ACCELERATING BUSINESS
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Digital China – First alternative to the Silicon ValleyMarch 11th, 2016
Judy Wei & Jean de Chambure
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Agenda
China, the first alternative to Silicon Valley
• Top digital cities in China
• BAT’s Vs GAFA
• Mobile is the Key
• WeChat Phenomenon
Atelier THEMAS
• Future of Retail
• Fintech
• E-Health
• Smart Cities
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China, the first alternative to Silicon Valley
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Top digital cities in China
Beijing
Shanghai
Hangzhou
Shenzhen
Political capital, yet China
version of Silicon Valley,
nation’s ultimate startup
center, also the city is filled
with HQ of local internet
giants
China version of New York,
strongly vibrant in:
Financial (FinTech)
Industries
Real Estate
Luxury
Booming
Manufacturing industry
and Hardware
E-commerce, HQ of
Alibaba
ChengduR&D, and data center
Hong KongHub of future Fintech in APAC
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BAT’s evolution compared to GAFA
Google (Alphabet)
1998, Mountain View
• Market Cap.*: $485.7 Bn
• Revenues**: $ 75 Bn
• Scope: Search engine,
technologie innovation
(car), R&D.
Apple
1976, Cupertino
• Market Cap.*: $535.6Bn
• Revenues**: $ 233 Bn
• Scope: devices, m-
payment (Apple Play),
Systems, R&D
2004, Menlo Park
• Market Cap.*: $307.6 Bn
• Revenues**: $ 18 Bn
• Scope: social media,
Virtual Reality, R&D
Amazon
1994, Seattle
• Market Cap.*: $261.5 Bn
• Revenues**: $107 Bn
• Scope: E-commerce,
device (e-ebook), R&D
Baidu
2000, Beijing
• Market Cap.*: $60.5 Bn
• Revenues***: $2.892 Bn
• Scope: Search engine,
video, mapping, O2O
(Ctrip & Uber), e-Health.
Alibaba
1999, Hangzhou
• Market Cap.*: $166.3 Bn
• Revenues**: $ 11 Bn
• Scope: E-commerce
(Tmall, Taobao), O2O
(Didi Kuaidi), Internet Fi
(Ant), entertainment
(Youku), e-Health.
Tencent
1998, Shenzhen
• Market Cap.*: $169Bn
• Revenues***: $ 4.1 Bn
• Scope: Social media, gaming,
Internet finance (WePay), O2O
(Didi Kuaidi) & e-commerce
(JD.com), Pan entertainment,
e-Health
* Market Cap for Feb. 25, 2016
** In 2014
*** In the third quarter of 2015
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China’s Big Online Number in 2015 – Mobile is the Key
Population: 1.37 billion
688M
620M
127M
50.3% Internet Penetration Rate
Mobile internet penetration rate
90.1%
They only access
internet via mobile
Source: CNNIC 2016
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WeChat: Massive Scale & Various Uses
Make in store
payments
Hail a cab – and
pay with app
Transfer moneySend lucky
envelops
Split the bills Send some
Bitcoins to a
friend
Pay utility
bills
Send instructions
to your butler
Share realtime
location with
friend
Order some
food/wineGet gaming
rewards
Source: Tech in Asia
1 2 3 4 5 6
8 97 10 11 12
Catch up on
some reading
More than 650 millions users + overseas extension
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Future of retail in China
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Mobile discovery and research Buy m-coupon, m-redeem Select & Pay with QR Code in
Mobile
Mobile is the natural link between every commercial interaction
The rise of mobile centric generation
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Examples of BATs iconic investment deals in O2O sector that took place in 2015
O2O Category
Transportation Investment USD 1200 million in
Uber
Investment in China version of
Uber: Didi
Investment in China version of
Uber: Didi
Travel Acquired 25% stake in China
l#1 online travel portal Ctrip
Online food
ordering
Investment in the leading
platform Ele.me
Investment in the leading
platform
Ele.me
Group Buying Became the shareholder in the
#1 Group Buying site Xinmeida
Became the shareholder in
the #1 Group Buying site
Xinmeida
Life service
directory
Held 25% stake in #1 platform
58ganji
BATs are entering the arena of O2O through aggressive corporate investment, merger and acquisition
They are buying the territory of O2O in every front, even though they have their own self-operating O2O entities
BATs dominate O2O in China (estimated 80%)
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Fintech trends in China
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Internet giants boosting
the market
• Jack Ma, founder of Alibaba
established Ant financial
(rebranded from Alipay*) in 2015
• Runs China’s largest money
market fund by AUM ‘Yu’ebao’**
• Provides micro-credit services to
SMEs
• Launched a direct banking service
‘Webank’, China’s first online-only
bank in 2014
• Offers extensive financial services
– on/offline payment, fund
investment, micro-credit etc. through
its mobile messaging app, ‘Wechat’
Incumbents pushing
aggressive strategies
• Runs China’s No. 3 E-commerce
‘Rong e Gou’*** by sales volume, its
total transaction exceeds ¥100 bn
• Launched e-ICBC platform for
combining online services - e-
commerce, product direct sales…
*Alipay was founded in 2004 **The fund is managed by Ant Financials partner Tianhong Asset management
***Sells investment products, property, gold, art pieces along with other lower basket value products –food, home appliances etc. Source: Bloomberg, Company Web
No holy ground for internet finance
VS
• Established China’s leading P2P/
open investment platform Lu.com
• Launched a direct banking brand
‘Orange bank’ in Nov 2014, within a
year, the customer # reached 4.5m
• Runs a loyalty point e-commerce
‘Wanlitong’
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With QR Code payment at PoS, the 3rd party payment market size reached ¥ 4.3914bn (€ 608.23bn) in 3Q
2015 (26.4% growth)
Apple pay, launched in Feb 2016, drew 30 million users on the first-day debut
Market Share
Community
Driven
Holiday
Booms
Eco System
Active Users 400M In China
200MIn China
169MGlobally
77%In China
13.5%In China
Less Than 1%In China
350MActive Alibaba/Taobao users
Over
400MActive Wechat users
157MActive eBay users
RMB
240M2014 CNY HongBao
RMB
1 Billion2014 CNY HongBao
62% Jump in mobile shoppers on
Paypal 2014 black Friday
E-commerce, cloud,
entertainment, finance,
logistics
SNS, IM, content, gaming,
finance, govt. services,
transport
Limited to core e-commerce
transactions at the moment
* Mobile payment volume reached 18.17 trillion RMB, 194.86% increase YoY*, which takes up ~0.02% of the market’s total non-cash transaction amount
(859.74trn RMB) in 3Q 2015 in China / Consumption payment volume via bank card is 14.26 trillion in 3Q 2015 , ~30% YoY increase (PBoC).
Mobile payment is soaring*
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Mainland China
• Internet giants boosting the Fintech
disruption – Mobile Payment
• Incumbents advancing with
aggressive digital strategies
• Rapid growth of P2P platforms
Main actors
- Mobile payment by Alipay, Wechat pay
- P2P by Lu.com (Ping An), Ppdai etc.
Hong Kong
• Gov. support for startup e.g.
Invest HK (1,558 start ups)
• Major financial center
Main actors
- Super Charger Fin Tech accelerator
- P2P lending by Welend
China: Hotbed of Fintech disruption
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E-Health trends in China
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E-Health market significant growth within last 5 years
M-Health China 2015
Market Size:
RMB4500 million
User #:
151 million
User Penetration
Rate:
22%
# of Major Health apps:
Over 2,000
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E-Health aims to solve China’s health care problem
Key Needs Digital Solution
1. Accessibility •Improve access to quality
healthcare services
•Eliminate inefficiencies in
hospital operations
•Online scheduling
•Remote consultation
(Platform/family doctor/specialist)
2. Delivery • Enhance experience in
hospitals
•Enhance diagnosis and
treatment capability and
efficiency
• Integrated registration, payment
and e-report platforms
3. Distribution Purchase drugs with more
convenience and at lower cost
•Drug sales O2O
•Online Consumer Health/OTC
platforms
4. Community More knowledge sharing and
support among physicians and
patient communities
•Physician & patient networks
•Complied knowledge / database
•Social media
5. Personal Care •Increase in awareness of
disease on large scale
• Better management of
personal health
•Healthcare knowledge & disease
management
•Data health management
• Wearable devices
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Smart city in Asia
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Smart city trends in Asia
South Korea
Singapore
China
South Korea is the first country to launch smart city project in 2003.
Singapore launched the «Smart Nation project »in 2015 to improve lives and business.
This project focus on 4 points:
transportation, smart city, healthcare and ageing population.
Chinese Government oriented the 13th Five-year plan (2016-2020) towards green economy
(绿色生态), saving energy.
In February, the Chinese State Council launched a guideline on “new-type of urbanization”
to prevent problems such as pollution, traffic.
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Merci !
Thank you!
谢谢!
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Questions?