恭喜发财 … Time for Chinese innovation, inspired by the red fire monkey!
February 8, 2016
Gong Hey Fat Choy! This Chinese new year is all about innovation.
My Chinese father in law tells me that the red fire monkey represents leadership and creativity, and values the fortune of nurturing those who you lead. By engendering the spirit of success, the monkey zodiac is considered to be a symbol of business property, inspiring confidence amongst business leaders.
More generally people born in the lunar year of the monkey are characterised as lively, quick-witted, curious, innovative and mischievous. They are said to be smart, clever and intelligent, especially in their career and wealth. And, apparently, their gentleness and honesty bring them an everlasting love life.
Whilst China’s exponential business growth has certainly slowed in recent times, it has also changed.
China’s GDP growth reached 7.4% in 2014 (the first time the target was not exceeded). Chinese growth has been slowing, as has investment. This slowdown could reflect the limits put on credit to manage the real estate boom or could actually signal a more structural and long term trend of deceleration. What is not up for debate is the rebalancing taking place in the Chinese economy, with private consumption contributing more to GDP. Rising income and social safety net reform will accelerate this trend, leading to even more consumption and lower savings. As the Chinese population ages, healthcare spending is likely to rise.
Read this: A Rebalancing of the Chinese Economy
As its citizens become more used to urban and material lifestyles, expectations and aspirations have changed. Smartphones and digital media have become the norm within cities, whilst luxury is more accessible, and even local. Rather than a rush to produce, to be cheap, the best Chinese companies have started to think bigger and different. To innovate.
Two months ago I spent a great few days with Kaiser Kuo, the director of international communications at Baidu. Three Chinese technology businesses are battling to shape the future of business in China, and far beyond. In many ways, Alibaba, Baidu and Tencent are set to shape the next decade in a similar way to which Amazon, Facebook and Google shaped the last. Whilst Alibaba is more retail, Tencent social, and Baidu search, the difference is that they all combine the components of social media, online retail, search and payment. They are also all searching to extend beyond the internet, and beyond China too. The rapid evolution of technology and new business models on the back of China’s economic revolution is fascinating, and in particular, the explosion of O2O businesses.
Here are some more of the Chinese businesses and their innovations which have caught my eye, and think the rest of the world could learn from:
Alibaba is a trading platform for the new world order, enabling a small business in remote China to deal directly with a large corporate, for any entrepreneur to access a global marketplace. Jack Ma grew up in Hangzhou, China. Having twice failed the entrance exam, he trained to be a teacher, but soon found himself, at the age of 25, lecturing in international trade. Friends in the USA helped him develop his first website, China Yellow Pages, which friends back home were amazed by. But Jack had bigger ambitions, for himself, and Chinese business. Alibaba has created around $220bn value in 15 years.
Alibaba is one of the 100 case studies in Gamechangers.
Haier is the world’s largest white goods business. The Chinese company was born out of old and bankrupt manufacturing business, but used a spirit of entrepreneurship – and a structure that created hundreds of profit-sharing small business units – to revitalise itself and grow rapidly. From affordable cookers and fridges, it has stretched far and wide, from robotics to new ways to do life’s essential tasks. One example is Codo, the world’s first “pocket washing machine” along with a rapid stream of innovations.
Lei Jun is often called the new Steve Jobs, not least because of the way he sees the future, and inspires the crowds to come with him to explore innovations they never realised they needed. 3 years after launching his first smartphone, the MiPhone, Xiaomi is now the world’s third largest smartphone brand. But that’s not even Lei Jun’s business, he sees himself much more in the knowledge business, harnessing digital media and information to make life better. The $10 MiBand fitness tracker is just one example, available now worldwide at a fraction of the price of the Jawbone or Fitbit. Health and fitness is addictive, and the data that flows from the user, is a highly accessible way for consumers to start exploring the Xiaomi ecosystem.
Xiaomi is one of the 100 case studies in Gamechangers.