October 14, 2016, by Tony Hong

China’s Expanding Mobile Cyberspace – Endless Disruption Opportunities

By Gary Zhenyuan,

SCCS Summer School Participant.

The daily life of Chinese citizens is significantly more convenient today, thanks to the integration of mobile internet into key activities.

In 2011, China had 513 million internet users. Within 5 years, Chinese outbound international bandwidth rose from 1.39M Mbps to 3.78M Mbps – this is an incredible growth of more than 250% within 5 years. More interestingly, close to 9 in 10 Chinese netizens uses mobile internet via the 3G/4G network. This implies that close to half of the Chinese population has access to (almost) any information in the world on-the-go. This is where it all takes off.

With the internet as an already well-known cause of disruption in business world, we can witness how innovation is brought forth in China, a country where competition is strongest in the world. Companies whom first identify an opportunity and make a first-move will be rewarded handsomely, and consumers are also likely to benefit from it.

Although it is my 6th time visiting China, I am always surprised by changes brought forth by its rapid development. Throughout my 2 weeks in Ningbo and Shanghai this time round, I witnessed and am fascinated by how different daily life in today’s China can be as compared to 3 years ago when I visited Yunnan province – namely mobile internet.

Today, with an internet-enabled mobile device, you can almost roam around without your wallet.

For a student with a mobile internet-enabled phone, here’s how a day out is like:

It’s 12 noon. He used Alipay Wallet (支付宝) to buy his favourite curry chicken rice. 20 minutes later, it’s right at his doorstep. He then recalls that his sister’s 21st birthday is coming up, he wants to get her sister a handbag, but there isn’t a Coach outlet nearby, so he went to Taobao (淘宝) and ordered a pink and leather handbag. As his graduation is coming up soon, he booked a cab to the Wanda shopping mall before getting down from his student apartment. The cab arrived right on time when he reach the campus gate, and drove him to the Wanda shopping mall. However, he forgot to withdraw money from bank and didn’t have cash in hand to pay the driver. No worries – Alipay. He scans the QR code displayed on the taxi’s screen, and the transaction went through without a hassle. He then spotted a suit that he likes. So it happened that there is a promotion for WeChat users whom follow the boutique’s WeChat account. Of course, he draws out his phone and scans the WeChat QR code, then paid for his suit before meeting his girlfriend for dinner. His girlfriend was thinking of watching Tarzan at the cinema after dinner. Through her iPhone, she selected a couple seat and ordered popcorn for 2 persons, and it was all set. Dinner bill? No worries – mobile payment is accepted at almost every restaurant in the city. However, he had sudden craving for chocolate – went to the convenient store, grabbed a Snickers, and paid through phone before heading to the cinema for movie night.

There is no need to bring wallet around – it’s almost redundant to do so when you have your phone with you.

Statistics don’t lie – they provide valuable insights.

Businesses’ responded. 52.7% of mobile marketing companies built their own mobile website.

The only constant in business world is change. Businesses see the rise in users accessing sites through mobile phones, and they built their own mobile website. With the rate that the mobile internet system is developing, soon it will be so close to using computers that the only difference would be not having a larger screen, keyboard and mouse, but having in exchange increased portability. Also, with the increase in ownership of tablets, it adds 100 more reasons for marketing companies to build their own mobile website.

Almost every mobile internet user in China is an active WeChat users, and 75.3% of all marketing companies in China utilize WeChat to promote their business.

Extracted from China Internet Network Information Center’s (CNNIC) 37th statistical report on internet development in China, it tells us how much easier it is today to communicate with anyone in China than previously where minutes were expensive and SMS’s were at rip-off prices. Businesses also are able to freely jump into social media to achieve their interest. Though this is not something new, but being able to get access to mobile phones which consumers bring along to everywhere they go is pretty crazy – it allows businesses to connect with consumers almost all the time.

Online take-away registered a value of 125.66 RMB in 2015, with 16.8% mobile user utilization.

Who from 10 years ago would have thought that we can bring the restaurant to our doorstep? The ability to order food from people’s favourite restaurants gave rise to specialized delivery service platforms where restaurants outsource their online order and delivery service to. As compared to the traditional way of ordering on specific restaurant’s website (which isn’t popular anyway) this is now a joke that people once thought was a smart move. On the bright side, these pioneer delivery restaurants now face greater competition than they ever had, and more competition means cheaper prices and better services for consumers. Who knows, in the future there might be housewives starting their own part-time restaurant that only serves take-away to earn some extra cash?

China’s e-payment in 2015 totalled 553.07 trillion RMB – and is rising steeply

The banks in China saw 27,138 billion e-payment transactions which sums up to 86.17 trillion USD – and everyone wants a share of this pie. Just imagine having 0.01% of this sum in your pocket, it will be able to pamper your entire extended family with luxury for generations to come. However, this pie (which is likely to continue to grow) is difficult for the average business to capture. The reason being is because of the existence of 2 super giants that dominate the e-payment market: Tencent (through WeChat TenPay) and Alipay Wallet. As for Alipay, which is currently the market leader, the services offered are so diverse that it is comparable to systems run by banks – people are even able to get interest by depositing money into Alipay Wallet’s Yu’e Bao which built up more investors in 9 months than the whole of China’s equity market.

Where will China’s market go from here?

With the rapid growth in internet and mobile internet adoption in China, it is more like a chaos. Chaos is good, as it opens up endless opportunities for businesses to take advantage. At the end of the day, everyone likes it – consumers’ will benefit from the added convenience and services, while it leaves businessmen smiling in front of their desk (well, not so if they can’t adapt as fast to the evolution). We shall all wait and see. Of course, if you have the courage and ambition to take over the Chinese market, you are most welcomed to join in the playground.

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