In this article series (3 articles), we will dive into the fastest growing tech industries in China, trying to understand main questions we all constantly ask: Why, What, Who, When, How come ?
Part 1 - Fintech and Edtech
Part 3 - Internet Of Things and Social Media
5- Internet Of Things Is Set To Revolutionize
Connectivity in today’s world is getting better and with new high tech gadgets and machines at our disposal, we are looking at soon to be a smart world where the much hyped Internet of things (IoT) and machine to machine (M2M) connections will bring in massive transformation.
Connectivity is improving energy efficiency, manufacturing and healthcare, it is enabling smart buildings and connected transportation among others. And China, being the world’s largest manufacturer is looking at speeding up its IoT and M2M technologies to the next level.
By 2020, there will be 200 billion IoT connected devices globally, out of which 95% will be manufactured in China.
IoT is the concept of connecting any electronic device to the Internet such as cellphones, coffee makers, washing machines, headphones, lamps, wearable devices etc. This technology also applies to parts of machines like an engine.
Globally, China is leading inM2M technology, which allows devices to wirelessly exchange information and execute tasks. The country already had 74 million connections in 2013, comprising nearly one-third of the global M2M market.
With its central and local government support , increasing cross-sector partnerships , economic growth and rising demand, China is focussing on three key sectors for IoT growth in the initial phase.
5-1. Manufacturing Is The Backbone of IoT
The government’s Made in China 2025 initiative is focussing on technologically advanced manufacturing process. The country’s promotion of smart manufacturing is integrating “digital twin” concept, IT (information technology)and OT (operational technology) for more scope for development in manufacturing industry.
Chinese manufacturing spending on theIoT is predicted to be $127.5 billion by 2020, with an average growth rate of 14.7%.
Since China makes most of the world’s electronics, such as sensors, microchips and other electronic devices, it will form the backbone of the expanding IoT technology market.
Recently, GE world’s biggest industrial company opened its Digital foundry in Shanghai to help Chinese companies develop and commercialise products for industrial IoT.
5-2. Telecom Sector Is Rapidly Expanding M2M Technology
The three big players of the telecom sector China Mobile, China Telecom and China Unicom, are bringing benefits of connectivity to a wide range of machines, vehicles and devices.
They are connecting through Bluetooth, wi-fi, ZigBee and other shortrange wireless technologies. For example WeChat can control IoT devices like home security cameras, lighting systems, door locks, and so on.
China Mobile was the first to deploy over 3 million M2M terminals as the interface of IoT throughout China. China Telecom is focussing on connected vehicles (Internet of vehicles), and China Unicom is investing strongly in the smart home sector.
Automobile sector is also seeing the penetration of telematics and in-car infotainment services through navigation and location-based type services. More sophisticated services are being introduced and adopted by consumers like the use of smart meters to improve energy efficiency in homes using smartphones or other electronic devices.
Cutting edge wearables market, producing innovative and low cost fitness bands and smart watches, with built in connectivity and tracking devices are just few of the M2M examples through network connectivity.
5-3. Automotive Sector Is On The Cusp Of IoT Innovations
An increasing 4G network coverage, has connected China’s car market. There will be around 68 million "smart" carson the country's roads by 2018. Baidu has tied up with BMW to introduce a driverless car soon, whileVolvo Car Corp. is working with China Unicom on in-car services, such as voice recognition systems and rapid assistance.
Experiments are going on to embed cars with SiM solutions that will have a built in capability to monitor vehicle performance, offer connected services integrated with driving experience and installing an emergency call system.
Recently, Chinese automaker ByD introduced a new car, the Qin, equipped with hybrid power and remote controllers. A smartphone is 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 several feet away.
Automakers are also deploying in-vehicle connectivity to collect data about the car’s performance in order to develop hi tech vehicles with value-added services.
5-4. Government Plans for IoT Enabled Living
To promote extensive application of IT and smart technologies, government has initiated “Internet Plus” strategy which will integrate country’s mobile internet, cloud computing, big data and IoT technology.
The central government has also selected over 200 cities in 2014 for smart city projects. Beijing, Shanghai, Guangzhou, Hangzhou and other large cities have established database and sensor networks to collect, 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.
5-5. Startups Aim For Smart Homes Market
6- China’s Social Media Scene Is Heating Up
China’s social media scene maybe dominated by big players with millions of active users, there is still space for medium to small timers to flourish. More than 300 million social-media users are in China. The average Chinese internet user spends around 90 minutes per day on social networks, and 5-6 hours online per week.
China’s social media is not limited to just for making friends and entertainment, it is extensively being used as a business networking tool, one stop source for infotainment and finding out the current trends.
70% of its social media users are under the age of 35 (30% are between 26 and 30) benefitting the burgeoning ecommerce and digital marketing industry which is using this tool to understand consumer as per their social media usage. Based on recommendations on social networks, 38% of consumers here make product purchase decisions .
WeChat the most popular in the social media race with over 600 million of registered account and 400 million of active users monthly is as a standalone business at $30 billion. Snowball Finance (Xueqiu in Chinese), the well known Chinese financial social media raised $40 million in Series C funding. Mogujie is the top social commerce site and designed similar to pinterest except it is being used by the ecommerce merchants more. It raised $200 million in funding, has 35 million active users. Xunlei, a video streaming site raised $330 million in funding among others.
6-1. Different Dynamics Of Chinese Social Media Landscape
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 social networking sites in China. QQ and WeChat have taken over e-mail in communication.
Whereas, known names for infotainment purposes are platforms like QZone, Renren, Pengyou and Kaixin which are inspired by facebook. Their features include sharing social profiles, photo albums, networking, making friends and online games.
Social networks are becoming more diversified with user communities being further subdivided. For example QZone, is the largest social gaming platform with over 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 3.2 million of daily users.
There are social media for pets, Smellme with 500,000 registered users, for moms, Lamabang, a social network and e-commerce company which completed a US$100 million series C round of funding and for people who identify themselves by their high social status, P1 which has over 2 million users among others.
6-2. Digital Marketing Gets Mileage From Social Media
Mining for social-media consumer insights and comparing the performance of their brands against that of competitors is an intrinsic part of digital marketing in China. Not doing so may put them on risk of drawing wrong conclusions about consumer behavior and brand preferences.
For example Dove China’s Real Beauty social-media campaign which aimed at all kinds of looks and body types did not work here as Chinese consumers viewed the notion of real women as overweight and unattractive. Dove then partnered with Ugly Wudi, the Chinese adaptation of the US television show Ugly Betty. The campaign led to millions of searches and blog entries and increased sales by 21 percent.
Estée Lauder’s Clinique brand also launched a drama series on a dedicated website which was viewed more than 21 million times and increased the product’s sales and awareness.
The Social graph data, allows brands to leverage fan and follower networks. Although still at a nascent stage, several multinational brands are able to penetrate the vast and diverse world of Chinese social media.
Durex has a corporate account on Sina Weibo where its marketing team monitors online comments and collaborates closely 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 brand also saw a 21% increase in sales and its e-commerce business here also doubled.
6-3. Startups Come Up With Innovative Ideas To Capture The Market
With a lot of big players in social media market, like Tencent with 210 million users, Baidu Teiba with 200 million account holders, and more than 8 million ‘bars’ (forums), Tencent Renren with 100 million active monthly users, WeChat with 4 million active users among various others, it is tricky to enter the social media market without any innovative idea.
Startups are coming up with option of crossposting across social media sites. New social networking sites like NICE (china’s Instagram), Meipai (photo sharing, live streaming) , Lofter (china’s tumblr) etc are playing smartly by allowing their users to cross post on WeChat .
Youku, Meipai and Bili bili are offering enough space for videos to do the rounds across sites and companies are now turning into viral video producers too.
Apart from crossposting, more features are being included in new social media platforms bringing out the novelty factor.
Pengpeng is a mobile social gaming app but with a twist. It also includes dating features. The concept here is to use games to break the ice and create some new relationships over games. It has 300,000 daily users in just 2 months after its launch.
Momo, a dating app has over 100 million registered users and 52 million monthly active users Momo obtained $40 million in funding from Alibaba. It has evolved to include theme-based interest groups. The app also moved into social gaming in order to diversify its services.
MeetYou was designed to track menstruation. But it evolved into something more social with more functionalities. It’s now a health and lifestyle social media platform for women of varied age groups. It has 2 million users with 1.2 million daily active users. The startup was founded this year with $15 million in funding and obtained another $30 million.
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