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How did China create the perfect chocolate bar?
The answer lies in the oodles of data that China produces. Data is the new fuel for China and gives new economy companies an edge in delivering innovative products and services.
Data mining and creating the perfect chocolate bar seems to be an odd match.
But one leading Chinese internet platform used data from millions of daily transactions to map consumer tastes and analyze buying behavior. It built this 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 million1.
Data is big in China and produces the most data globally:
- nine to 10 zettabytes of data produced annually,
- accounts for between 20% and 25% of all data produced globally2
- has the largest pool of online user data globally.
China can generate large amounts of data because it has
771.9mn internet users3.
Though large, this still has room to grow. Only 55.8% of China’s residents are online, compared with 95.6% in the US4.
1.5bn smartphone subscribers3.
Smartphones offer real-time tracking of consumer behavior and give apps and operators a wealth of diverse and detailed data on user habits.
USD 15tn e-payments
In the US, cashless payments are less than USD 2 trillion5.
Again, this provides plenty of data points to retailers about behavior, preferences, and spending patterns.
Turning data into marketable products and services is a challenge. However, Chinese companies have proved to be adept at monetizing these data insights (as the story of the spiced chocolate bar illustrates).
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:
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 costs6.
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 year7.
Ride hailing – China vs US
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.
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 US8, and had 14.1 installed transmitter sites per 10,000 people, compared with 4.7 in the US and 8.7 in Germany9.
New fuel will drive the new economy in China
What this all means is that Chinese companies capable of harnessing, 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 as China’s online user base and telecoms technology expands, the prospects are good for new economy companies – those currently mining China’s rich seam of data and developing innovative products are in the healthcare, IT, insurance, and consumer discretionary spaces.
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