Digital Disruption in China

China Shanghai town city blocks of flats high-rise buildings city skyline Huangpu river flow Pudong evening travel travelingDuring the spring semester of 2016 I studied abroad in Shanghai, China. It was a wild experience. The extent I underestimated the difference between the world I knew and the world I was going into is laughable. I thought I’d be able to get around just fine not knowing any Mandarin. I thought the pollution wouldn’t actually be as bad is it’s made out to be. I also thought that the integration of technology into daily life was far less pervasive and sophisticated relative to the Western world. Wrong, wrong, and wrong. The former two assumptions, I quickly realized, were just flat out ignorant – but the latter really took me by surprise.

Just about all services provided by major U.S. tech companies are blocked in China by what’s become known as the ‘Great China Firewall’ – meaning no Facebook, no Instagram, no Snapchat, no Twitter, no Google. Because the majority Westerners view these companies as the primary drivers of technological progression, many (myself included) jump to the conclusion that the tech landscape in China lags behind the rest of the world, and that the platforms available there are just ‘knock-offs’ of those offered by the major players in the West. And, because of the government’s tight control over the Internet, it’s easy to take a step further and assume that the impact of technology on daily life had not been realized to the extent that it has elsewhere in the world. In reality, these assumptions could not be further from the truth. My 4 months in Shanghai gave me an interesting, firsthand perspective on the disruption of industries and empowerment of people being driven by new technologies in China.

Deng Xiaoping’s economic reforms in the 1980’s created an investment climate that drove the creation of countless new jobs, businesses, industries, and even cites. 43fe8cigde5xShanghai, a city that today is home to over million 24 people, popped out of the ground in twenty years.

Since China opened their doors to the rest of the world in the 1980’s, the socio-economic state of the country has undergone rapid, non-stop change. And while technological adoption has played an increasingly important role in China’s development throughout the past decade, proliferation of smartphones in recent years is altering the social and economic fabric of the country in new and extreme ways.

China has the largest population in the world of approximately 1.4 billion people – and in November of 2016, Statista estimated China had 1.319.99 million mobile subscriptions. Keep in mind that the United Sates has a population of approximately 320 million people. Crazy, huh? These mind-bending statistics illustrate the scale of connectivity that has in swept across China. Unlike the in the U.S. where getting cellphone is a long, expensive, and contract-oriented process, finding an affordable phone and network in China has been made easy and accessible to everyone – irrespective of city tier and/or socio-economic status. Everyone from rural farmers to factory workers to bankers now has a cell phone – and more and more commonly, a smartphone.

China’s mobile statistics are more enlightening when sliced to look at the number of people using their phones to access the Internet. Why? Because it takes connectivity one step further by enabling access to purpose-driven apps and ecosystems that create even greater value in the lives of consumers. iResearch reported that there were an estimated 619.81 Mobile Internet users in China in December of 2015, representing approximately 90% of the total Internet users in the country. This is a clear indication that smartphones are viewed as a more affordable, convenient, and useful than a computer- and it reflects the overwhelmingly pervasive role of mobile Internet in China moving forward.

screen-shot-2017-02-07-at-7-26-16-pm

The Eastern tech market has responded by creating a countless number of apps for just about every use case imaginable. Widespread access to applications has sparked a entirely new understanding of digital activity in Chinese society, and has had tremendous impact on daily life in the PRC. Visually, it’s almost impossible to miss. No matter where you turn, people always have their eyes glued on their phones. It’s bad in the U.S too, but China takes it to another new level. Advertising across all mediums – television, print, digital, etc. – is dominated by ads for smartphones and mobile apps. In a urban city like Shanghai, the streets are flooded with fleets of moped curriers operating via mobile platforms. Every checkout counter, from small street food vendors to large retailers, has a QR code available that most Chinese consumers will use to pay via their smartphone.

What’s not as ‘in your face’ is the cost to value ratio realized by Chinese citizens – especially outside of metropolitan areas. This new wave of connectivity has empowered the average citizen with a substantial increase in efficiency, productivity, and overall quality of life. WeChat, for example, is the most ubiquitous app in China that has connected the country on an entirely new level – it has grown from 2.8 million monthly active users in 2011 to 846 million monthly active users in 2016. WeChat users are able to accomplish more than imaginable through the platform. For certain businesses and industries, it has even replaced e-mail as the primary means of communication. Apps such as Taobao or JD enable chineseappstoreChinese consumers to buy anything they want at unbeatable prices – from groceries to clothes – read comprehensive reviews, communicate real-time with vendors, and have items delivered within hours. Digital banking, investing, and lending apps are disrupting China’s bulky and inefficient banking model and providing the average citizen with more financial flexibility than ever before. It’s important to consider that life isn’t easy in the PRC – especially for the average guy walking down the street. The cost, accessibility, and capabilities of smartphones have empowered the masses across China with access to connections, services, and opportunities that offer significant improvements to daily life – no question about it.

It’s interesting and exciting that China is still in the beginning of all of this. The disruption I’ve discussed occurred within the span of the past 5 or so years, so it will be interesting to see what happens in years ahead.

Appendix:

screen-shot-2017-02-07-at-7-23-18-pmhttps://www.statista.com/statistics/278204/china-mobile-users-by-month/

20160602123441_0093http://www.iresearchchina.com/content/details7_23064.html

screen-shot-2017-02-07-at-11-39-23-pmhttps://www.statista.com/statistics/255778/number-of-active-wechat-messenger-accounts/

7 comments

  1. It’s easy to forget just how influential China’s technological separation has been for the whole Chinese economy. I wonder if the U.S. is destined for the same fate as the tech and smartphone app markets become more and more saturated here. I definitely think the WeChat phenomenon is fascinating as well; it’s hard to imagine email being replaced writ large, particularly in corporate environments, but it’s a wonder it’s taken so long for a better and more widely-adaptable alternative.

  2. It is crazy how living in a different place can really open ones eyes to all the power, influence and cultural differences a country has compared to the one you grew up in. I studied abroad in Venice Italy and the main social media/ technology difference I noticed was in cell phones and online TV watching. It did not seem as though IPhones were as popular as they are in the US. And similar to the “Great China Firewall” some channels such as ABC would not allow me to stream shows so I had to change my browser’s location. But that was due to their server not any laws or legislation against certain websites.

  3. It was great to hear a personal account of your digital experience in China. I think we often have set views of other cultures’ technical advancements and it takes real life experience to understand the true situation. I would have thought that China was behind digitally based on the absence of the most prevalent digital businesses in my life. It just goes to show there are always different ways to bring efficiencies, knowledge, and advancement to different countries. It seems as though there is a distinct line between tech used in the Western world verses the Eastern. I understand that various political policies and a need for competitive advances hinders this, but I wonder what more we could accomplish as a global society if we took a more collaborative approach.

  4. Wow, what a really great post! I was in Shanghai about 3-4 years ago and had a very similar experience as you did. I touched down and wanted to post a picture back to my #IS6621 feed on Twitter, but to no avail. I did hear that China was thinking about experimenting with Western SM but only in Shanghai. Will be interesting to see if it happens.

  5. Thanks for the post Duffy, hearing your personal account made this a much more fascinating piece to read. Do you think there is a chance in the future that not only will China open up and use our Western platforms like Twitter, Facebook, etc; but the West will adapt what may be better products from China? The digital age and globalization is truly an amazing thing when you see how much growth there has been in such a short period of time.

  6. Really enjoyed this post and hearing about your experiences in Shanghai. The photo that compares the cities from 1990 to 2010 is pretty incredible – amazing to see how rapid the development has been. Also, thought it was interesting seeing the contrast between US and China in terms of cellphones – that US has primarily contracts and that China was able to make it readily available to the masses. Definitely agree that it will be exciting to see what China has in-store for the years ahead.

  7. I never lived abroad but home for me is a city that has a huge influx of people from all sorts of places so I kind of see the cultural differences and influences other people have compared to the what I am used to. I noticed that sometimes Facebook is a lot more popular than what I consider it to be in America as well as what seems to be a common trend of this weeks blogs, dating apps. So it is interesting to hear the experience from someone who has actually experienced it first hand.

%d bloggers like this: