Fast and convenient, agile as a dragon: this ambitious watchword has been put into practice with unrivalled efficiency and inventiveness in China. In China, which will by 2013 have the most numerous middle class in the world, online businesses have been growing at top speed, not necessarily by inventing, but by innovating – i.e. by improving something that already exists but lacks the design to be truly efficient. China is not so much unicorn territory as the land of dragons, a place where many companies have shown themselves able to rapidly transform their business so as to keep up with changes in the way their customers like to do things. Three examples – from fields as diverse as smartphone manufacture, bicycle sharing and Internet-based finance – perfectly illustrate this phenomenon.
Smartphones: Oppo and Vivo now lead on speed
In 2014, Apple posted a record annual profit of $18 billion, a large percentage of which came from sales of smartphones in China. Two years on, Apple has maintained a significant market share (9.6%) but now lags the top suppliers – Huawei (16.4%), Oppo (16.8%) and Vivo (14.8%), according to a report from US market research, analysis and advisory firm IDC. Meanwhile Xiaomi, once thought of as Apple’s great rival, has slumped to just 8.9% of the market. This firm’s personalisation strategy, oriented towards smart home applications and IoT devices, is working well overall, but has not really paid off as regards the mobile device segment.
The mobile war: oppo vs vivo
The niche Oppo and Vivo have gone for – ‘fast and simple’ – with a battery that charges up in 3 to 6 minutes, coupled with simple and elegant brand positioning, has enabled the two firms to scale these heights. They are now ahead of Apple and very close to the market leader Huawei. In a country where 92% of all Internet users (656 million people) are smartphone owners, where 65% of all online payments are carried out on mobile devices (via WePay and AliPay), and where 146 million people order in food online, it is essential to be able to recharge your battery easily. This was a key innovation that everyone needed, and Oppo and Vivo seem to have grasped that fact faster than the competition.
Bicycle sharing: a boom in old-style mobility
Bicycles have a long tradition in China. In 1949, as the country was finally opening up to the world, Shanghai had 230,000 bicycles among its 3.5 million inhabitants. In the 1990s, with the arrival of the automobile and the passion this new means of transport unleashed among Chinese people, bicycles fell out of fashion, although production levels remained quite high. Then came the monstrous traffic jams and the urban pollution that arose in part from overuse of cars. A solution was urgently needed, and thus it was that the little two-wheeled chariot made a big comeback, underpinned by a new consumer model: bicycle sharing. You use your smartphone to geolocate a bicycle, you lock and unlock it by scanning a QR code, and off you go! An estimated 18.9 million Chinese people became bike-sharers in 2016, and the forecast figure for this year is 50 million. Market leaders Ofo (with its yellow bicycles) and orange-branded Mobike generate turnover worth an average of 10 million RMB (around €1.4 million) per day from their users.
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The business has been so successful that local authorities urgently need to draw up regulations so as to avoid over-concentration of bicycles in certain places. However, the revolution is underway. Ofo is valued at $2 billion and is planning to invest in 200 Chinese towns and cities, plus 20 abroad – including Singapore and New York City. This certainly looks to be the way to pursue innovation. The future Jack Ma of the sharing economy will perhaps build an ecosystem where transport (bicycles, cars), accommodation (for example for young single working people) and some types of jobs such as delivery services, factory work and restaurant table-waiting will all be based on a sharing/on-demand model.
Ping An, a bank with four online lifestyle services ecosystems
In no other country are the traditional banking and insurance firms facing such a severe challenge as in China. The Internet giants – led by Tencent and Alibaba – have created online services which not only provide all mainstream banking services – payments, loans, savings & investment – in addition to bringing enormous online convenience to the world of shopping. In fact the Beijing authorities might well decide to step up the regulatory requirements on these new players in order to protect their traditional banks, but it is nevertheless undoubtedly in China’s interests to have new agile, competitive players encouraging domestic consumption, which is a vital driver of national economic growth.
More than 22% of Ping An’s new customers come through the Internet. Cross-selling between the various online services and targeted financial products is on the increase, boosted by the fact that Ping An provides one-stop-shop access to its galaxy of services. What better example of a transformative innovation? Here is a traditional financial firm that has dared to take the plunge into the digital world of data analysis and online services, an old-style dragon that has engineered its own metamorphosis!