China Today: From upheaval to innovation
China Today: From upheaval to innovation
19.05.2017 | John Artman
Reading Time 5’
The innovation rate in China is astounding. Even more staggering is the capacity for the Chinese people to absorb this change. A look at the country’s modern history shows that change has become the norm, while - in comparision - China’s recent technological shifts remain quite tame. This strikes at the heart of one of the many differences between the West and China: whereas Western life is relatively easy and comfortable with few “big” problems to solve, China is a goldmine for entrepreneurs promoting lifestyle solutions. And that is the story of China: a country hungry for progress and improvement.
From upheaval to lifestyle obsession
The period between 1912 and 1989 witnessed unprecedented upheaval in chaos. After a military coup, China’s first and only republic lasted a matter of years before the country descended into feudalism. Following the Japanese occupation and a brutal civil war, the Communist Party of China (CPC) took hold of the country, their utopian communist dream soon turning into a nightmare for many. The Great Leap Forward, Anti-Rightist Campaign, and Cultural Revolution created an environment of scarcity, betrayal and corruption. It wasn’t until Deng Xiaoping announced the Economic Reforms and Openness Policy in 1978 that the seeds of contemporary China could emerge. Fast forward to 2017: a command economy, political correctness, and scarcity have given way to fierce competition, individual freedom, and lifestyle obsessions. After decades of uncertainty, Chinese consumers became hungry for lifestyle upgrades and life improvements.
Chinese consumer trends in 2017
Against the backdrop of its modern history, China has developed more rapidly than any other country during any other period in history. And this momentum is set to carry it past the rest of the world. Where else are live streaming, mobile payments, QR codes, and the sharing economy being so visibly embraced – and to some extend pioneered?
In the late 00’s and early 10’s, the debate among China-watchers was whether or not China was innovative. At the time, it was certainly a legitimate question: much of the consumer-facing internet products and services were a mere localization of popular Western offerings. In 2017, this debate ceased to exist. As Chinese companies get smarter at innovating around consumer needs, the similarities with their Western counterparts start to shrink. WeChat is no longer the “Facebook of China:” It is a highly credible own online-to-offline ecosystem of content, messaging, payments, and QR codes. Meitu, a photo beautifying app and smartphone, is perhaps the most influential Chinese novelty in a field saturated by numerous global players.
In a country that caught the tail-end of the PC revolution, smartphones have become the main entry point into a world where the distinction between offline and online is quickly fading away. With the relatively high PC cost and the slow development of connected internet, the adoption of smartphones and mobile data has been rather impressive. And, while there are obvious concerns about privacy and security, the latter seem particularly trivial for a country that has recently discovered the notion of “individual rights.”
China is likely to lead the innovation in mobile payment.
As a matter of fact, smartphones have become an integral part of the Chinese lifestyle and are extensively used to manage shopping activities, book services, remain connected with one’s social network, get educated, informed, and entertained. While this usage pattern tends to follow global trends, there is something uniquely Chinese about it.
A country of practicality
Take any large internet company or service today and you will see that much of its success comes from savvy application of cultural hooks, little UI tweaks or incentives that excite users and keep them coming back. In China, this has been doubly true: the lack of convenience offering and the increase in purchasing power led to the exponential growth in e-commerce and O2O services. The amazing success of Xiaomi smartphones builds on this double truth.
Until recently, China was a very poor country. Even today, it wouldn’t be unusual to follow a normal conversation between two “elderlies” comparing prices at different grocery stores. While China cannot be fully labelled as a “technology loving” country, it is clearly obsessed with getting things done in the most efficient way. Solution delivery, affordability, ease of use, and social connectedness have become sure values in the Middle Kingdom.
Ultimately, the typical white collar worker in China chases the same dream as most white collar workers: escape from the pressures of life and find a sweet way to spend their hard-earned money. Whether it is playing mobile-based MMOs, flooding WeChat groups with emojis and stickers, or finding the best deal for travelling, China’s escapism is typically Asian and uniquely Chinese.
Cashless society in an emerging sharing economy
China is likely to lead the innovation efforts in at least three different areas, all linked to mobile payments: cashless transactions, offline-to-online, and unmediated resource sharing. After connecting a debit or credit card to one of China’s two leading mobile payment solutions (WeChat and Alipay), Chinese citizens can purchase any good or service anywhere without cash or card. This transaction is enabled through a QR code scan and can be used for online and offline payments.
Chinese people’s thirst for progress, convenience and material success will continue to push the country forward.
In China, cash was a bottleneck for many transactions. The largest note in circulation is 100 yuan, enough for purchasing cheap necessities or street food, but not enough for a night in town or buying an expensive pair of shoes. The obvious solution – credit cards- is relatively new and has only been broadly available for the last 3 to 5 years. In other words, if consumers were to engage in a high-cost transaction, they would have to carry huge wads of money, which is neither safe nor convenient. While cashless transactions were faced with skepticism at first, recent estimates show that around 65% of people who own smartphones in the country pay online. With mobile payment now becoming the norm, the unmediated sharing of resources is rapidly gaining in popularity.
The average Chinese white collar worker commutes between 1.5 and 3 hours daily. Crowded subway lines, packed buses, and jammed streets generated obvious dissatisfaction and turmoil. Following the Reform and Opening Policy, cars started to dominate the streets of China. Bike sharing promises to not only improve commuting but also solve the last mile problem of public transportation. This latest craze is directly enabled by mobile payments and QR codes. So bringing back an old tradition not only solves some of modern society challenges, it also gives a small amount of control back to the individual. This is likely to have a lasting impact on how people travel in China.
Riding the wave into the future
The face of China has fundamentally changed in the past 30 years. The social and economic progress the country has steadily mastered caught most of us by surprise. While its economic and political future is likely to continue polarizing, its people’s thirst for progress, convenience, and material success will continue to push the country forward. The Chinese certainly seem to enjoy the ride.
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