Ramzi Chaabane
Jan 29, 2020

Will the future of digital be 'made in China'?

Having invested heavily in innovative new technologies, Chinese companies have become the biggest digital transformation competitor to Silicon Valley’s giants. They're now set to shape the future.

Will the future of digital be 'made in China'?

Much industry conversation today implies that digital acceleration and growth centers more heavily in China. Historically, China’s digital ecosystem has grown in parallel with that of the West, but recently I’ve noticed a new phenomenon: that the Chinese digital ecosystem is moving at full speed in innovation, with Western platforms beginning to copy China’s recipe for success. The reason: Differing philosophies on how each region approaches building large digital platforms.

Western development is defined by a need to accommodate more and more users, then monetise the platform through advertising and/or data. In a mature digital economy, growth is built from responding to new needs from existing users. In China, where 40% of the Chinese population still doesn’t have Internet access, the idea is to build a large ecosystem by continually adding on new verticals, as there is much room to grow organically as more users come online.

Building consumer ecosystems

This ecosystem-based approach is ideal for helping enable brands to make themselves indispensable for users by building deeper connections within their lives. Forming a 'one-stop-shop' that helps users accomplish a variety of related tasks within an ecosystem of services, this model of adding-on multiple product and service verticals has proven effective for top Chinese tech brands through the emergence of 'super apps' like WeChat and Alibaba’s Alipay. The latter includes over 200,000 mini-applications that include financial services, food ordering/delivery, entertainment services, transportation and more.

At first blush, it might seem tough to imagine such an environment in the west—but that might only be temporary. We can already see brands like Uber flirting with the model. Uber’s vision is to become 'a one-stop-shop for transportation in your city', and this goal has driven the app to extend its features beyond hailing rides. With it, you can have a meal delivered and rent a scooter or bike—or even a helicopter ride.

How does an ecosystem of verticals fit in? In March, Uber announced plans to buy Careem, a Dubai-based transportation network company, whose offering isn’t limited to transport but also includes meal delivery, a GPS application, instant messaging and a payment solution. These features are well in-line with Uber’s current offerings: a piloted feature for Uber Eats that lets users pre-pay for a meal that they can enjoy at the restaurant and Uber Transit—a service Uber is testing in the US city of Denver, Colorado—that will allow users to purchase transit tickets within the app.

This sort of evolution is a natural step in the 'age of the customer.' In their report The Customer-Obsessed Enterprise, Forrester researchers Keith Johnson and Sharyn Leaver note that “In the age of the customer, firms like Amazon, Apple, Facebook, and Google have cemented status as digital winners by building ecosystems that are deeply embedded in customers’ lives,” and that “these ecosystems become veritable gateways to the consumer.”

Will Uber Pay become the keystone of a vertical development that goes far beyond the company’s existing services? It’s certainly possible—we’ve seen it before with WeChat Pay and Alipay in China.

China’s innovation influence

China has been an influence on more than just Uber. Facebook is well known for its centralization of services. More than just a place to catch up with friends, you can buy and sell in its Marketplace tab, consume videogame live streams, watch original video programming and much more. Outside of the immediate Facebook ecosystem, you can message others via Whatsapp or share photos via Instagram—and soon, you may be able to trade its digital currency, Libra. In response to the explosive growth of Chinese-owned collaborative video-sharing app TikTok, Facebook has also launched its own take, called Lasso.

After years of Chinese tech companies emulating the innovations of American competitors, today’s tech landscape presents an inverse, with Western giants’ taking inspiration from their Chinese counterparts—and why not, when China is the second-largest country in the world in terms of number of 'unicorns' (startups valued at over $1 billion).

China is a strong contender in emerging technologies that extend beyond mobile. The nation has invested $1.65 billion in 5G, and its research is already showing interesting results: earlier this year, Baidu performed the world’s first driverless auto test using 5G. Through 200 billion yuan invested in integrated circuits, the country is also positioning itself as a leader in the next generation of computer chips—especially those dedicated to AI.

Hema stores in China

Finally, it’s leading the charge on “new retail.” After growing a robust e-commerce service, Alibaba is revolutionizing physical distribution by mixing together the best of both worlds when it comes to e-commerce and bricks-and-mortar retail. Its Hema stores are a bit like what you would find at Amazon Four Star store, but even more, integrated with digital: shoppers can examine products on store shelves, then scan to place them in a virtual shopping cart. Upon paying via mobile, the item is delivered in 30 minutes.

Just like vertical development, this new form of shopping is also capturing the attention of Western brands. Retailers are experimenting with bricks-and-clicks models that blur the boundary between traditional and digital retail, like scannable QR codes on clothing tags, which treat users to supplementary content and a mobile site to explore looks and make a purchase.

Within the ecosystem, fit-for-format is king

Each of these gateways and services are powerful because they have grown by offering users something unique. If the West prepares for a digital ecosystem similar to what we’ve seen in China, the players must first recognize the importance of fit-for-format content to enable a more harmonious presence.

With German grocery store Aldi, for example, MediaMonks built a video campaign that portrays a day in the life of prominent Chinese actor Zhang Liang. In each video, the action stops—but users can still interact with the frozen scene, examining key objects and purchasing them directly within Tmall, a subsidiary of Alibaba. The campaign had full integration with WeChat, growing its reach and relevance among social shoppers.

Aldi interactive video campaign with actor Zhang Liang

Brands that likewise want to position themselves on such platforms must first have a good understanding of what makes each platform unique. Creative must be designed to suit a specific purpose for that platform, enabling more powerful storytelling opportunities and cultivating a better brand experience.

Since the 'Chinese Dream' political slogan launched in 2013, China’s goal to become a powerful leader in digital transformation is now a reality. Having invested heavily in innovative new technologies like AI, big data, virtual reality, deep learning and more, China has snuck up to become the biggest competitor to Silicon Valley’s giants. Will the digital future be made in China? Perhaps it already has been.

Ramzi Chaabane is head of business & strategy at MediaMonks Shanghai.

Campaign Asia

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