A long walkway inside Shanghai HongQiao Transportation Hub — a 1.3 million square meters (10.8 million sq ft) structure that connects an international airport, a high-speed train station, and a city subway station. Photo taken by the author in Feb. 2016.

China’s Mobile Revolution (pt. 1)

This is a three part series looking at China and its ongoing mobile revolution. In part 1, I will give a few examples of the kind of changes I’ve seen personally.

In February 2016, I went to China to celebrate Lunar New Year with my relatives. Having emigrated to North America over 14 years ago, I’ve always been amazed by China’s continuous transformation.

As my life in the West became interweaved with services provided by Google, Facebook, Snapchat, Uber, Youtube, and Amazon, I realized that my relatives in China couldn’t access any of these services (with the exception of Uber and Amazon in some cities). This is due to China’s Great Firewall, which blocked off most Western Internet technologies.

Though I had read about the rise of WeChat, Alibaba and Xiaomi, I had little idea about what the actual implications were on the people who lived there. The lack of context meant that numbers and figures remained as such. Subconsciously, I still assumed that the tech industry there was lagging behind, limited by the Firewall, churning out tasteless knockoffs.

Boy, was I wrong…

As I interacted with my relatives there, I got a much deeper understanding of how rich and vibrant the tech scene really was. Without a doubt a mobile revolution is happening in China.

There are differences in terms of mobile UI between Western apps and Chinese ones (I highly recommend these great blog posts from Dan Grover). China is also different in its underlying ecosystems (for example: Visa and MasterCard are not generally accepted there, so people rely on bank cards and escrow services provided by Alipay; Google’s Play store is blocked, so alternative Android app stores flourish). Yet the whole ordeal felt familiar in terms of the value and convenience people received.

In North America, I Uber and Zipcar. In China, they use Didi. I Venmo my friends so we don’t worry about who’s paying for lunch. In China, it’s done via WeChat or Alipay, or better yet, many merchants already accept WeChat and Alipay. I shop on Amazon Prime and Instacart. In China, everything can be bought on Taobao and JD.com. Sometimes delivery can even happen within two hours. In North America, I watch shows on Netflix and Youtube. Over there it’s Youku and a slew of others.

Change is Good

I witnessed my eighty-two year old grandpa ditch newspaper and TV (media that he has depended on for 50 and 30 years respectively) to go all in on mobile — consuming nearly all of his news and TV content on a 1200 RMB ($186 USD) Xiaomi Smartphone. He’s even learned to send messages and post comments on WeChat moments.

For him, the tech transformation started in 2014, when my cousin set him up with a Xiaomi Box that allowed him to watch news and TV series on demand. By fall of 2015, my aunt, who understood the power of the Smartphone, got him one as a gift. With some coaching, he was able to quickly learn to use it.

Decades-old habits are broken in a matter of days.

Instead of reading his morning paper, he simply checks the news on his phone. My aunt who subscribes to a Chinese news aggregation service (similar to the one from Dave Pell) forwards the daily digest to him every morning via WeChat. For decades, at 7pm sharp, he would watch the national news on TV. Nowadays he’d be reading articles on his phone.

When I asked how he feels about it, he put it this way:

There’s endless information [on the web]. I understand why newspapers are going out of business. One click, what you want to read is right there. You don’t need the paper thing.

Later I watched my 27 year old cousin, a mechanical engineer and a frequent traveller, do all of his travel bookings on his iPhone in a matter of seconds — first booking a hotel that is offering a deal via a group-buying app and then buying his high-speed train tickets via the official China Railway app. He told me about his life with tech products:

Everyone I know is on WeChat. I have a group for work, one for school, and one for family. When I shop, I pay with WeChat or Alipay. But I don’t often shop in person. I group-buy most things. It saves a lot of money.

The sentiment is echoed by my 32 year old cousin. As a university administrator and a father of a three year old, he is quite busy. He showed me as he ordered on his Samsung dual sim Smartphone, a few pounds of high-grade Australian beef from a vendor he trusts on Taobao, then scheduled a housekeeping session from a home services app. As he sees it, it is painfully obvious that tech is the way to go:

It’s very convenient. You can buy whatever you want [on Taobao], at a cheaper price than most stores. Even for things such as grocery, it can be delivered in a few hours.

What’s interesting is that while I am an early adopter of technology, my relatives are not—they don’t go out of their way to use something new for the sake of newness. They use them because the value provided is clearly higher than the incompetents.

Part of this rapid adoption is due to the fast-paced innovation spearheaded by the new wave of Chinese entrepreneurs. Part of this is a broader cultural phenomenon. People in China have seen more change in 30 years than Americans have seen in 100 years. There has to be some impact on the way people perceive change and innovation.

People in China have developed a knack for expecting progress and being optimistic about new technology.
An ad about a premium taxi app (similar to Uber Black) on the back of seats of a high-speed train. QR codes are ubiquitous in China, most apps have QR scanners built-in.

This culture can be seen in the type and quantity of ads about mobile apps. There are ads about all kinds of apps at all places, from TV commercials to billboards. Startups there seem to be fighting for market share rather than figuring out product market fit (perhaps they have already done so).

I spent a day chatting with relatives in my grandparent’s living room with the TV on. Channel CCTV-3 (an arts and performance focused channel with a wide-ranging national audience) was playing in the background.

About 1/3 of all TV ads I saw were about apps.

Think about that for a second. This volume of TV commercials at a national level reveals a few interesting things. It shows that startups in China have access to a lot of capital. It also means that there is an intense competition for market share. What might be overlooked which I find very interesting, is the fact that there are enough consumers who not only own smartphones, but consider apps as the de facto way to get things done.

Comparably, you’d never see this much money spent on marketing mobile apps on national TV in the U.S. (games maybe, but not apps). Here are a few that I saw.

Anjuke (安居客): a real estate listing app.

ChinaHR (中华英才网): a recruitment platform that connects jobseekers with corporations.

58 SameCity (58同城): a Craigslist style directory for cities.

Uxin (优信二手车): a used car transaction platform that inspects and certifies quality, similar to Beepi and Shift in the U.S.

As a side note, celebrity endorsements really work in China. This is why every commercial above features celebrities. The last one from Uxin features eleven familiar faces as a means to build trust. Whereas American commercials have moved past appealing to consumer’s aspirations to rely on humour and ingenuity, Chinese commercials haven’t done so yet. People still have strong aspirations to raise their standard of living — hence the focus on lifestyle in most commercials.

The New Norm

It has become the norm to rely on apps to get things done. Just as my two cousins mentioned, people use apps for everything and buy most things online. Fewer and fewer urban professionals are heading into physical stores. Many are skipping the desktop Internet altogether. There are now 358 million mobile consumers in China (more than the entire U.S. population).

Rather than fighting the trend, traditional companies are embracing the change — businesses from large retail chains to mom-and-pop shops are accepting payments via WeChat Pay and Alipay; many municipal transportation bureaus have integrated mobile payments into subway gates, so that riders can wave their phones to get into the station; hospitals are taking doctor appointments on WeChat; TV networks are porting over content (sometimes handing over exclusive rights) to online video portals.

It’s unclear how much of the mobile revolution in China will take place in North America, if at all. What is clear is that the pace of change is faster in China than the West. Competition is fierce, as indicated by the aggressive marketing. At the end of the day though, ordinary people who are eager and willing to use new technologies have seen their lives improve tremendously. The real interesting thing is that the revolution has just begun.

In part 2 of this series, I will dial back the discussion a bit to set the context. I will explain what “China Scale” means, how China is both open and closed at the same time, and list the key challenges facing China in the 21st century.