Casium chatted with author Winston Ma about some of the very recent changes in the Chinese mobile economy. For him the pace of innovation is still accelerating and tweaks to business models are frequent.
How have things changed since your book, China’s Mobile Economy, was published?
Winston Ma: The rate of innovation has accelerated. Back in 2014 or 2015, one would have thought that the growth potential would have peaked, but that has not turned out to be the case. Some companies have of course had to adapt and modify their business models, and many cases of consolidation occurred, for example in ride-hailing services (the merger of Uber and Didi in August 2016, for example).
Another change has been the reduction in “subsidies”. Companies active in the mobile economy are no longer willing to price below cost in order to gain market share. Consumers have had to adapt to higher pricing, but they remain active nonetheless, and in increasing numbers. One could say that consumers have been educated in the ways of e-commerce, and particularly mobile payments and transactions.
Has the pace of innovation changed?
Winston Ma: There are a variety of innovation forms within the ecosystem of the mobile economy in China. The spectrum of innovation is not just within mobile Internet. Many new niche players, often founded by alumnus from the BAT trio (Baidu-Alibaba-Tencent; read here add link to part 1), are active in all segments of e-commerce, entertainment, etc. Popular celebrities are monetizing their stature via promotional operations, services, apps, and so forth.
In the B2B area, one can mention innovation in 3D printing and robotics, as well as IoT (Internet of Things) both in consumer and enterprise markets. Lastly, as in developed markets, there is much R&D money spent on innovation in the area of artificial intelligence (AI); in fact, the China market in the near future is poised to be the trend-setter, rather than the trend-follower, in next-generation mobile device and application innovation.
What differences in management styles do Chinese Internet companies display?
Winston Ma: Although I cannot offer a complete answer, here are some pointers. It is true that China’s entrepreneurs were very influenced by Apple co-founder Steve Jobs, including splashy product presentations, with CEOs donning jeans and T-shirts. From another perspective, most Chinese internet players seem to love the Google model: they focus their attention on the core business units that drive profits, yet keep an eye on longer term investments to insure the future. They worry about new competitors sprouting up and cutting the grass under their feet. That is particularly true for the largest players such as Tencent and Alibaba, which have invested into driverless cars and smart hardware, media and entertainment contents, mobile payment and online asset management, and are now heavily into big data businesses (e.g. credit scoring for the large and expanding new middle class).
Of particular interest to me are the challenges that Chinese companies now face in overseas markets. What similarities to those encountered by US companies such as Amazon and eBay when they ventured into China before! Today the journey for Chinese players into foreign markets is full of challenges, but with their overseas stock listings and significant foreign ownership, one may expect Alibaba, Tencent, and other Chinese companies to manage cultural differences better than American firms did in China a decade ago.
Expect more in the future
Although somewhat reserved about the topic, Winston Ma does admit that he is already thinking about his next book, which will focus on cybersecurity risk and linked issues of data management and regulation. With data being the oil of the information economy, he believes, data stands at the heart of upcoming AI developments and new business models.
Yet, unlike Saudi crude oil, there is no risk of data dearth: Winston Ma notes that the more data is used, the more data is created, and the more data needs to be managed and regulated. Every country is dealing with cybersecurity issues, meanwhile every nation wants to fully control its “own” data. That makes a global solution extremely difficult to find, because data in the new digital economy is “interconnected” across national borders.
Title: China’s Mobile Economy; Opportunities in the Largest and Fastest Information Consumption Boom
Author: Winston Ma