Digital Digest #29

Top 10 China Digital Trends in 2015

Welcome to my China Digital Digest. I curate cool topics in the digital space, particularly in China and Asia. I started this in 2013 as an e-newsletter to colleagues and clients, then I moved it to my personal blog, trevorXfiles.com . This year, I’ll start posting on Medium, so more people can understand China’s digital world. Share away!

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Shanghai’s got one of the slowest internet connection in China. But it got impossibly slower after the B un d S ta m pe de (I won’t tempt fate and spell that right…). The internet speed is one innovation that we totally need here. Speaking of innovations, the start of the year brought lots of digital news. As I mentioned in my previous post, digital innovations in China take a different road from Silicone Valley. Usually, the innovations here are more practical and useful.

Anyway, here are Carol Ong’s fearless forecast on 2015

KnewOne will make you rethink how ecommerce is supposed to work, it doesn’t even post prices on the first page.

1. ECommerce & Mcommerce gets bigger and more beautiful

I’ve been saying for years that eCommerce and mobile commerce will be huge, and that’s where brands should be investing. But I didn’t imagine how awesome the spawn has become. A year ago, the newly born mCommerce was worth USD1.9B in sales. This will continue to grow rapidly until 2018, with Alibaba and Tencent (Wechat) leading the pack. They do mobile payments, Offline to Online sales, social media payment, and other amazeballs tie ups that I’ll tackle in future posts.

The ecommerce game will get even more cutthroat now that Wholly foreign owned ecommerce companies are now approved to operate in Shanghai’s free trade zone. And the customers are getting more saavy, not everyone is as price conscious anymore. Many are willing to pay a premium for quality, as KnewOne (gadget ecommerce start up) proves.

I wonder how all these super easy microfinancing services will affect the Chinese culture of saving. People traditionally save 30–50% of their take home pay, because social security isn’t very good. But youngsters nowadays are rumored to have zero savings but have lots of luxury items and iPhones.

2. Online microloans and ebanking (ecommerce/ ebanking) will change the financial system

There’s been a gap at microfinancing in China, and the 6 new online-only banks such as WeBank will try to fill it. Actually Alibaba (with a offline bank tie up) has been giving really good financial services already, you can get micro loans, and you can even invest your Alipay money! (Imagine your money stuck in Paypal having the option to earn 5–6% interest).

These loans are usually for small to medium enterprises. Enter microloans for gadgets. There are a lot of startups that offer loans to college students to buy iphones (and other electronics). All you need to do is to add the link of the gadget you want to buy, so easy! (Don’t tell that to the teen who sold his kidney for an iphone and an iPad.)

The busier people becomes, the more they will rely on mobile food delivery. And China’s social media and ecommerce platforms make it easy for small businesses to open mobile shops.

3. Mobile Food Delivery will get popular (ecommerce)

Online to Offline trend is going to get bigger. These services will go beyond paying for cabs, vending machine, and the likes. It will go beyond connecting big brands to social media sales (and also managing their inventory). One new trend is opening online-only restaurants in Wechat, which you order and pay through mobile social media. Food delivery app start ups servicing existing small restaurants have also gotten massive funding.

Google Wallet and Facebook can learn a thing or two from China mobile wallets.

4. Mobile Wallet will boom for offline payments

This is pretty new but will continue to be one of the biggest winners in 2015. Last year 54% of Alipay’s transactions were paid through mobile. It’s interesting to note that mobile wallet and Alipay have bigger growth in remote areas vs big cities. Places such as Tibet (60%), Shaanxi (60%) and Ningxia (58%) use mobile to buy goods and services more than Tier 1 urbanites in Beijing (29%), Guangzhou (27%) and Shanghai (24%). This year, Mobile payment will grow much faster now that WeChat’s Webank is giving Alibaba’s Alipay a run for its money. WeChat is much more aggressive with Online to Offline payment services. Competition is getting fierce that Alibabals Taobao actually blocked itself from appearing in Wechat’s system, meaning to access Taobao you need to get out of Wechat.

Blued is the biggest cupid for Chinese gays. This is bold. As recent as the 1990s, gays were considered as a “mental illness” in this country, according to an old article I’ve read.

5. Dating Sites will get more love

Another group that’s getting big bucks are Dating start ups. Different sites cater to different objectives: Jiayuan for the serious I-want-a-ring-on-my-finger (or a house?). Momo for hook ups (although this Tinder-esque platform has rebranded itself as a social network for shared interest, an amazing marketing feat). Blued for LGBT. I wonder when will the Millionaires-searching-for-trophy-wives yacht go digital?

Local smartphone manufacturers are racing to produce quadcore phones below the 1000cny mark. Xiaomi, Oppo, Huawei all have good phones catering to the lower end market. But Xiaomi’s got a cult following with techies, even among those who can afford iPhones and Samsung Notes.

6. Smartphone demand will start slowing down

China has officially surpassed the USA in iPhone sales. Motorola, which lost its appeal when it focused on Google apps (all blocked in China), is making a comeback in 2015. Xiaomi is taking the world by storm wherever it goes. BUT….. smartphone shipments are slowing down (21.9% in 2014 vs 2013, 452 million from 579 million). The market is still growing, just less rapidly. The biggest slowdown come from 2G followed by 3G phones. 4G is on the rise. China’s 4G infrastructure is one of its best tech advancement since the economic boom, so expect a 4G phone boom.

Qihoo isn’t the first one to do kid-tracking bracelets, but they could popularize it. Anti-kidnapping devices is a huge and largely untapped market. Kidnapping is a serious issue in China, because kidnappers sell kids in the countryside, they don’t kidnap for ransom. I secretly wish I can embed a microchip tracker in my babies :-)

7. Rise of Digital Homes and Wearable tech (in Chinese-relevant ways)

The BAT (Baidu, Alibaba, Tencent) will now focus on connecting more Online to Offline products & services. Alibaba has partnered with the biggest appliance manufacturer Haier and one of the biggest property developers Evergrande to create digitally-integrated homes. Digital homes are becoming the new standard, I’ve personally been to properties where you can control everything with a tablet, from heating to opening windows. (At 65sqm it’s quite ridiculous, I’ll just extend my arm and I could reach the window haha!)

Airlines are getting a digital makeover too. China Eastern and Microsoft is now offering AI-equipped smart flights from Beijing to Shanghai. There are also now WeChat controlled smart Hotel rooms in Las Vegas, catering to the Chinese clientelle.

Qihoo, the largest online security company in China, is diversifying to kid tracking watches. There are lots of kid/elderly tracking watches and devices here already, but not yet in the mainstream. Qihoo seem to make the UX much easier and prettier. And you can’t take off their watch unless you’re the primary caregiver.

8. Movie Industry will be revolutionized

Video sites in China has been investing heavily on exclusive online content, (thanks to TV broadcast’s very strict policies, Chinese usually watch their shows online). Alibaba stepped up the game by getting Wong Kar Wai to produce and direct its first full length movie. It will use ecommerce stores to promote the movie, and will even get some merchants in Taobao and Tmall to do their merchandise! I think this is just the tip of the iceberg. With the BAT controlling majority of China’s digital platforms (and now O2O such as taxis and shops), there could be pretty awesome digital innovations in the near future.

Mobile gaming exploded in China because game consoles was banned. It’s estimated at a USD2.9B market in 2014 with projected growth of USD7.4B in 2018. It is projected to overtake US’ gaming market this year (2015). We already got 300M mobile gamers in 2014, the equivalent of the whole US population. In 2018, it will shoot up to 800M.

9. Rise of Game Consoles

Since the 14 year game console ban was lifted last year, the top 3 major players sold 33++ million units. Chinese companies have launched their own consoles, and Alibaba is rumored to join the gang soon. But region-free console gaming is not gonna happen in China. The Ministry of Culture has banned games with objectionable political content such as Battlefield 4. This means you can only play these games in game consoles bought at the gray market. (Just like you can only access anything Google if you get a gray market Android phone).

Clarity could be a game changer in the fight against air pollution. If it won’t be banned here.

10. Air Pollution devices and software will be developed

With China’s major air pollution nationwide, I wonder where there aren’t more investments being made for better, cheaper, prettier or more portable air purifiers. Xiaomi just launched a cheaper air purifier last December 2014, that connects with your smartphone. A wearable tech is being developed by a Shanghainese in Berkley. Clarity is a crowd sourcing pollution sensor that individuals can wear on their belt or put on their bikes. It’s connected to the cloud, to give a more accurate reading of the city’s pollution rating.

That’s all folks! For previous China Digital Digest posts, go to TrevorXfiles.com

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