June 4, 2015, by Tony Hong
The rising internet+ economy in China
By Dr. Youqing Fan
Assistant Professor, School of Contemporary Chinese Studies, University of Nottingham Ningbo
With the technological innovations, the mobile internet based economy started to demonstrate its huge potential in changing people’s life and business models. The rise of China’s new rich does not only provide fertile soil for internet+ based entrepreneurs, but also promise extraordinarily huge demands and capacities for consumption.
The Alibaba group is perhaps the largest internet+ enterprise, focusing on providing SMEs with platforms to sell their goods/products online. Taobao.com is the largest of its kind in China. Although faced with the problems of selling fake goods, the way of selling goods through internet shops and delivering the goods through courier services have been widely accepted by Chinese customers. This has been further powered in recent years by the technological innovation of incorporating mobile computing operation systems into mobile phone devices. The advance allows people to shop whenever they have mobile signals, whilst at the same time saving customers extra costs.
On May 8th, the state council of China issued a Guideline trying to endorse and support the development of the e-Commerce industry in China. The guidelines highlight that the government will lower the threshold for registering e-Commerce companies, clearing all the pre-approval procedures that may hinder the progress of establishing e-Commerce companies. In the meantime, the guidelines also encourage entrepreneurship and talent training activities in the area of e-Commerce. Universities, couriers and third parties (including government and NGOs) are also inspired to collaborate to facilitate e-Commerce. In addition, the mode of delivery of goods has also improved. A smart delivery mode is to be trialled in university campuses.
The share price of Alibaba surged by 7.5% as a result the announcement of this policy. Its overall value rose to USD 21.61 billion. Now, Alibaba has overall 163 million active users by the end of March 2015. Wechat has a cohort of 500 million live users. Both of the figures rose by more than 40% compared to the same time last year.
Another tycoon of mobile internet service- Jingdong (JD.com) also seeks to extend their territory of service by acquiring a number of promising smaller internet-based enterprises, such as the ‘daojia’ which provides personalized laundry services, and other similar businesses providing massage, beauty clinic, domestic services etc. The Dazhongdianping is also promoting similar services. Both of the companies have already established their presence in major Chinese cities such as Hangzhou, Beijing, Shanghai, Guangzhou, Shenzhen, Chengdu, Wuhan, Nanjing etc. Future plans aim to incorporate current services to cooking, car services etc.
Meanwhile, the no.1 courier company in China, ‘Shunfeng’ has been promoting next-day delivery services, allowing packages to be delivered before 10am the next day. Currently the services provided by Shunfeng have already covered the Pearl River Delta, the Yangtze River Delta and the Bohai economic circle.
The burgeoning internet+ economy also helps to increase the efficiency of resource utilization. A case in point is China’s native APP ‘dididache’ which is an equivalent to the ‘Uber’ App. The App allows rented cars to be more efficiently used by potential passengers. More recently, the function of ‘shunfengche’ has been added, allowing private cars to provide services to people who need a ride. Additional services attached to this App is to allow the rented/private car drivers to buy something on his/her way to pick up the passenger, allowing car services and product delivery services to be combined and delivered to passengers in a personalized way via the mobile data technology.
With no doubt, the internet+ will continue to change the economic and business terrain of China, allowing the rise of the new entrepreneurs to grow from the bottom. More importantly, the government is endorsing this new trend and is providing policy benefits. It is anticipated that there will be a more personalized and more in-time services to be supplied by this new technology, and also many industries will disappear in this round of economic restructuring in China.