May, 4th 2015
« Over 1B people are using mobile in China. There are +/- 600M mobile internet users. Mobile internet is the real internet » said Eric Li, VP Baidu.
All over GMIC halls, mobile apps were popping from bodyguards to massages services (tested&approved). Beauty is a hot category: simultaneously launched in May 2014 in France, the US and China, MakeUp Genius app has been downloaded 3 Million times so far in China according to Asmita Dubey, CMO of L’Oreal China. Certainly part of the success, the rising importance of virtual appearances, as well as a strong local insight : Chinese women are shy at trying makeup at the counter, so mobile brings what’s needed of privacy.
Following my GMIC 2014 coverage, here are 7 take aways of this year « Mobile Everything » edition of the Global Mobile Internet Conference held in Beijing April 28-30 which gathered more than 30 000 people. The ambiance ? Chinese tech is hotter than ever, huge confidence ! Worth noticing Israël offensive which had its Pavillon, its embassy visiting, and a few start-ups, including Visualead – in which Alibaba invested, and who came for the first time in France at China Connect last March), and in parallel the noticable absence of France (but Cheetah Mobile was quite seen and heard, and reminded it recently bought MobPartner)
1- Of Neuromarketing
In the keynote session « How Our Brain Drives Our Judgment on Brands », Brain Intelligence consultancy firm’s Founder & CEO Roy Tang, introduced her demonstration showing first a speech of former President Hu Jintao, followed by action/sex movie scenes. And asked the audience which one more excited them… Shy laughs but hands up!
She told how she cooperated with Tencent using neuroscientific technologies to evaluate players’ real-time emotion reactions and experience for their PC and mobile video games, and made the necessary adjustments to make higher level contents more exciting for gamers to engage further. She also shared why Xiaomi is successful (no TVC ad, product focus…) and was, still based on those neuroscientific technologies, the mobile phone brand winner vs One+, Smartizen, or the iPhone. Xiaomi who sold 14.2M phones in China in Q1 2015, announced they were still the N°1 Chinese smartphone brand, beating Apple and Samsung
Li Ya, President Phoenix New Media in an other session seemed to agree with Roy Tang : “Xiaomi may outlook Baidu/other platforms for interest searches and accurate marketing“.
2- Of driver-less & smart cars, and taxi apps
If last year Yonche app had bigger than life black limos standing at the entrance of the National Convention Center, more modest red AA cars “Anytime Anywhere” welcomed visitors at GMIC 2015. But William Wang, CEO of AA Car was firm: “Our main competitor is Uber“.
Year-on-year the private cars/taxi hailing-app market heats up. While being in a regulation (as else where in the World; last week authorities raided Uber’s Guangzhou office), and concentration phase (Alibaba/Kuadi Dache and Tencent/Didi Dache merged in February and now control 90% of the business), the latter doesn’t slow down intitiatives, an all seem to compete against Uber, backed by Baidu.
More on Uber strategy in China with Candice Lo, Head of Greater China Expansion
The automotive industry is definitely a high tech battlefield. Tencent, AliMusic, Ford or Kaola FM discussed its future. « There’s no business model, we’ll talk about it in a few years, we want to provide apps for the moment » said Ji Mingzhong, Senior Product Director at Tencent.
Self-driving and Internet-connected automobiles (Baidu-BMW partnership, LeTV working on an electric car) have made recent headlines, so the Shanghai Auto Show April 22-29, was the place for the latest ones, such as, « Project N » a China-made concept smart car by Pateo Group, or Alibaba, who sees opportunities beyond smart cars, and showcased a host of internet based services from online financing and insurance, to online booking of oil changes and other maintenance, to used-car sales. In the works, a mobile app called “Car Owner+” that will help dealerships and other merchants provide individual services to customers. The leading e-commerce player says things are really moving, with luxury autobrands such as Jaguar Land Rover, or BMW opening Tmall stores these past months, after Geely launched the first flagship e-dealership on Tmall in 2010.
3- Of O2O
Ecommerce had its first forum which only lasted half a day. Probably because it’s so much part of Chinese consumer habits, and that O2O is The topic. For Edward Feng, co-founder of review app Dianping, « the O2O fever is going on and will last. We have a restaurant, you can book a table, use iPads to order, scan to pay: there’s no need to speak with waitresses“. “We have 100 millions Tenpay customers, payment is linking on&offline. But if payment is a necessity, we want to be social, we want people to share: we encourage them to use WeChat” said Howe Zheng Assistant General Manager Tenpay (Tencent).
Unfortunately nothing has been revealed of « Wanda E-commerce » concrete moves following the last August’s announcement (Tencent/Baidu/Wanda association to develop O2O and better compete with Alibaba).
When Eric Li, VP of Baidu was challenged on Baidu Map being less successful than Alibaba’s Auto Navi, he answered, relaxed: “the delivery boy needs maps, and the delivery boy will more help women than their boyfriend or husband will…”
4- Of Apps
According to Danielle Levitas SVP Research & Analysis App Annie, key leanrings in China are:
• Increased competition from the large screen phones vs tablets,
➢ Larger iPhone 6 and iPhone 6 Plus in high demand
➢ As of April 2015, mainland China has 21 Apple Stores across 11 cities, up from just 8 in only Beijing and Shanghai in October 2013
➢ Apple is on track to reach 40 stores in Greater China by mid-2016
➢ iPhone 6 launch was the first time that Apple could launch with all three of China’s mobile carriers at the same time
• Android’s lead on app download is expanding, while IOS extends App Store revenue, China and US being the core markets
• China’s iOS quarterly downloads grew 30% between Q1 2014 and Q1 2015, while remaining relatively flat in the US allowing China to become the #1
• Lifestyle, Entertainment and Photo/Video in China rode the wave
➢ Entertainment was helped by key video streaming providers’ content strategies
➢ Photo & Video was assisted by enhanced sharing capabilities from iOS 8’s new App Extensions feature
➢ Lifestyle was aided by m-commerce and related apps
➢ Growing 385%year-over-year on revenue in Q1 2015, the Entertainment category demonstrates the future revenue potential for iOS in China
China is now the world’s largest smartphone market. For Ben Evans of Andreessen Horowitz “There are, say, 100 million people in China who can buy luxury goods, and they want the best”. And Mobile analyst Avi Greengart summarizes the demands of the Chinese consumer as follows: “Chinese consumers prize status, absolute value, and local content“. “The local content aspect is Apple’s greatest weakness so far, and it’s where the local manufacturers continue to hold an advantage”, according to Vlad Savov of Verge.
5- Of Robotics
Hiroshi Ishiguro, Professor at Osaka University was back at GMIC for the 2nd year, transporting us into the future one step forward, with the android Yangyang on stage. A whole day was dedicated to Robots, Artificial Intelligence, Virtual Reality…For Eric Li, VP Baidu : «Robotics will be later, the next popular topic – because it will take time. For the moment, we must keep on saving people’s time, or make them lazy».
GMIC 2015 by TV station CCTV
6- Of Entrepreneurship
According to the Ministry of Science and Technology, “new businesses are sprouting at a record pace, with China’s Silicon Valley birthing 49 start-up a day in 2014 and 1000 organizations investing in start-ups with capital exceeding $56 Billion”. Giving up government jobs to seek fortunes at startups or in the private sector, and become entrepreneur is a broader shift in China, as the economy slows and state backed companies falter, just as crackdown on corruption makes it less prestigious and lucrative to be a civil servant
“The brightest of our generation no longer yearn to be in the system. As long as you have the caliber, there’s a real possibility you can make it in the market. Bright people are restless” says Nymar Li, 34 years old to ChinaDaily. Gao Xinmin, VP of Internet Society of China said at GMIC : “Mobile Internet is integral to entrepreneurship in China“. And Eric Li VP of Baidu, gave his version of innovation and entrepreneurship, « You can’t maintain a business, you have to keep on innovating. We fear these patients that are not afraid of dying”.
7- Of Change
In this fast evolving (Chinese) market, there’s one moto: change, evolve. But how can you change ? In his presentation « Disrupt or Die, re-inventing the Media Agency Business », Alvin Foo, Head of Airwave, an OMG Mobile Business Unit, first reminded that the market capitalization of the World’s 4 Largest Advertising Companies of about $80Billion, is 1/3 of the one of Facebook, and while agencies are still figuring out what is CHANGE, Facebook is constantly thinking and developing game changing business models. Then, to shift from the « Media agencies= selling ads model » to the one of « Media agencies=platform for ideas and innovation », he reminded some in-house innovations initiatives such as an Hackaton, and the launch in 2014 of the OMD China Innovation Fund, « a program to encourage its employees to unleash their entrepreneurial spirit and be creative with their ideas to build the next big thing in media and marketing », and its acceleration for 2015, partnering with Chinaccelerator. On June 4 2015 in Shanghai, 10 tech start-ups will present their business plans at Demo Day and 3 will be selected to receive a joint investment from OMD and Chinaccelerator to fuel their business growth.
Sheng Fu, Cheetah Mobile CEO didn’t say else, sharing his success story in doing and thinking differently, not cutting prices. «We must create new value. We need to give up the idea to compete with old rivals, and work with more partners. We’re like the (Christopher) Columbus vessels, we must find new continents».
South East Asia is the next big wave of user growth and investment in mobile internet, all VC panelists on stage agreed. Because « consumers today want “any good, anywhere, anytime, on any device” said Rui Ma, China based tech angelinvestor and 500 Startups partner. In his keynote « The Next 50 Years – The Evolution Of The Mobile Internet Industry », Sheng Fu again, whose 70% of Cheetah Mobile users are outside of China, said “In the future, mobile apps, like rice bowls, will be “Made in China”.
Laure de Carayon
Founder&CEO China Connect
Check our coverage of GMIC 2014