One day we’ll all be made in China
The emerging markets of the East — A unique opportunity
Entering the era of cyberspace, with the capabilities to re-design and re-engineer our reality, digital world developments in Asia are advancing at supersonic speeds. An era that is more commonly becoming known as the Fourth Industrial Revolution (4IR), as dubbed by Professor Klaus Schwab at the World Economic Forum in Davos. In a scenario where data is more valuable than cash and the US dollar is dethroned as the standard transaction currency, the East will emerge as a leading force, rather than a follower of the West. Especially so when it comes to usability in blockchain technologies and implementing blockchain powered ecosystems.
The world of smart retail is quickly being adopted in China. In Shenzhen, going cashless is not a problem. Wallet-free living with mobile apps (WeChat pay and Alipay) has already become the norm to pay for food, consumer goods and transport. In 2016 Chinese consumers spent 9 trillion USD on mobile payment transactions, compared to a 112 billion USD spent in the US. And according to Tencent, more than 70% of payments for fast-food in China is made via smartphone apps. Tencent’s WeChat and Alibaba’s Alipay have a combined user base of 1 billion compared to PayPal and Apple Pay’s combined give or take 300 million users. The world’s largest exchanges for cryptocurrencies are also based in Asia and places like Japan, South Korea and China harbour cult followings of crypto traders and enthusiasts. In fact, the People’s Bank of China has been working on its own cryptocurrency that could possibly, one day replace the RMB. China also handles an overwhelming majority of blockchain mining, with a speculated 70–80 % of the global mining pool and control of the largest hash rates (the measure of mining performance efficiency).
Not only is there a rapidly growing middle class in Asia, that is both young and openly embracing new technologies and ready for new ways to spend and invest, but there are also fewer legacy players to slow down the process of implementing these new digital ecosystems. Keybox CEO David White is very optimistic, “there is something quite unique about having a population the size of that in Southeast Asia”, he states, “with fast-growing markets that are being digitised very quickly, and some places that are yet to make that jump. It represents an amazing opportunity”. Driven by increasingly more affordable smartphones and mobile data-plans, research by GSMA Intelligence predicts that Indonesia will be the third largest smartphone market globally by 2025 with up to 90% adoption. “Smartphones being put in the hands of tens of millions lays down fertile ground to push products that sit on mobile platforms” David adds.
Indeed, more than half of the world’s internet and smartphone users are in the Asian region. With China in the lead, India, Vietnam, Indonesia, South Korea and The Philippines also make the top 15 list of global smartphone users. A 2017 survey by Nikkei Asian Review revealed that online mobile and e-banking transactions were the leading choices of payment method in Indonesia, Malaysia and Thailand (via bank-issued mobile apps and platforms such as GrabPay and Go-Pay).
All eyes East for the West
As 4IR technologies move forward so will the companies integrating them into their business models. Those who have sat at the top of the global economy and trade for the greater part of recent history may soon find themselves behind in terms of competitive edge in the global scheme of things. As the UK soldiers on to engineer its departure from the EU for example, and with the current state of affairs in the US reflecting increasingly protectionist sentiments, Western attitudes seem to be showing bad signs of a more inward focus.
Whilst it is true that after an era of rapid globalisation the majority of future consumers will be in the East, this is not to enforce a dogma that European companies must be in China or in Asia to win. Business Unit Director for Danone in Shanghai Gonçalo Vilarinho keeps it real by discerning that, whilst an exciting prospect, China can be a very demanding, expensive and challenging market for businesses to operate in. “[With startups particularly] there are many more examples of failures than there are successes, and we tend to like focusing on the bright side. If you want to enter this arena and play this game, you need to be ready to do so. You must decide strategically if as a company you have the capabilities, skills and opportunity to win.” On a contrasting note, a significant portion of Western consumers will likely prefer localisation in the brands that they choose to connect with over products and services provided by global multinational brands. Gonçalo adds “in this sense, a European company may very well define their strategy as one that will remain within the confines of Europe and that will be a winning strategy for them.”
China, the new America?
So what if a shift does occur and China taking Uncle Sam’s place as the economic superpower of the world does come to pass? After all, China could possibly come to possess a monopoly on mining blockchain transactions, is very likely to reroute global trade with its ever-ambitious Belt and Road Initiative (BRI), and essentially own most of the world’s manufacturing and future infrastructure. With so much control China would have the power to carve up the planet to its liking without anyone’s permission or much concern for democratic freedoms or disastrous environmental consequences.
On the other hand, a world dominated by China could introduce the idea that global competitiveness and economic growth need not be determined by the rhetoric of a Western capitalist system. Emphasising the idea that there is no one-size fits all. And instead, encourage developing nations to exercise their freedom to seek and establish systems of their own and still be part of a global community. A global community starring China in a leading role of course.
