Learning from China, the world’s largest mobile economy

Not everything that happens in China translates to America, Europe, or other mobile markets. But failing to pay attention to what’s happening in the world’s largest mobile economy is probably not a good strategy for staying on the cutting edge of mobile.It’s not a shock that China is massive:

• Smartphone shipments of 250 million just in the first 9 months of 2021
•  932 million mobile internet users
• Mobile commerce totalling $2.3 trillion in 2020, more than half the global total (and 90% of this happens via mobile devices)
• Almost 800 million mobile consumers buying and selling online

So I spent some time with the trilingual Moonie Zhu, co-founder and managing director of eTOC, which specializes in helping Western companies do business in China and with Chinese companies. My goal: understand some of what life is like in China in terms of mobile penetration and use, and understand what that might mean for the West in a few years.

Some of the key takeaways from our conversation:

1. Cash is shocking, even confusing
We know most payments in China are digital, but viscerally grokking that is another matter. Cash is literally not even a payment option in many places in China. When it is, it’s so uncommon that staff at restaurants may not even know how to deal with it.

2. The Chinese fan economy puts the hard in hard core
Imagine the most passionate cheesehead at a Packers game, or a diehard English soccer fan with her face painted red and white and her voice broken from too much cheering. That’s sort of on the level of the supporters of many Chinese influencers, who are projected to spend 140 billion RMB (about $22 billion USD) in 2022 on social commerce via key opinion leaders.

“The fans in the fan circle will frequently purchase music albums of course, or products endorsed by their idols, as well as actively and repeatedly generate posts and comments on social media.”

This is not passive following. This is ferocious promoting of their “idols” popularity, reputation, and business success, Zhu says. So ferocious that the Chinese government has recently taken steps to reduce influencers’ influence and popularity.

3. Livestreaming commerce is popular entertainment
It may take being up until 3AM to make The Shopping Channel entertaining for westerners, but Chinese people watch their favorite mobile personalities sell just about anything (and buy frequently).

One livestreamer, Austin Li, has almost 70 million fans and outsold Jack Ma in a lipstick-selling contest. (Pretty sure a goat could outsell me in a lipstick-selling contest.) He streams daily — sometimes more than once a day — and once sold 15,000 lipsticks in just five minutes.

These sessions move fast and there’s pressure to get items before they sell out: apparently one consumer bought a sofa before really understanding what the sale item of the day was.

4. Platforms are even more antagonistic in China
Amazon and Google may not be best of friends, but if you search for a product on Google, you’ll see some search results for products on Amazon and other organic results as well as Google shopping ads.

Not so much in China.

Products for sale on JD or Alibaba won’t show up on Baidu (China’s Google), Zhu says, as the platforms want you to go directly. It’s gotten so bad the Chinese government has told big (red) tech to interoperate better as part of its antitrust crackdown.

5. Grandpa and Grandma are hip, digital, mobile
There’s definitely an age gap in mobile-firstedness (yes, I just invented that word) in the West, and at some level that simply has to hold true in the East as well. But not nearly as much, says Zhu.

“Everybody uses the internet, actually … even my grandma often buys things online … after the pandemic, the number of elderly consumers has increased significantly because they have to shop for food online.”

I’m guessing some of our parents, never mind grandparents, might starve if they had to order their food and groceries via mobile. In China, that’s a bit different.

6. Horizontally-integrated technological ecosystems dominate
In the West, we might search on Google, buy on Amazon, socialize on Facebook, and check the latest buzz on Twitter.

Not so much in China.

“Facebook, Google and Amazon … are individual technology platforms and kind of walled gardens. But in China it’s called … ecosystems. So if you go to the Alibaba ecosystem or the Tencent ecosystem, when you are visiting one of those ecosystems, you can search, you can social, you can commerce, logistics, payments, et cetera … they are all seamlessly blended together.”

That of course goes hand-in-hand with the super-app mobile experience that is fairly uniquely Chinese at this point.

It’ll be interesting to see how the big Western platforms evolve over time in relation to this. Some consider, for instance, Apple Music to be a social platform because you can share content, follow people, and more. Google built something social in Google+ which it shut down, but YouTube could also be considered social.

What does this mean locally … and in China?

Clearly, if you’re going to expand to China, you need to adapt to the local modes of doing business.

That’s increasingly hard for western companies, however, with LinkedIn and Yahoo recently pulling out, and China blocking many other American tech companies. In addition, China’s recent crackdown on its tech sector, which is focused on redirecting Chinese innovation to core industrial and strategic needs, controlling public conversation, and realigning power and wealth in the country, also makes it much harder for outsiders to penetrate.

The flip side is what we can learn.

Older generations in the West will increasingly be tech-savvy. Platforms do battle here as well, and it’s getting increasingly difficult to to mix and match mobile-connected smart home technologies, for example, between Amazon, Apple, and Google. While influencers are extremely hot now, we’re not seeing huge uptake of mobile-first livestreaming commerce yet. (TikTok might have something to say about that, of course.)

But one thing we can foresee is the increasing marginalization of cash and the concurrent increase in the use of Apple Pay, Google Pay, and other wallet technologies to pay with our phones. (And have all our ID on our phones as well.)

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