purchase. If you talk to a group of Chinese women between the ages of 20 and 25 and ask them where they shop, they’ll just look at you like you’re a bit stupid.” China doesn’t have as many shops as other western countries. Dr Tan said Alibaba was an innovator to watch in the future. The company traditionally connected international buyers with Chinese suppliers but was now looking to expand its services overseas, including in Australia, to allow international suppliers to access the rising middle class consumers in China. “They are trying to rival Amazon in that,” Dr Tan said. “It’s about bringing international buyers and sellers together.” Like Tencent, integration is a key factor of Alibaba’s success. For example, on Alibaba’s Taobao shopping app, which offers online shopping similar to eBay and Amazon, people can also buy groceries and other goods. But it also acts as a social media platform where buyers can share their recommendations of the products. In order to understand how integral it has become in people’s lives, Maggie Zhou, Alibaba Australia and New Zealand managing director told the recent Sydney China Business Forum, the average user of the Taobao app launched it seven times per day, and spent more than 25 minutes per day in the online shopping app. The app has become a place where social interactions happen and is now a portal for commerce and digital entertainment. Live streaming is a new innovation and a recent event where celebrity Angelababy, known as China’s Taylor Swift, live streamed the new Maybelline lip gloss was watched by five million users. “10,000 units (were) sold in only two hours,” Ms Zhou said. Alibaba is also branching into other areas, including looking at the potential for virtual reality to transform the consumer experience. The company is also looking at ways of integrating its platform with an internet car, further entrenching it into everyday life and helping to develop smarter transportation and smarter cities. “There’s a battle between Alibaba and WeChat to make the easiest, most integrated payment system in the world,” Brian Buchwald, CEO of consumer intelligence firm Bomoda told Digiday. “Alibaba’s advantage is being the world’s largest marketplace. It was around before WeChat, but it’s a desktop-first product. WeChat was built with a mobile-first mentality.” THE NEW SILICON VALLEY? While many people don’t realise it, China has already begun influencing products in the west. For example, Dr Tan said that taxi hailing apps like GoCatch and Ingogo had been developed in China first. Others have pointed to the development of dating app Momo in China, before Tinder became popular in the west. WeChat also offered in-app news articles well before Facebook and integrated the use of QR codes before Snapchat. Now Facebook is copying WeChat. WeChat started off copying WhatsApp. Like WeChat, Facebook now has a voice messaging function and is also developing a payments system. “Quite frankly, the trope that China copies the US hasn’t been true for years, and in mobile it’s the opposite: The US often copies China,” Ben Thompson, the founder of the tech research firm Stratechery told the New York Times. “For the Facebook Messenger app, for example, the best way to understand their road map is to look at WeChat.” But Dr Tan said it was unclear how much of the technology being developed in China would make its way to western countries because of concerns over privacy. “By integrating mobile payment they also have data surrounding your consumption patterns,” he said. “They know where you’ve been, which restaurants, what food or dishes you like to order,” he said. He said it was likely WeChat was selling this data to companies for analysis. They were other potential downsides of integrating so many services into one app. “I also know IT security experts (in China) who are so paranoid, they don’t keep any money in the bank anymore,” he said. “Because now if someone knows your mobile number, they can get access to your bank account because of integration. “So on one hand there’s benefit to ordinary people having things in one place but there is an issue of data security, privacy and all that.” Despite the issues, Dr Tan said some level of integration was inevitable in western countries and the development of e-commerce in western countries would be driven by China. “The extent of what they are doing is so unbelievable, you have to be there to believe it.” [email protected] _______________________________________________ Link mailing list [email protected] http://mailman.anu.edu.au/mailman/listinfo/link
