The Chinese Way

“Leave the western world behind…

The Chinese way…

Who knows what they know

The Chinese legend grows…

Standing at the master’s side

Then with patience he confides

Secret knowledge, sacred ways

Pearls of wisdom from the dragon days”

Extract from ‘The Chinese Way’, Level 42

When Mark King and the band penned the lyrics to The Chinese Way back in 1983, little did they know just how prophetic their lyrics would be.

Roll forward to today, and imagine – just for a moment, while you’re reading this – a world where:

  • social interaction, entertainment, shopping, wealth and savings, health, business, charity, travel and much, much more are all embedded into a single, personalised mobile app
  • every person and every business has a ‘behaviour score’, based on their social and financial behaviour, and services may be offered or withdrawn depending how ‘good’ you are
  • mobile payment for almost all activities is standard, with cash being slowly consigned to history
  • and taking just a single example from an area that affects every single one of us at one time or another, AI-powered ‘intelligent robot doctors’ can ask patients a series of questions and then recommend a course of action for more than 200 diseases.

How do you feel? Excited? Disturbed? A memory of the brilliant, if dark, Black Mirror tv series? Well, this world is no longer just some futurist’s imagination. This is happening in China, right now, today, and with an intensity and a speed never seen before.

For so long hidden behind The Great Wall, we are now getting a far greater insight into what is going on in this global superpower, the World’s largest and most developed retail e-commerce market. In the space of a decade or so, China’s high-tech high-demand transformation has been nothing short of a miracle:

  • exceptionally high digital adoption (approaching 800 million smartphone users), especially of quality products (including traceability) and amongst the younger generations
  • around 65% of all smartphone users have adopted mobile payments
  • two-thirds of Chinese consumers expect retailers to have current information on them and personalise the experience accordingly
  • shopping experiences now mix social, entertainment, education and the transactional, using multiple digital platforms and apps, livestreaming, vlogs, AR and VR, and real-time offers and discounts to create truly bespoke engagements – the oft-touted but rarely delivered consumer-centric Market of One

At a business level, this translates to:

  • China now being the largest retail market in the world. For context, Alibaba’s recent Singles Day (11th November) took in c.$30 bn of sales, more than double the United States’ Black Friday and Cyber Monday combined – the poster-child example of what is happening.
  • Ant Financial Services Group – which most Westerners, including many working in UK financial services sector, have never heard of – processed more payments in 2017 than Mastercard, runs the largest money market fund on the planet (Yu’e Bao, or ‘leftover treasure’) with around US $260 bn AuA, and has a market valuation of around US $150 billion.
  • WeChat (just 7 years old) now reports 1 billion monthly active users. Of these, an incredible 60% open the app more than 10 times a day, 21% more than 50 times a day, and with the average time spent on the app more than 66 minutes.

Not surprisingly, traditional financial services are being usurped by the development of a truly digital marketplace, where consumers have no qualms about sharing their personal data provided they receive a benefit (a tailored solution) in return.

Alibaba – the biggest of all the Chinese tech giants – no longer describes itself as a platform; instead, it is a ‘data business’, capturing and analysing the real-time data it receives to create ever-more personalised and relevant content for their users – a self-perpetuating virtuous circle. Meanwhile Ant, which spun out of Alibaba, is moving away from being a financial services conglomerate and is instead positioning itself as a ‘lifestyle platform’, earning its revenues from the many partner businesses using its technology.

Perhaps more worrying for western nations, not least the financial sector, the Chinese technology giants have ambitious global plans through investment, acquisition and partnership. For example, Ant raised a whopping US $14 bn Series C funding round earlier this year, in part to extend its global footprint.

And it’s not just the Chinese private sector investing vast amounts of money to become global leaders. The Chinese government is investing US$ billions to position the country at the forefront of the technology revolution, not least in Artificial Intelligence. While China is currently the second-largest investor in AI enterprises after the US, China is leading the way in the fusion of AI and Fintech, and the State announced a scheme in July 2017 to surpass all western nations and shape the future of artificial intelligence by 2030. That said, expansion is not a foregone conclusion, as western nations have finally got wise to what’s going on and clamped down on some of the investment and acquisition activity.

While the cultures and social behaviours between China and UK are obviously very different, could The Chinese Way become The British Way? While maybe not in its entirety, and certainly not on the same scale, we would be foolish to believe that Chinese thinking can’t be adapted to a UK way of life.

In China, the innovation in fintech is creating ‘inclusive finance’, enabling more people and more businesses to access credit, and to save and better manage their money. On a smaller scale the same trend is emerging in the UK, and we already have a number of examples:

  • The rise of digital-only platform as a market ecosystems, where content is increasingly curated
  • Messaging apps that can do far more than just send texts and share pictures
  • Digital wealth managers, hybrid digital-human services, ‘round up’ apps to save spare change into a savings account
  • Personal finance apps – currently powered by early-stage Open Banking – which will get increasingly rich in their sophistication, yet simple to use from the consumer perspective
  • P2P and Challenger Banks creating a lifeline for the SMEs that the incumbents have ignored for so long, providing a real shot in the arm for the burgeoning small business economy.

Compared to China, the UK is a decade behind; we need to put a few scared cows to the sword:

  • Reimagine the business model, don’t just simply digitise the existing one.
  • Collaboration with the right partners is critical, both propositional and during development.
  • Using data to enable smarter, quicker decisions is becoming hygiene, albeit GDPR could be a real obstacle in Europe, and leave us trailing in China’s wake.
  • Be ruthless about capabilities – keep those that add the real value, outsource the rest.
  • Consumers today expect – no, demand – that you treat them as people, that you personalise the offer. For them, as individuals.

Businesses that don’t do this will quickly find themselves less relevant, and joining the graveyard of once-famous brands.

This article first appeared in TechNative December 2018

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