- 771.9 million internet users, or about 15% of total internet users globally2. Though large this still has room to grow because 55.8% of China’s residents are online, compared with 95.6% in the US3. When that rate grows to around 80%, it will bring an estimated extra 350 million users online.
- 1.47 billion smartphone subscribers, or about 18% of total global subscribers4. Smartphones offer real-time tracking of consumer behavior and give apps and operators a wealth of diverse and detailed data on user habits.
- USD 15 trillion in cashless payments, compared with less than USD 2 trillion5 in the United States, Chinese consumers are putting a huge amount of business through cashless channels, delivering a wealth of data points to retailers about behavior, preferences, and spending patterns.
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.
Key operational metrics, US and China companies compared, 2017
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:
Cashless payments (USD trillions) US vs. China, 2011 vs. 2017
- Healthcare: access to healthcare data enables medical researchers to assess patients health in detail and gauge the risks they face in contracting particular diseases or conditions, while opening the opportunity to deliver precision medical care to patients. This is a huge opportunity because it targets a growing market for healthcare in China, where patients are increasingly willing to spend more on higher quality treatments.
- Insurance: data-rich insurers are applying their analysis to create a whole range of new tools for customers. One such example is a car insurance scoring app developed by one of China’s leading internet services companies that users personal information, like credit history and profession, together with real-time data readings, like on spending habits and driving behavior, to more efficiently measure driver risk and deliver estimated savings of 6% to 10% on claim costs and non-claim costs7.
- Ride-hailing: car ownership is growing fast in China but costs can be prohibitive, especially in China’s largest cities where annual licenses in cities like Shanghai can cost as much as USD 14,0228. App-based ride hailing has developed into a huge business in China, with one company reporting 7.43 billion rides per year9.
A 5G-driven future
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.
New fuel will drive the new economy
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.
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