Get to know our Emerging Markets team: Urs Antonioli.
Urs shares the current outlook for emerging markets, the key strengths of the team, and importantly how this benefits our investors. More
We take a look at China's innovative advantage, as the greatest producer of data worldwide.
China produces between nine to 10 zettabytes of data annually, accounts for between 20% and 25% of all data produced globally1 and has the largest pool of online user data of any country globally.
That means internet users supply a steady, sizeable stream of data to Chinese companies, particularly those in new economy sectors, like IT, e-commerce, financial services, and retail, that speeds the development of new products and services.
China’s data superiority rests on three key growing fundamentals:
But while having data is an opportunity, turning it into marketable products and services is a challenge. In this respect, Chinese companies are proving adept at turning data insights in cash, and a recent news story about a newly-launched chocolate bar can explain.
One leading Chinese internet platform used data from millions of daily transactions to map consumer tastes and analyze buying behavior and built it into a product specification for a foreign chocolate firm. The result – a spiced chocolate bar – became an instant hit in China, generating sales of USD 1.43 million6.
Source: Bloomberg: China Great Tech Leap Forward, September 29, 2018
This ability to gain deep insight into consumer preferences and develop finely targeted products is one that Chinese companies are increasingly applying in lots of different industries, with three particular sectors standing out:
Source: KKR, August 2018
And while China’s data prowess is formidable, improvements in telecoms technology look likely to boost it in the future, particularly in the roll-out of 5G technologies.
5G technology is the next generation in mobile technology – it means more advanced telecommunications networks that can handle much larger and more diverse range of data communications.
5G networks offer the foundation to connect an unlimited number of machines and will significantly improve not only the amount of devices that a network can handle, but can offer significantly faster communications speeds.
And China is taking the lead in installing the infrastructure and developing the hardware that will give it an advantage in 5G technology. By mid-2018, China had 1.9 million 5G enabled wireless transmitters installed, compared with 200,000 in the US10, and had 14.1 installed transmitter sites per 10,000 people, compared with 4.7 in the US and 8.7 in Germany11.
What this all means is that Chinese companies capable of harnessing, processing, and analyzing new dataflows, as well as developing new products to suit them, will have a huge advantage in developing the tech products of the future.
So with China’s data superiority, and the prospect of growing it in the future as China’s online user base expands and companies innovate, is one of the key reasons why it will see good growth prospects for ‘new economy’ companies.
‘New economy’ sectors currently mining China’s rich seam of data and developing innovative products include healthcare, IT, insurance, and consumer discretionary spaces.
Urs shares the current outlook for emerging markets, the key strengths of the team, and importantly how this benefits our investors. More
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