Great Po­ten­tial for Emerg­ing Tech­nolo­gies in China In­ter­net In­dus­try

China's Foreign Trade (English) - - Industrial Watch - By Rui Li

In 2017, the In­ter­net in­dus­try in China for­mally bid farewell to the rapid growth of the past few years and com­pleted the tran­si­tion from an in­cre­men­tal mar­ket to an inventory mar­ket, em­brac­ing a new stage of devel­op­ment.

Re­cently, the IDC re­leased the “Per­spec­tives on Top Ten Trends for China In­ter­net In­dus­try in 2018”, in which the IDC pre­dicted the de­vel­op­ing trends of Chi­nese In­ter­net in­dus­try in 2018 and in the next three years, cov­er­ing the macro-en­vi­ron­ment, hot mar­ket is­sues, user de­mand, prod­ucts and tech­nolo­gies. Xue Yu, a se­nior an­a­lyst from the IDC China of In­ter­net in­dus­try, said: “In 2018, In­ter­net-based in­dus­tries in China will start to grow in­ten­sively, and it will be­come more im­por­tant to vi­tal­ize th­ese ex­ist­ing users than to at­tract new ones. The com- mer­cial­iza­tion and scale devel­op­ment of ar­ti­fi­cial in­tel­li­gence, block chain, In­ter­net of things and other emerg­ing tech­nolo­gies is ex­pected to bring great po­ten­tial, strengthen the ties be­tween new tech­nolo­gies and the busi­ness, stim­u­lat­ing more new busi­ness for­mats to come. In the new stage, In­ter­net com­pa­nies should at­tach more im­por­tance to the devel­op­ment and ap­pli­ca­tion of emerg­ing tech­nolo­gies, to gain first-mover ad­van­tage.”

Fore­casts by the IDC for China In­ter­net in­dus­try in 2018 are as fol­lows:

Fore­cast 1: The trend of the dig­i­tal econ­omy

By 2021, up to 45% of Chi­nese In­ter­net com­pa­nies will co­op­er­ate with tra­di­tional in­dus­tries to pro­mote the devel­op­ment of dig­i­tal econ­omy.

In China, dig­i­tal trans­for­ma­tion will be the core driv­ing force for fu­ture economic devel­op­ment. IDC be­lieves, as one of the most im­por­tant na­tional strate­gies dur­ing the 13th Five-year Plan pe­riod, China will speed up the im­ple­men­ta­tion of “In­ter­net+” policies. As the de­mo­graphic dividend is de­creas­ing, more In­ter­net com­pa­nies will turn to tra­di­tional in­dus­tries to seek for op­por­tu­ni­ties in in­te­grat­ing In­ter­net tech­nolo­gies with tra­di­tional in­dus­tries, to in­no­vate their busi­nesses and ben­e­fit from the dig­i­tal econ­omy.

Fore­cast 2: The in­flu­ence of China’s Belt and Road Ini­tia­tive

By 2020, 30% of Chi­nese mo­bile In­ter­net com­pa­nies will de­ploy in over­seas mar­kets, es­pe­cially the coun­tries and re­gions par­tic­i­pat­ing the Belt and Road ini­tia­tives.

The rapid devel­op­ment of In­ter­net

in­dus­tries makes China a world leader in terms of In­ter­net pen­e­tra­tion rate, busi­ness mod­els, tech­no­log­i­cal strength and cap­i­tal ac­cu­mu­la­tion. There­fore, ex­ports of tech­nolo­gies, prod­ucts and busi­ness mod­els now has be­come a new choice for some mo­bile In­ter­net com­pa­nies.

Fore­cast 3: Plat­form ecosys­tem

By 2021, nearly half of In­ter­net dig­i­tal ser­vices will come from the open API Ecosys­tem.

The com­pe­ti­tion among In­ter­net in­dus­tries in China now has es­ca­lated into com­pe­ti­tion among the ecosys­tems, mean­ing the plat­form be­ing the core tar­gets for in­no­va­tion, devel­op­ment and mar­kets. The great network ef­fect will con­tinue to en­hance and ex­ert in­flu­ence on the world.

Fore­cast 4: Cloud com­put­ing 2.0

By 2021, the spend­ing on cloud com­put­ing ser­vices by Chi­nese In­ter­net com­pa­nies will reach nearly USD 3.5 bil­lion.

In the past few years, var­i­ous clouds gained pop­u­lar­ity among Chi­nese In­ter­net com­pa­nies, with many now adopt­ing a strat­egy of “cloud first” or even “cloud only”. As the im­ple­men­ta­tion of “In­ter­net+” strat­egy and the wave of “mass en­trepreneur­ship and in­no­va­tion”, a great many of in­no­va­tive In­ter­net com­pa­nies de­velop prod­ucts and ser­vices and op­er­ate on cloud plat­forms.

Fore­cast 5: Pop­u­lar ar­ti­fi­cial in­tel­li­gence

By 2020, more than 90% of In­ter­net prod­ucts or ser­vices in China will be in­te­grated with ar­ti­fi­cial in­tel­li­gence ca­pa­bil­i­ties.

The ties be­tween In­ter­net in­dus­tries and ar­ti­fi­cial in­tel­li­gence are quite close, as en­ter­prises gen­er­ally be­lieve that ar­ti­fi­cial in­tel­li­gence rep­re­sents the trend for next era af­ter PC In­ter­net and mo­bile In­ter­net. And now th­ese In­ter­net gi­ants like BAT are ac­tive in ar­ti­fi­cial in­tel­li­gence mar­ket, in hope of get­ting a bet­ter po­si­tion in the emerg­ing fu­ture.

Fore­cast 6: Pi­lot­ing in block chain

By 2021, more than 30% of In­ter­net com­pa­nies in China will take mass ap­plied block chain ser­vices as the foun­da­tion of dig­i­tal trust.

So far, the great­est threat to the devel­op­ment of dig­i­tal econ­omy has been the con­stant ero­sion of trust, es­pe­cially with in­creas­ing vul­ner­a­bil­i­ties in cy­ber se­cu­rity. Sig­nif­i­cantly strength­en­ing dig­i­tal trust is the num­ber one pri­or­ity for the dig­i­tal econ­omy. As IDC ex­pects, the era of block chain will re­build dig­i­tal trust, put­ting an stim­u­lus to the devel­op­ment of IT in­dus­try and even the en­tire dig­i­tal econ­omy.

Fore­cast 7: Fiercer com­pe­ti­tion in new re­tail mar­kets

By 2019, more eight out of ten Chi­nese e-com­merce en­ter­prises will de­velop an ar­chi­tec­ture of user ex­pe­ri­ence sup­ported by ar­ti­fi­cial in­tel­li­gence, mark­ing an in­crease of 30% in the con­ver­sion rate, and boost­ing the on­line re­tail sales in China to USD 1.6 tril­lion.

At the end of 2016, the con­cept of new re­tail was put for­ward, and 2017 wit­nessed many Chi­nese In­ter­net com­pa­nies en­ter­ing new re­tail mar­ket. In ad­di­tion to the two gi­ants of Ali and JD who are deeply in­volved in en­tity re­tail in­dus­try, Ten­cent started new re­tail busi­ness through buy­ing in shares of Yonghui Su­per­store and align­ing with JD and VIP shop, while many oth­ers like YAN XUAN, Miss Fresh, Xing­bianli and Bin­gobox started in dif­fer­ent ways by fea­tur­ing qual­ity, fresh­ness or 24-hour un­manned ser­vices.

Fore­cast 8: A boom­ing shar­ing econ­omy

By 2019, the shar­ing econ­omy in China will main­tain a high growth rate of over 50%, with the mar­ket size of rid­ing shar­ing up to USD 67 bil­lion.

In 2017, Chi­nese shar­ing econ­omy de­vel­oped at a high speed, and came into be­ing a lot of new busi­ness mod­els and modes, push­ing the dig­i­tal trans­for­ma­tion in so­ci­ety, in­dus­tries, en­ter­prises and con­sumers.

Fore­cast 9: Up­grades in video con­tent

video in­dus­try, and the ra­tio of high­qual­ity con­tent will rise re­mark­ably.

As the trend of pan-en­ter­tain­ment deepens, the com­pe­ti­tion among on­line video plat­forms is shift­ing to IP (In­tel­lec­tual Prop­erty), and the cor­re­spond­ing costs are get­ting higher and higher. Cut­ting such costs with home-made con­tent and im­prov­ing prof­itabil­ity now have be­come the com­mon choice for ma­jor video plat­forms.

Fore­cast 10: The in­te­gra­tion of mo­bile pay­ment meth­ods

By 2019, more than 70% of the ex­ist­ing play­ers in in­de­pen­dent mo­bile pay­ment mar­ket will change their sta­tus, and through com­pe­ti­tion, merg­ers and ac­qui­si­tions, mo­bile pay­ment ser­vice providers will be in­te­grated into a com­pre­hen­sive fi­nan­cial ser­vices ecosys­tem.

The mo­bile pay­ment sys­tem in China has been suc­cess­ful, as it not only pro­vides con­sumer with much sim­pler, cheaper and more con­ve­nient pay­ment meth­ods, but also can be in­te­grated into a larger ecosys­tem, which in turn at­tracts more con­sumers and en­ter­prises to form plat­form-based In­ter­net ecosys­tems through mo­bile pay­ment, greatly im­prov­ing the vi­tal­ity and com­pet­i­tive­ness of pay­ment en­ter­prises.

In 2018, In­ter­net­based in­dus­tries in China will start to grow in­ten­sively, and it will be­come more im­por­tant to vi­tal­ize th­ese ex­ist­ing users than to at­tract new ones.

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