China is Leading the Integration of Multi-energy Sources

“Think big” – under this motto, a new multi-energy power plant has been built in China. The power plant integrates wind power (400 MW), photovoltaic (200 MW), concentrated solar energy (50 MW) and an energy storage system (100 MWh) into a uniform network system. It was built as part of the “Luneng Haixi Multi-Mixed Energy Demonstration Project” and is expected to generate around 126,000 MWh of electricity per year. After a 17-day test phase, it is now on the grid.

Operators hope that this project will signal the adoption of novel regenerative energy generation systems and smart grids around the world. HUANG Shilin, Vice Chairman and Chief Strategy Officer of battery specialist CATL, believes that this centralised multi-functional power plant will provide “incentives for more differentiated renewable energy projects around the world” due to its reliable technology and cost-effectiveness.

Equipped for adverse conditions

CATL is the largest Chinese battery supplier specialising in the production of lithium-ion batteries for electric vehicles and energy storage systems. Participating in the multi-energy power plant posed some challenges for CATL. Especially the heat management of the power plant was unusually complex. The new power station is located in Golmud, a remote region in the southwestern mountains of China. For the operation of batteries the area was less than suitable. Temperatures can vary between -33.6 and +35.5 degrees Celsius – a real stress test for the batteries. To allow the battery to last at least 15 years, CATL has installed a cooling system with air vents and airflow designs that keeps the temperature in the cabinet at a constant level. A battery management module activates the cooling system as soon as the temperature limit is exceeded and pre-stored electricity protects the battery from capacity drop.

Temperatures are not the only problem in the remote region. Golmud is located in an active earthquake area. Protection against vibrations and shocks were therefore absolutely necessary. In a Test & Validation Center, CATL provided evidence that the batteries can withstand a magnitude eight earthquake. By comparison, the highest earthquake ever measured had a magnitude of around 9.5. It destroyed a Chilean town and triggered a 25 meter high tsunami.

In Europe, the Chinese battery manufacturer plans to build a plant near Erfurt, Germany. CATL intends to increase its capacity by 14 GWh and from 2026 on it will increase its capacity to a three-digit range. This is what Matthias Zentgraf, European leader of the Chinese cell manufacturer, said at the Car Symposium in Bochum. If the plans become reality, CATL will outperform Elon Musk’s Gigafactory in Nevada, California, which currently has a capacity of 20 GWh.

Chinese energy companies are looking to Europe to collaborate with innovative companies on creating new projects. But where are European energy companies looking? What are the opportunities for European energy companies and what challenges exist? Let us know in the comment section on our LinkedIn profile.

Artificial Intelligence speaks Chinese

From the 33rd floor of the office building has a breathtaking view. Toward the north, visitors look at densely forested hills. In the south, are the enticing sea and Hong Kong. “We want to remain attractive to our employees through our new location,” said BING Xia, Deputy Chief Executive for International Business at the Chinese startup Malong, headquartered in Shenzhen.

The company is just four years old. However, it has expanded so much that it had to move into new premises. The company operates additional offices in Beijing, Shanghai, Tokyo and Arkansas. Furthermore, Shenzhen City Government also supported the company in moving into the new premises. Chinese cities like Hangzhou, Xian and Shenzhen compete with each other and have a lot of attractive offers for innovative startups.

The company, founded by American Matthew Scott and Chinese HUANG Dinglong – the company name Malong is made up of their first names – deals with computer-aided vision, a subfield of artificial intelligence. “We are just in the early stages of development and cannot predict what computer vision will be able to do one day,” says BING Xia.

Nowadays, everyone is talking about facial recognition, in which China, with young companies such as Megiiv Technology and Sense Time, is leading technological development. Instead of identifying faces, Malong focuses on product recognition and works with retailers and consumer goods manufacturers worldwide. “Such cooperation is helpful for both sides. We understands the needs and difficulties of each industry better and our partner’s benefit from our services,” adds BING Xia.

Until now, consumers are faced with the problem that if they like a piece of furniture or clothing, for example, during the holidays, back at home, they are lacking the right words to describe shape, colour and pattern and are unable to find the item in search engines or in stores. Malong offers a solution: Consumers photograph the products and then upload the photos in an app. In a matter of seconds they can see which comparable models Malong’s partners have on offer. The product can then simply be ordered through the app. This technology also describes patterns and colours of fabrics of fashion designs without them having to manually describe them. Product descriptions can therefore be produced more efficiently and faster.

Malong has already taken new paths to gradually conquer the vast field of computerised vision. For example, with this technology, it will be possible to take less than a second to determine which parts of the brain are affected by a stroke based on computed tomography scans. According to Malong, this procedure is 308 times faster than the human eye. For patients and health insurance, the technology offers great opportunities. Diseases are diagnosed faster and more accurately than traditionally.

Recently Malong announced a cooperation with the University of Bern. The cooperation is a result of the agreement between the Canton of Bern and Shenzhen nearly four years ago. Both sides want to promote economic cooperation. In mid-November last year, a Memorandum of Understanding was signed in Shenzhen in the presence of Bern’s Economics Director Christoph Ammann. In the future, synergies between artificial intelligence and brain tomography will be explored in two research institutes in Bern and Shenzhen.

Attractive Prospects

 The company’s international reputation is in part due to its hiring choices. Malong has attracted international talents such as HUANG Weilin who leads the research department. Previously, HUANG Weilin obtained his doctorate in the prestigious Visual Geometry Group at the University of Oxford where he worked as a postdoctoral researcher. HUANG listed several reasons why he was drawn back home, despite his promising academic career. “At Malong, I can help people with my developments,” he emphasises. In addition, working with Malong does not have the anonymity of universities or large companies such as Alibaba or Tencent. Furthermore, his move to Malong did not mean leaving academia. About half of the published studies come from the research departments of companies, HUANG Weilin estimates.

Startups like Malong may one day be financially attractive. The employees are involved in the young companies through stock options. If the IPO or the company is sold, a lot of money can be generated. Just over a year ago, venture capital firm Softbank China Capital invested RMB 220 million (£25 million) in Malong. In August of last year, it was announced that Accenture, one of the world’s leading management consultancies, invested in the Chinese startup and signed a cooperation agreement.

Race between America and China

In parts of the Western world, there is still the persistent misconception that China is a world champion in copying and imitating and is unable to develop and bring innovative ideas to the market. But times have changed. Shenzhen, with young companies like Malong, is a stronghold of innovative and modern China.

China has just recently started play a role in artificial intelligence research. The theoretical foundations for artificial intelligence were created in American, British and Canadian institutes. Now, the next step is to develop business models. And that’s where China is leading.

According to Lee Kai-fu, who previously headed Google China and now invests in young Chinese high-tech companies as the head of Sinovation Ventures, China leads the future in artificial intelligence.

China has more than 800 million internet users who reveal a lot about themselves on the Internet

So far the practical application of artificial intelligence has faced the problem that there were not enough data and computers with high computing performance. This has now changed. China, with more than 800 million internet users sharing much about themselves online, provides the ideal environment to test the theoretical foundations of artificial intelligence. In addition there are powerful technologies and ambitious entrepreneurs who want to fulfil their dreams.

China has a moved ahead in all these fields of foreign competition. Malong is aware of this. “In the past, China had to catch up with foreign countries on already pre-tracked paths. Those days are over. Now we pave the way for the rest of the world.”

China is speeding up the development of delivery drones

China wants to play a leading role worldwide in the production of unmanned aerial vehicles (UAVs). In December 2017 the government has published new guidelines for the civilian unmanned aircraft industry to support UAV development. The government expects the market value of the industry to increase by an average of 40 percent by 2020 to RMB 60 billion (£7 billion). The long-term growth goals are even more ambitious. By 2025 the Chinese government aims to more than triple the UAV industry to RMB 180 billion (£21 billion).

The new guidelines already had a positive effect on China’s UAV industry. One of the country’s largest online retailers, JD.com, announced a US$ 2.5 billion round of financing for its logistics subsidiary, including investments in automation, drones and robotics. The announcement was made by Richard Liu, Chairman and CEO of the Group in February 2018.

He even got support from Google. The search engine group invested US$ 550 million in JD in June, which was a likely move to improve the company’s standing compared to US logistics leader Amazon. In August 2018, a startup accelerator was announced to support the company’s UAV ambitions.

JD’s drone delivery plans focus on China’s remote rural areas which currently incur high delivery costs. With drone delivery the group wants to be able to deliver goods faster and cheaper to these regions, Richard Liu said in an interview with CNBC. Richard Liu expects that fully automated logistics will reduce costs by 70%.

Chinese online marketplace Alibaba also has made a move towards drone technology. According to the US magazine Popular Science, the e-commerce company has concrete plans to offer deliveries via drones. In tests drones collected meals and other packages in restaurants and shops at Jinshan Industrial Park and flew them to their delivery points. From there, human drivers transported them the last stretch to the customers. “By using planes the delivery services can bypass Shanghai’s crowded streets. This can reduce the total delivery time for customers in the area by over 20 minutes”, reporters observed. In the next few years Alibaba wants to roll out this service to other cities.

This delivery robot can transport up to 300 kilograms.

This delivery robot can transport up to 300 kilograms.

Chinese drone logistics isn’t solely focused on the last delivery stretch, which can account for more than 50% of the total delivery costs. Long-range drone delivery is another fiercely competitive development area.

According to a report, Alibaba subsidiary Cainiao is working with the University of Beijing on a long-range drone which has a payload of one tonne and a delivery range of 1,500 kilometres. First tests have been scheduled for 2020 and it is scheduled to be put into services by 2025. Meanwhile JD is developing a similar project with a 300 kilometre flight radius and a payload of one tonne.

UAV delivery on the road is comparably easier to design and implement. Traveling delivery robots are long commonly used in China and are part of the automated supply chain: JD’s carry a payload of up to 300 kilograms in 30 parcels, drive 15 km/h on bike lanes, stop at red lights and orientate themselves with their radar sensors.

How smart parking is tackling China’s parking crisis

In 2018 that the number of cars on China’s roads exceeds 385 million, revealed a study published by Tsinghua University. With only an estimated 800,000 parking lots and 30 million of-street parking spaces, China is facing a parking crisis. There is also a strong uneven distribution of those parking spaces. On average first and second tier cities have 0.8 parking spaces available per car, with the availability in small and medium-sized city dropping as low as 0.5 parking spaces per car.

Furthermore, simply finding a parking space where it is needed is nearly impossible. Parking in those spaces can also be difficult for novice drivers, with many being extremely small. Once a parking space is found, drivers are faced with fees that are not transparent and very high.

Inefficient parking also significantly impacts traffic flow. Statistics show that 30% of traffic congestion problems are caused by parking difficulties, and 48% of vehicles need to wait in line when entering and leaving the parking lot.

With the number of cars on China’s roads steadily increasing, parking is becoming a top priority.

Smart parking is becoming the “new favourite” industry

The commercial value of the parking industry is enormous. China has an estimated parking gap of 60 million. The China Industrial Research Institute predicts that the smart parking industry will reach a market size of RMB 10 trillion in the future. In addition, there are data showing that the market size of smart parking in the first half of 2018 has exceeded 10 billion globally. Currently the smart parking industry has a scale of USD 26 billion, growing at a rate of 18%.

Smart parking can use parking data in various regions, and allocate parking spaces based on availability, thus improving parking space utilisation.  The system allows users to reserve and find parking spaces with the ease of their mobile phones. Furthermore smart parking creates a more transparent and fair pricing system. Payments can be made online based on a clear pricing structure. The system is self-managing, therefore further reducing parking costs.

Smart parking – still not that smart

Work on smart parking systems started in early 2014. Although the market reached a global scale of 10 billion, the system has not been applied on a large scale. In China coverage currently reaches only around 7%.

The reason that smart parking is not developing as fast as initially hoped for is because smart parking is not yet smart enough. The industry is currently highly fragmented with 38 different enterprises developing systems independent from each other. Currently no public data sharing platform exists. Furthermore, developing the necessary infrastructure is incurring high costs. Smart parking requires the use of wireless communication technology, mobile technology, GPS positioning technology, etc. In addition, engineering integration costs are high.

China Report Network data shows that 800,000 parking lots nationwide can be considered for smart parking in the next 5 years. The cost of converting a single parking lot is about RMB 100,000, making the overall expected costs at RMB 160 billion.

According to data released by Zhiyan Consulting Network, the number of car ownership in China is expected to reach 280 million by 2020 and 360 million by 2025. In 2017, the demand for parking spaces reached 270 million. In 2018, the demand for parking spaces will be nearly 300 million, with an annual growth rate of 11%. By 2025, parking demand will reach 600 million. Currently only 250 million parking spaces exist. Although smart parking can significantly increase utilisation rate of existing parking spaces, it will not be able to resolve the fundamental issue – insufficient parking spaces for increasing numbers of cars.

China’s Health and Fitness Industry is turning to Online Platforms

Broad shoulders, abdominal muscles and firm arms … A fitness craze has hit China in recent years. China’s increasingly urban and young population are driving the growth of a new health and fitness industry in China.

The health and fitness industry boom started in 2015 with the introduction of the O2O (online to offline) system. Lefit, based in Hangzhou, is currently the largest O2O fitness platform with gyms in all major Chinese cities. Membership costs RMB 99 (£11) / month giving members access to any gym 24 hours, 7 days a week.

The person leading the change in China’s health and fitness industry is HAN Wei. In 2013, the then 37-year-old HAN Wei was the marketing director of Alibaba Group, the executive general manager of Taobao Tianxia Media Co., Ltd., and the public relations director of Alibaba. After leaving Alibaba, HAN Wei went to the US to pursue further studies. In the United States, HAN Wei found that the gap between Chinese and American Internet companies is not as big as imagined. “Chinese always think that the United States is more open and free. In fact, China and America are only different in form of expression. The biggest opportunity in the world is undoubtedly in China, because the most prosperous market is in China.”

The idea behind creating an O2O business model stemmed from Taobao’s business model. O2O gyms connect consumers directly with the health and fitness industry. Through the online systems users are able to choose time, venue, classes and coaches online. By giving users more flexibility to plan their active lives through the O2O system, gyms are able to increase their utlisiation rate.

However, Lefit’s online model also generates significant data giving insight into users choices and preferences. This allows the platform to offered tailored services to their members and to support them making healthier lifestyle choices. As of October 2018, Lefit has over 3.2 million registered users, 6,000 coaches and nearly 500 gyms.

However, the ClassPass system also faces challenges in China. Unlike in the US, where 70% of the gyms are large chain gyms and 30% are small studios, China’s market is dominated by small studious. Therefore creating a homogeneous product offering across these smaller studios has been an issue HAN Wei and his team have been facing.

However, HAN Wei is certain, with the craze in health and fitness continuing more and more sports will be made available on Lefit and maybe in the future Lefit will not only be able to offer gym services but also sports like badminton, basketball, and table tennis.

5 Things to look out for at the 2018 Tencent Global Partner Conference

On 1 November the 2018 Tencent Global Partner Conference will open in Nanjing Jiangsu Grand Theatre. This will be Tencent’s first industry conference after having gone through restructuring earlier this year. This will also mark the first event ahead of Tencent’s 20th anniversary this year. There are 5 things we are particularly looking forward to at the conference.

1. The release of Tencent’s 20th anniversary film “River”

Tencent’s 20th anniversary film is called “River” and will footage from the foundation of the company, developments over the past 20 years as well as the company’s vision. According to a company spokesperson the film has been named “River” to show the continuous forward movement of the Tencent. The film is said to be centred on Tencent’s mission to jointly build a “Digital China”. The film has sparked wide excitement amongst industry experts as it is expected to set the tone for the company’s future development.

2. Internet driven development

On 30 September Tencent announced the third group restructuring which many industry experts saw as Tencent’s attempt to focus on internet driven development.

The 2018 Tencent Global Partner Conference will see the attendance of China’s leading smart technology and artificial intelligence companies. Industry experts will be paying close attention during the conference at Tencent’s strategy for internet driven development and future goals.

3. Science and Culture Show

Over 125 companies will be presenting their project around one of the three themes at the conference: Innovation Block, Cultural Garden and Science and Technology Forest.

The Science and Technology forest will see projects like “sister” robots, and vehicles equipped with Tencent’s automatic driving system. Projects in the Culture Garden will include a DreamWorks art show. The Innovation Block features the latest innovations of the smart industries from everyday routines to an augmented reality mobile phone tour of Yunnan.

4. The Future of Speech

This session of the conference is especially focused about how speech and language will be used in the future across industries. It will look at how speech will affect the creative industries as well as how new technologies will use speech as a direct communication tool. The session aims to connect researchers, entrepreneurs and artists to explore the use of speech and its future application.

5. New Wenchuang Open Day

The conference will host the two-day open day at the 6th National Theatre of the Jiangsu Grand Threatre. China’s leading cultural and creative industry representatives have confirmed their attendance and the opening will simultaneous screen popular film and television programs. The open day will also host a creative exchange where guests can share short videos, vlogs, movies, TV series and etc.

Are you planning to attend the 2018 Tencent Conference? These are the 5 things we are most looking forward to. What are you looking forward to? Let us know in the comments.

Alibaba: Tmall wants to enter product development

China’s online giant Alibaba has teamed up with Shanghai Fashion Week to demonstrate what fashion shopping of the future can look like. New technologies are intended to close the gap between consumers, retailers and brands.

Virtual catwalks

The Shanghai Fashion Week took place in China’s most important fashion metropolis from 10 to 17 October. The event is an excellent opportunity for China’s leading online retailer Alibaba to show how in the future for retailers and consumers can benefit from these events.

Through the B2C online shop Tmall, the company invited the four Chinese fashion brands Me & City, IMMI, Banxiaoxue and Zhangshuai to trial new technology. Based on the brands’ design patterns, the Tmall software visualised the garments movements or predicted fits for different body types. Users were able to follow the virtual looks and live fashion week shows on the Taobao and Tmall apps.

Tmall wants to use this technology to give young designers, who cannot afford a “real” runway show, more online presence, commented Tmall’s Vice President of Fashion, Anita Lyu in an interview on the company’s own blog Alizila.

Heat maps measure visitor frequency

The Virtual Runway was just one of many new technology Tmall trialled at the Shanghai Fashion Week. A “showroom robot” allowed shoppers to take a closer look at products, talk to designers, and place orders in real time. Tmall technology also provided pedestrian heat maps throughout the showrooms that analysed which brands, items, clothing styles, colours and fabrics attracted the most attention.

Customising Runway Looks

The virtual show allowed users to tap on each garment and to view its details in 360 degree view. Users were able to change the measurements of the garments – from height and weight to chest, waist and hips – to see what the outfits would look like on their own virtual model. The software also indicated where garments would be too tight or not fitting properly.

 

 

Tmall wants to be part of the product development

According to Alibaba’s “New Manufacturing” strategy and Tmall, the 3D modelling solution will be made available to apparel brands in the near future. Once all the properties of a fabric are known – including colour, how the fabric reacts to different levels of compression, friction, and light – each garment would be virtually replicated in just five minutes to an hour. In other words: Tmall wants to give its fashion suppliers tools with which designers can directly create their virtual patterns on Tmall. “The tools will help retailers save time and money and reduce the cost of product development cycles by up to 80 percent, including patterning and prototyping, material sourcing and production,” the company said on the blog.

Currently this new service is still in the development phase. The insights gained through interactive technology could help brands to better engage consumers, get to know them better, better forecast market demand, and to build consumer-centric manufacturing.

Germany’s Chinatown in Duisburg – How the Ruhr Area wants to benefit from the Silk Road 2.0

In Duisburg ends an 11,000-kilometer rail line – China’s new Silk Road. The trains from the Far East not only bring goods, they change the Ruhr metropolis.

China’s Belt and Road Initiative has become a changing point for the German city Duisburg. Increasing numbers of Chinese companies are now becoming interested in the Duisburg location. German newspaper Das Handelsblatt followed a delegation on their tour through the Duisburg industrial area.

The black minibus stops. All passengers pull out their smartphones. The man in the passenger seat says a few words. The rest take photos. Then they drive on. A woman is constantly filming through the tinted windows because she does not want to miss anything: warehouses, tank silos and containers. Sightseeing in the Duisburg industrial area.

The five passengers are not tourists, but business people from Chengdu, China. The man in the passenger seat is not a tour guide, but project manager of the port company Duisport. Instead of planning a project, today he is selling a product; the Duisburg location.

The Duisport project manager explains to the delegation that the industrial wasteland will be transformed into a state of the art industrial port. Siemens, Audi and other companies have already settled here. A traffic control system that reduces waiting times for trucks had also been installed. The women and men do what they will do the rest of the day; they nod and take pictures.

Shortly afterwards the bus waits in front of a barrier. The Chinese delegates point their smartphone cameras at the railroad crossing. A train rolls in front of their camera. It is loaded with containers bearing the logos of the Chinese shipping company Cosco and the state-owned railway company China Railway. A hundred meters away, three cranes are waiting to unload the train. The cargo consists mainly of electronics and textiles.

The Duisburg inland port is the end of an 11,000-kilometer railway line. It leads from China via Kazakhstan, Russia and Poland to Germany. Up to 35 trains run weekly on the route, three to five from Chengdu. On the way back the trains bring German cars and consumer goods to China.

Since the smelters and collieries have closed, Duisburg has become one of Germany’s economically most disadvantaged cities. The unemployment rate of 11.5 percent is more than twice as high as the national average. The city has high hopes that the train connection to China will change that. It wants to convince Chinese business people to send more trains to Duisburg.

Hope in the structural change

That’s why second mayor Volker Mosblech is waiting for the black minibus in the town hall. The suit of Duisburg’s second mayor carries two pins, one of a German flag, one of a Chinese flag. He proudly presents them as he welcomes the members of the Chinese business delegation.

The City of Duisburg has printed Chinese business cards for its employees. For every card Mosblech gets from the Chinese delegates, he gives them one of his own. He hands them over with both hands – as is customary in China.

The mayor and his colleagues tell the Chinese about the advantages of the location: 300,000 companies are located within a radius of 150 kilometres, 30 million consumers live in the region and the existing Chinese network that has made Duisburg known as Germany’s Chinatown.

The city has even appointed a China commissioner to oversee relations with the China and has established a China Business Network to attract Chinese companies to the city. Meanwhile the Confucius Institute invites the people of Duisburig to tea ceremonies and calligraphy courses to introduce them to the Far Eastern culture.

The cityscape changes

The Duisburg University Library is full, despite the term break. Mainly Chinese students are studying here. They sit in groups of four or five people. One has put a pillow under his head and takes a nap. The rest are staring at their laptops.

Over 2,000 Chinese students are enrolled at the University of Duisburg-Essen, most of them at the Faculty of Engineering in Duisburg. The majority will return home after graduation. But that could change.

If you go from the university to the main train station, you pass Chinese supermarkets and tailors. From time to time, the smell of peanut oil from Chinese restaurants mixes with the scent of Turkish food stalls.

Bangni also has its headquarters here. The start-up helps Chinese people in Duisburg to find a job and a flat. It also advises German companies on China issues and Chinese companies settling in the city.

There are currently only 100 Chinese companies in the city. However, the number could quadruple within a few years. Duisburg based Chinese company, Starhai wants to invest €260 million into a new trading centre, where previously has been industrial waste land. Starhai has already raised the money with the help of Chinese investors.

Offices, hotels and function rooms are to be built on 60,000 square meters for 300 Chinese companies, who will organise their Central European sales from there – and bring 2000 jobs to Duisburg.

Five kilometres south of the site, the black minibus stops at the spot where China’s President Xi Jinping made a speech in 2014. You can see one thing above all: asphalt. The delegation still photographs.

On the way back to the hotel, the Chinese go through the pictures on their smartphones. They have a good impression from Duisburg, they say. The next day the delegation is expected in Nuremberg. Regular trains from China also stop there.

(Photo: picture alliance/Tang ke – Imaginechina)

World Artificial Intelligence Conference: Where is China’s AI technology heading?

The 2018 World Artificial Intelligence Conference was opened on Monday 17 September 2018 in Shanghai under the theme of “A new Era Empowered by Artificial Intelligence”. The conference saw attendance from over 200 experts and entrepreneurs form over 40 countries discussing which challenges China’s AI sector would be addressing in the upcoming years.

China is considered a leader in AI and has a significant advantage towards its western competitors due to the large number of data Chinese companies have been able to collect from Chinese users. For Eye Cool’s CEO ZHOU Jun, a Chinese AI technology firm, the challenges in the AI sector are obvious. In his conference speech the entrepreneur highlighted the importance AI is going to play in the cyberspace security sector in the upcoming years.

Cyberspace security is becoming a new challenge the AI sector is addressing”

While AI has the potential to significantly contribute to increased cyberspace security, the area poses a political quagmire. Risks of data and personal privacy disclosure, vicious cyber-attacks, etc. pose a significant risk to the security of sensitive social and national security information. However, for entrepreneur ZHOU Jun these problems will resolve with the growth of the AI sector.

Businesses until now have been prioritising AI development in the finance and transportation sector as the increased efficiency allows to optimise company spending. Yet, developing AI in the security sector is dependent on having a comprehensive data set which spans across all sectors. Having pioneered the use of AI in financial services security over 20 years ago, ZHOU Jun is certain that the cyberspace security is the next step for developments in AI. However the entrepreneur also cautioned that progress is also dependent on companies building stronger relationships with people.

“Companies must become more people-orientated to accelerate the maturity of AI. Only by working together can we reduce security risks.”

China’s AI sector is heading towards a more interconnected sector to increase security on the cyberspace and although AI technology is making rapid progress, communication with humans is now moving into the centre of AI development.

Global Perspective

In his recent book, AI Superpowers: China, Silicon Valley, and the New World Order, internationally renowned AI expert Dr. Kai-Fu Lee outlines the global trends in AI. According to Dr. Kai-Fu Lee, China will lead in areas where massive data and maniacal focus lead to better products (such as Internet applications, mobile applications, payment and commerce applications, and computer vision and speech applications). But US will lead in areas where China doesn’t have quality data (such as financial and health applications), as well as areas which require cutting-edge technologies (such as autonomous vehicles).  New research breakthroughs are more likely to come from US than from China. The UK government has made a commitment to boost the UK’s position in AI through a sector deal. It is estimated that AI will add £232 billion to the UK economy by 2030.

 

5 lessons in marketing to Chinese consumers

China’s growing middle-class has become an important consumer base for Western companies. However, Chinese culture, trends and opinions can be difficult to keep up with for multinationals. In addition, Chinese consumer behaviour is changing at a rapid pace. This has prompted Chinese companies to connect with consumers in new ways. But how exactly do successful Chinese brands connect with consumers?

1. Brands must understand modern day Chinese consumers

Brands must follow modern Chinese cultural trends and must continue doing so once successfully marketing products. This means keeping up with the rapidly evolving consumer patterns.

Cultural trends are created by consumers and are the voice of consumers. Successful brands in China are built in the hearts of customers. Only companies that listen to the voices of customers, can become successful brands.

In a guest article in the Chinese online publication the CY Zone, Chinese marketing expert Shen Haitao highlights that Chinese consumers are looking for increasingly comfortable lives and products which will simplify their everyday business.

With the rapid economic development, China’s middle class has grown significantly in the past years. According to a study by consulting firm McKinsey & Company, China’s middle class has reached 200 million and by 2022 76% of China’s urban population will be considered middle class. This economic shift directly influences Chinese consumer behaviour.

Consumers’ demand for high-quality products and services is increasing. This demand is fuelling competition between Chinese brands. The pressure forces continuous developments in brand marketing but also creates new business opportunities for brands.

2. Chinese consumers are looking for reassurance and quality

China’s economic reform significantly impacted Chinese consumers. With the rapid economic development, consumption grew and improved production methods, resulted in higher quality of many goods. Thus, consumers are now looking for products which benefit their lives.

Shen Haitao points out that Chinese consumers live increasingly fast paced lives and scandals, for example in the food industry, have shaken consumers’ trust. Therefore building a brand which establishes trust with consumer has become a key to success.

These days, Chinese consumers are looking for reassurance when purchasing a branded item.

Therefore brands have to not only create high-quality goods but also build an emotional connection with consumers when marketing the brand. Trust is a key element in the way Chinese consumers make purchasing decisions. This means that only those brands that can establish this bond with their customers can achieve long-term sustainable growth.

3. Build close relationships between consumers and customers

Unlike European consumers, Chinese consumers are not brand loyal. Regardless which brand, service or product, if it does not continuously bring value to Chinese customers, they will find a better alternative.

While Apple has successfully established themselves in the Chinese market, domestic technology companies are now starting to outcompete the iPhone producer. Many consumers who previously purchased iPhones have now started to purchase domestic brands such as Huawei instead. On Chinese social media platform WeChat, consumers explained that this trend was caused by Apple’s inability to innovate their product. “Although I don’t enjoy adapting to new mobile phones, I still decided to switch to Huawei. I don’t like how Apple’s phones are getting slower and slower. This is how they make you continuously buy their newest iPhone mode. I hate it” commented a user named Xiao A.

In this particular case, Apple capitalised on the common believe that old technology inevitably slows down. Apple intentionally slowed down old devices in order to incentivise consumers to upgrade to newer iPhone models. Previously Chinese consumers had only few high-end smartphone brands available to them. Therefore they had little choice but to continue purchasing Apple iPhones. However, the Chinese market these days produces an oversupply of high-quality, high-end smartphones. This has made consumers more likely to purchase brands which give them independence over when to upgrade their technology devices.

Brands must not just improve consumers’ lives but must build an emotional connection with them. Any brand which only markets a set of product will be eventually lose Chinese consumers. This is the resurgence of an ancient Chinese philosophical concept in modern day brand marketing. Over 500 years ago, ancient Chinese philosopher Wang Yangming argued that knowledge and action must be integrated. The idea that brands must be integrated in their environment in order to stay relevant is modelled after Wang Yangming’s philosophical thought and has become the core idea of modern Chinese marketing. In modern day China enterprises have become a social instrument with the fundamental purpose of solving people’s problems and improving customers’ lives.

4. The quality of the product is key to brand success

The internet and social media have completely transformed what Chinese consumers value in a brand. While previously it was important for a brand to be widely known. In the era of global connectivity, brand marketing is focusing on the essence of a brand. The essence of the brand is the relationship it is able to build between the owner of the brand and its users. The most important link between owners and users is the product itself.

In the past Chinese consumers were primarily focused on the values and the connotations a brand communicated. If this social contract was nott fulfilled, the product did not match customers’ expectations. In that case customers likely decided to purchase a different brand.

Because nowadays competition between brands has become so fierce, it has become too easy to find a substitute for any product. As a result, products themselves have once again become a key aspect of a brand’s success. Brands which want to be successful in China must create products that exceed customers’ expectations.

5. Connecting to consumers

Promoting a product has always been an important way to target new consumer. However, in the era of internet and social media, the purpose of promoting an item has changed fundamentally. Chinese consumers want promotions to connect with them, not to tell them why they should purchase the item. Integrating consumers in the brand has become a key aspect of a brands success.

In China’s competitive consumer market it has become important to continuously establish connections with consumers, to listen to consumers’ voices and to help consumers solve their problems.

Next Steps

Today China’s consumer market is rapidly changing. It is important for brands to gain an accurate understanding of the underlying cultural trends that inform Chinese consumers, to establish an emotional bond between the brand and the consumer, and to continuously deliver high-quality products and services. While the Chinese consumer goods market is highly competitive, it offers many opportunities and will continue to grow at a rapid pace. At Hampton Group we focus on providing accurate insights into China. If you are interested in successfully entering into the Chinese market with your brand, contact us at office@hamptonholding.com.