Regional Focus: Accenture's View from... China
The Accenture 'view from' series of blogs will take us to a different country each month, giving a light but enlightening insight into those markets' characteristics and daily challenges when it comes to implementing mobility across enterprises.
Stuck like Glue
The Chinese are glued to their smartphones. One Chinese city was recently reported as going so far as to introduce special 'smartphone' lanes on the pavement, for those who can't take their eyes off their screens as they walk . As the largest mobile market in the world and the country responsible for manufacturing half of the world's top-selling smartphone brands, mobile devices have become a necessity. Whether for social use, gaming, shopping or accessing emails, Chinese people will never be far from their mobiles.
With 18% of the world's total mobile phone users, everyday behaviour here has transformed in less than a generation. Social media platforms that are always-on and always-available through smartphones and other devices have become woven into the fabric of society. Platforms such as WeChat have become much more than just the chat app they started as, and are offering a number of additional commerce and payment services.
China's mobile business model differs from other markets, as companies here tend to focus on apps and platforms, rather than hardware. Due to regulation on open APIs, where other markets have just a handful of app stores, China has over 200, and the development of apps and tools for these can become major revenue sources for hardware manufacturers. Low-cost manufacturer Xiaomi, which sells even its highest value handsets at cost price, makes money on the services it sells with devices. This low entry point means that even people in rural China are starting to purchase smartphones instead of feature phones in order to access advanced services.
As China adopts 4G more widely, I think we're going to see even more software development used as a differentiator for hardware manufacturers. It's certainly worth noting that three smartphone manufacturers are expected to be licensed as MVNOs in the near future, which will support this trend.
China's Switching Economy
Last month, Accenture released a study on the digital lives of China's consumers, and it found that brand loyalty in China is incredibly low. As consumers face almost endless choice in products and services, they have become increasingly willing to change providers to go with whoever has the best offer. This 'switching economy' means that businesses have to work harder than ever to get the attention of consumers and convince them to not only switch to their services, but to stay with them. This is one reason why China is relatively advanced in its use of analytics. In order to deliver a superior service, a business has to understand what users want, and to be constantly improving services for differentiation.
The Chinese financial services sector has been massively disrupted by this lack of customer loyalty. Three of China's biggest consumer-facing companies, e-commerce giant Alibaba, web portal and gaming company Tencent (parent company of WeChat, which has over 438 million active users), and search engine Baidu have all launched mutual funds as part of their ecommerce offerings, using them as customer acquisition tools and challenging traditional banks in the process. Mutual funds have significantly higher interest returns than traditional banks, and thanks to Chinese consumers' willingness to switch providers, Alibaba has become provider of one of the largest mutual fund products in the world.
Ecosystems are Everything - O2O
Each of the financial products that we're seeing Chinese companies launch require partnerships if they are to be successfully adopted. Through the payment solutions offered from companies like Alibaba's Alipay and Tencent, merchants aren't charged any fees to conduct transactions, rather they are taking advantage of a free service that benefits the provider and offers a seamless experience to users in their store. The business case is simply around advertising and that all-important customer acquisition.
We've also seen other interesting ecosystem developments. For example, Tencent and Alibaba have both invested in taxi-hailing applications. These have led to taxi drivers scrambling to own smartphones, so that they can take advantage of the app to get fares and remain competitive, as well as take payment directly via the application - a win-win for everyone in the ecosystem.
This coming together of the 'O2O' - online to offline - experiences means that to do something in the real world, you only need one digital application, and this is a growing trend. On the Chinese New Year we traditionally give members of the family and young people red envelopes containing cash to celebrate the new year. This year, we could send 'virtual' red envelopes via our mobiles, which totally changed the landscape of money movement, and allowed users to understand the ease with which they can move money through their mobiles.
Enterprise Mobility is a Priority, and is Well Underway
Enterprise Mobility is moving ahead at a pace in China, and is actually part of the government's five-year plan to increase efficiency. While BYOD is a real headache given the fragmentation in the handset market, employees are increasingly being provided with corporate liable devices to do business on the move. Many industries here are also moving towards true Enterprise Mobility, including in supply chain management, sales force automation and work force management, and rolling out applications to support employees in the field. Utilities, resources and manufacturing are all key industries benefitting from implementing mobility, and one of the key drivers for this - in addition to efficiency - is safety.
Safety is paramount for Chinese companies, and inspections are often carried out to ensure employees are adhering to safety policies and regulations. Mobility is used as a tool for everything from certifications, identifying problems, and reporting from the field for real-time updates. As a manufacturing hub, in order to continue to drive development and growth for China it is important that a reliable, safe infrastructure is in place. When companies are growing at enormous scale and speed, mobility tools can help ensure that everything is done to a high safety standard.
In companies of hundreds of thousands of people spread right across China, mobile devices play a key role in development and collaboration. Whether participating in on-boarding or being instructed to use new equipment or remotely accessing step-by-step guides to an activity, mobile devices make connecting with a huge, disparate work force possible. To help demonstrate compliance with safety standards, mobile devices are also increasingly being used by employees to participate in training programmes to ensure everyone completes courses to the right standard, with reports automatically generated and shared with the relevant teams.
Due to the local regulatory environment, we're starting to see a growing interest in localised Chinese platforms and application offerings, so in addition to using off the shelf solutions, innovation in development is a growth area here.
It's an increasingly common trend in China that manufacturers are offering to build custom wearable and mobile devices for companies. This means that in China, where businesses can have over a million employees, scale works to their advantage as they can order devices optimised for the specific environments in which they're working. The capacity to 'personalise' devices for a business also means that each security or software needs can be met according to the relevant requirements. The growth in these devices will coincide with a growth in the Industrial Internet of Things and the increasing use of sensors and connected devices in industries as diverse as oil and gas and consumer goods development. As more devices can talk to each other and share data, I also expect that our use of analytics in China will become increasingly, and rapidly, advanced, in order to improve business decision making.
The Chinese enterprise market is an extremely competitive one, and when it comes to delivering products and services both at home and abroad, there is a constant and concerted effort to find ways to cut costs and drive efficiencies. Mobility is a trusted and increasingly utilised tool in this effort, and I'm confident that we're well on the way to embracing other digital technologies to enhance, support and safely grow our businesses.