In this article series (3 articles), we willdive into the fastest growing tech industries in China, trying to understandmain questions we all constantly ask: Why, What, Who, When, How come?
Part 1 - Fintech and Edtech
Part 2 - Artificial Intelligence and Healthtech
Part 3 - Internet Of Things and Social Media
Connectivity in today’s world is gettingbetter and with new high tech gadgets and machines at our disposal, we arelooking at soon to be a smart world where the much hyped Internet of things(IoT) and machine to machine (M2M) connections will bring in massivetransformation.
Connectivity is improving energyefficiency, manufacturing and healthcare, it is enabling smart buildings andconnected transportation among others. And China, being the world’s largestmanufacturer is looking at speeding up its IoT and M2M technologies to the nextlevel.
By 2020, there will be 200 billion IoT connecteddevices globally, out of which 95% will be manufactured in China.
IoT is the concept of connecting anyelectronic device to the Internet such as cellphones, coffee makers, washingmachines, headphones, lamps, wearable devices etc. This technology also appliesto parts of machines like an engine.
Globally, China is leading inM2Mtechnology, which allows devices to wirelessly exchange information and executetasks. The country already had 74 million connections in 2013, comprising nearlyone-third of the global M2M market.
With its central and local governmentsupport , increasing cross-sector partnerships , economic growth and risingdemand, China is focussing on three key sectors for IoT growth in the initialphase.
The government’s Made in China 2025initiative is focussing on technologically advanced manufacturing process. Thecountry’s promotion of smart manufacturing is integrating “digital twin” concept, IT (information technology)and OT (operationaltechnology) for more scope for development in manufacturing industry.
Chinese manufacturing spending on theIoT is predicted to be $127.5 billion by 2020, with anaverage growth rate of 14.7%.
Since China makes most of the world’selectronics, such as sensors, microchips and other electronicdevices, it will form the backbone of the expanding IoT technology market.
Recently, GE world’s biggest industrialcompany opened its Digital foundry inShanghai to help Chinese companies develop and commercialiseproducts for industrial IoT.
The three big players of the telecomsector China Mobile, China Telecom and China Unicom, are bringing benefits ofconnectivity to a wide range of machines, vehicles and devices.
They are connecting through Bluetooth,wi-fi, ZigBee and other shortrange wireless technologies. For example WeChatcan control IoT devices like home security cameras, lighting systems, doorlocks, and so on.
China Mobile was the first todeploy over 3 million M2M terminals asthe interface of IoT throughout China. China Telecom is focussing on connectedvehicles (Internet of vehicles), and China Unicom is investing strongly in thesmart home sector.
Automobile sector is also seeing thepenetration of telematics and in-car infotainment services through navigationand location-based type services. More sophisticated services are beingintroduced and adopted by consumers like the use of smart meters to improveenergy efficiency in homes using smartphones or otherelectronic devices.
Cutting edge wearables market, producinginnovative and low cost fitness bands and smart watches, with built inconnectivity and tracking devices are just few of the M2M examples throughnetwork connectivity.
An increasing 4G network coverage, hasconnected China’s car market. There will be around 68 million "smart" carson the country's roadsby 2018. Baidu has tied up with BMW tointroduce a driverless car soon, whileVolvo Car Corp. is working with China Unicom onin-car services, such as voice recognition systems and rapid assistance.
Experiments are going on to embed carswith SiM solutions that will have a built in capability to monitor vehicleperformance, offer connected services integrated with driving experience andinstalling an emergency call system.
Recently, Chinese automaker ByDintroduced a new car, the Qin, equipped with hybrid power and remote controllers. A smartphoneis used to check the car’s status, location, and control the air conditioner.The smartphone can even be used to drive the car by remote control from severalfeet away.
Automakers are also deploying in-vehicleconnectivity to collect data about the car’s performance in order to develop hitech vehicles with value-added services.
Government Plans for IoT Enabled Living
In 2009 China initiated the concept of"Sensing China" in order todevelop sensor networks. China’s Five-Year DevelopmentPlan (2011-2015) prioritized the development of IoT and is planning to spend $603 billion on M2M till 2020.
To promote extensive application of ITand smart technologies, government has initiated “Internet Plus” strategy whichwill integrate country’s mobile internet, cloud computing, big data and IoTtechnology.
The central government has also selected over 200 cities in2014 for smart city projects. Beijing, Shanghai, Guangzhou, Hangzhouand other large cities have established database and sensor networks tocollect, store, and analyse information related to transportation, electricity,public safety, and environmental factors. For the next 10 years, a total of$300 billion have been invested for smart cities.
· Broadlink is smart home solution provider whichspecializes in IoT Wi-Fi.
· Gizwits an IoT technology platform, it connectsinternet and smartphones to home appliances and consumer electronics.
· Ayla Networks China offerscloud connectivity solutions for manufacturers to turn appliances intointelligent devices. $39 million were invested in it.
· Lifesmart is engaged in developing smart homedevices. It is developing products such as smart control center, smart sockets,surveillance cameras, environment sensors, etc.
· Phantom is a smart home solution provider and isprimarily focusing on surveillance and smart lighting systems. The companysecured $1.5 million of pre-Series A investment.
· Orvibo isfocused on IoT and smart home hardware. Its product line includes smartgadgets, digital visual doorbells and cloud platforms to provide services forIoT terminals.
· MXchip focusseson short distance wireless network technology and products.
China’s social media scene maybedominated by big players with millions of active users, there is still spacefor medium to small timers to flourish. More than 300 million social-media users arein China. The average Chinese internet user spends around 90 minutes per day on socialnetworks, and 5-6 hours online per week.
China’s social media is not limited tojust for making friends and entertainment, it is extensively being used as abusiness networking tool, one stop source for infotainment and finding out thecurrent trends.
70% of its social media users are underthe age of 35 (30% are between 26 and 30) benefitting the burgeoning ecommerceand digital marketing industry which is using this tool to understand consumeras per their social media usage. Based on recommendations on social networks,38% of consumers here make product purchase decisions .
In 2016, revenue for the industryis estimated to reach $4.3 billion increasingat an annualized rate of 27.8%. Whereas, the advertising revenue insocial media is estimated to be $2.07billion in 2015. It is expected to reachat $6 billion by 2018.
WeChat the most popular in the socialmedia race with over 600 million of registered account and 400 million ofactive users monthly is as a standalone business at $30billion. Snowball Finance (Xueqiu in Chinese), the wellknown Chinese financial social media raised $40 million in Series C funding. Mogujie isthe top social commerce site and designed similar to pinterest except it isbeing used by the ecommerce merchants more. It raised $200 million in funding,has 35 million active users. Xunlei, a video streaming site raised $330 millionin funding among others.
Unlike the West and other countries,where a handful of social media platforms are being used for myriad purposes,Chinese social media is customized for Chinese culture and conversations.Established social media networks like Tencent RTX, Enterprise Fetion,Enterprise QQ and Netease EIM are some of the popular business socialnetworking sites in China. QQ and WeChat have taken over e-mail in communication.
Whereas, known names for infotainmentpurposes are platforms like QZone, Renren, Pengyou and Kaixin which areinspired by facebook. Their features include sharing social profiles, photoalbums, networking, making friends and online games.
Social networks are becoming morediversified with user communities being further subdivided. For example QZone,is the largest social gaming platform withover 700 million monthly active users.
Meilishuo, which means ‘Talk about beauty’ in Chinese, specializes in women’s fashion. It has 150 million of registered users and 3.2million of daily users.
There are social media for pets, Smellmewith 500,000 registered users, for moms, Lamabang, a socialnetwork and e-commerce company which completed a US$100 million series C roundof funding and for people who identify themselves by their high socialstatus, P1 which has over 2 million users among others.
Mining for social-media consumerinsights and comparing the performance of their brands against that ofcompetitors is an intrinsic part of digital marketing in China. Not doing somay put them on risk of drawing wrong conclusions about consumer behavior andbrand preferences.
For example Dove China’s Real Beautysocial-media campaign which aimed at all kinds of looks andbody types did not work here as Chinese consumers viewed the notion of realwomen as overweight and unattractive. Dove then partnered with Ugly Wudi, theChinese adaptation of the US television show Ugly Betty. The campaign led tomillions of searches and blog entries and increased sales by 21 percent.
Estée Lauder’s Clinique brand alsolaunched a drama series on a dedicated website which was viewed more than 21million times and increased the product’s sales and awareness.
The Social graph data, allows brands toleverage fan and follower networks. Although still at a nascent stage, severalmultinational brands are able to penetrate the vast and diverse world ofChinese social media.
Coca-Cola haveestablished a presence on these networks, with limited time, Tiffany & Co.and Mercedes-Benz havebeen doing WeChat marketing through highly successful social campaigns.
Durex has a corporate account on SinaWeibo where its marketing team monitors online comments and collaboratesclosely with agency partners to create original content.
On Weibo, Fashion brand, Tommy Hilfiger,released content around its 30th anniversary fashion show which led to a 2000%increase in its Weibo page visits and raised engagement by 1,900%. The brandalso saw a 21% increase in sales andits e-commerce business here also doubled.
With a lot of big players in socialmedia market, like Tencent with 210 million users, Baidu Teiba with 200 millionaccount holders, and more than 8 million ‘bars’ (forums), Tencent Renren with100 million active monthly users, WeChat with 4 million active users amongvarious others, it is tricky to enter the social media market without anyinnovative idea.
Startups are coming up with option ofcrossposting across social media sites. New social networking sites like NICE(china’s Instagram), Meipai (photo sharing, live streaming) , Lofter (china’stumblr) etc are playing smartly by allowing their users to cross post on WeChat.
Youku, Meipai and Bili bili are offeringenough space for videos to do the rounds across sites and companies are nowturning into viral video producers too.
Apart from crossposting, more featuresare being included in new social media platforms bringing out the noveltyfactor.
Pengpeng is a mobile social gaming app but with atwist. It also includes dating features. The concept here is to use games tobreak the ice and create some new relationships over games. It has 300,000daily users in just 2 months after its launch.
Momo, a dating app has over 100 million registered usersand 52 million monthly active users Momo obtained $40 million in funding fromAlibaba. It has evolved to include theme-based interest groups. The app alsomoved into social gaming in order to diversify its services.
MeetYou wasdesigned to track menstruation. But it evolved into something more social withmore functionalities. It’s now a health and lifestyle social media platform forwomen of varied age groups. It has 2 million users with 1.2 million dailyactive users. The startup was founded this year with $15 million in funding andobtained another $30 million.
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