Digital innovators looking for inspiration should look East to China, where they’ll find a cash-rich hotbed of digital innovation, by Dr Paul Marsden, Consumer Psychologist, SYZYGY Group.
“We’re all familiar with micro-payments and micro-lending, but China’s Alibaba is leading the way in online micro-investing.” – Dr Paul Marsden, consumer psychologist
Move aside Silicon Valley, the centre of innovation gravity for all things digital is shifting East. And the Hangzhou Hills, 180 kilometers south of Shanghai could soon give the Valley a run for its money.
Last month’s record-breaking IPO of Hanzhou-headquartered Alibaba marked a seismic shift taking place in the evolution of the internet and digital business. Alibaba – already the undisputed king of eCommerce handling more sales than Amazon and eBay combined – is now the world’s fifth most valuable tech company, valued at over $200 billion. With money comes deep pockets for innovation.
But China-style digital innovation may take an excitingly different track to that of the West. There is a huge market to cater to and that affords more possibilities. China is the world’s biggest eCommerce market and it’s growing fast; 600 million online Chinese consumers will spend an estimated $541 billion online next year, each making over 100 purchases. As Alibaba’s flamboyant founder and now the 12th richest man in China, Jack Ma, recently explained “in other countries, eCommerce is a way to shop, in China it is a lifestyle”. With little legacy technology holding it back, China’s eCommerce market is not only big, it is advanced; the world’s highest penetration of post-PC devices means that eCommerce here means mobile commerce. Size combined with an advanced market offer plenty of opportunity for new directions in digital innovation.
In this huge, growing and advanced market, Eastern internet giants such as Alibaba, JD.com and Baidu still benefit from an enviable degree of market protection – at least from foreign firms. In the case of Alibiba, this has allowed the Hanzhou firm to build up an eyewatering 80 per cent share of the domestic eCommerce market. Four out of five purchases online in China are made via one of Alibaba’s B2B, B2C and C2C marketplaces, and half of all online payments are made using Alibaba’s ‘Alipay’ electronic wallet. Such market dominance in benevolent market conditions may help foster the confidence to buck innovation trends by creating new ones.
If Alibaba is anything to go by, we’ve some exciting new innovation trends to look forward to. Take, for example, micro-investments. We’re all familiar with micro-payments and micro-lending, but China’s Alibaba is leading the way in online micro-investing. Alibaba’s innovative Yuebao feature (meaning ‘leftover treasure’) lets consumers make one-click micro-investments in a high-yield money-market fund using the small change from their online purchases. Yuebao now has more investors than China’s stock markets, and is the largest public fund in China. Positioning itself wherever money changes hands and without respect for industry verticals, Alibaba is also experimenting with a variety of commercial innovations from demand-led ‘team-buying’, to virtual malls and shoppable streaming video.
Hitherto dismissed as imitators rather than innovators, the new Eastern internet giants are beginning to flex their freshly-funded innovation muscles. Asia is becoming a new hotbed of digital experimentation, making it the region where you’ll most likely to find the ‘next big thing’ – and the company behind it.
So if you want to look to your digital future, look East. As William Gibson remarked – “the future is already here, it’s just unevenly distributed”. We now know that uneven distribution has shifted East. East is where the sun will rise on tomorrow’s breakthrough digital ideas, innovation and inspiration.
We just needed an Alibaba ‘open sesame’ to open ourselves to the truth that Western digital hegemony is finally over.