Inside Digital China With Jeffrey Towson


High at one for police station. We We'd ask Jeff we had a speaker on China and Asia that grants visas professor at Beijing University and older older of a great book which is really a quick greeting driven understanding about China which is called the one hour channel Hannibal so thank you Jimmy disquisition Jeffrey now pleasure to be here. Thank you so let's start from urology actually actually get you know to study the Chinese Market Economy Ellison your story I just a sort of international international business guy doing a lot of deal stuff's out of the Middle East and slowly started doing more with Asia this is good fifteen eighteen years ago and I was sort of half in the developing world in half in the US and it was pretty clear that Asia was the place to be early early on and China and Asia was just going to be a huge story so I was kind of on the ground is pretty obvious what's going to happen so I started focusing more and more on China Asia and I've been doing that ever since I still keep about half my time in China half my time in the US which is just an endless opportunity 'cause there's always new stuff to do and it's also pretty enjoyable lights so that's kind of where I settled days one foot in China one foot in the US which is gets more and more more interesting every single year absolutely of course suitable also to see all the things and the differences and similarities between Howelsen Woodson the the landscaper right now that the most interesting backup tech companies probably messy before for for a few years and I guess your good spectator and also protagonist of these which is interesting so and then in the book you actually mentioned seeks Mega trends that shape than actually are s shaping China in the Chinese economy. I am looked at those make sense. Can you give us just a short as an option about Those ones will be this is a CO author author. Jonathan Mackenzie we know China's confusing and there's a lot going on. It's a big place very complicated and what we did is we sorta pointed. Look at least major economic trends happening that our long-term these. Are you know thirty forty year trends if you if you I can understand those a lot of the chaos becomes a lot more understandable and so the trends. We started to look at where things that were driving. The revenue are the cost structures of companies and out of that we we identified sort of six number one. We is urban as ation just the fact that in China reopened to the world nineteen eighty about eighty percent of the population west farms and twenty percent in this city which is usually pretty much the inverse of most developed countries I so there's just been a steady movement of people into cities which is still happening today. That creates a lot of economic drives. We also like to things like manufacturing manufacturing scale just a lot of money capital rising Chinese consumers which is something that's really become important in the last five to ten years. I digital China and then what we call brainpower behemoths which is just there's there's more and more people with advanced degrees. China's not liking us to be in nineteen ninety minutes engineers and PhD's and artists and a lot of advanced skills now so we kind of looked at those six EXC trends and that that's held up pretty well over time. This little model used a lot of most of the major companies. You see are writing one or two of those trends so so far it's held up. Its minimum four to five years so we'll see but I think it's pretty solid most of those. Things are going on for at least another decade gate if not longer and then we'll say interesting. What time do you think it will be really going on a steeler in the in in the next I mean of course the Sikhs Mega as you said that we would be going on or thirty four thirty forty years but some of them really started the banking the against inspecting the eighties so those spence that you see losing momentum and which ones are the ones that I really any moment I can get. You know it'd be nice to from your side perspective random in the ones that were easier to predict where urbanization manufacturing shrink capital just a lot of money because it's just been steadily narrowing. I mean it's literally a linear line. Just dry nineteen eighty two today and it's just a stray raid law. The ones were little more unpredictable. Were rising Chinese consumers which you know they were not really an economic factor ten years years ago. People didn't talk about Chinese consumers ten years ago. They weren't buying much even know they had income and savings well. That's changed dramatically in the last five to ten years now. It's the world's largest market for audio for gaming offline gaming cinema movies and one industry after the next day become the largest argest marketplace or in the top two so that one's sort of a late bloomer and then digital China which is one of our six is the most unpredictable acas crazy stuff happens all the time most of the China. The digital consumer stories really about consumers. I'm sure most of the digital China's story is mostly about consumers honors. that's where things are really happening. Fast Alibaba ten send social media all that that's a lot of China who turn out are almost almost entirely digital creatures. You know you can't talk about Chinese consumers without talking digital anymore. Everything happens on a smartphone. That's probably the most awesome predictable one but it's moving quick now each missing and you said at the beginning knitting these bedding posted to stress out because a steeler for many people. China is blocked by the very complex set county which is a male of many classes as you. I liking the in the book but did the digital megatrend like Internet Essa changed in China lagged in terms of society consumers would seeing now consumers is his main. Everyone knows a lot of them. That's not a big surprise. Everybody knows that they're rising in their wells. I think the part that gets under appreciated is how complicated they are. China's is arguably the world's most complicated consumer market now it is just you can look at thirty million. Chinese consumers live in caves. You can find Chinese consumers in the far west. Were you got several hundred million of them. That looked like a different country. You go to downtown Beijing. You get more billionaires in Beijing in New York City so there's a huge fragmentation and complexity to them. and it's just getting more so because you know there's a lot of them so we get a lot of anything you're. GonNa they get a lot of complexity and to you still get this big spread between very very developed market behavior like Beijing and Shanghai and you know okay that's out in the field and in the mountains and so you know it's just this hugely complicated subject in the only way you can really understand and Chinese consumers at this point. Is You have to go small. You have to study micro populations Chinese moms sports enthusiasts inland consumers DADS. You have to break it up that way and you find out people are very different YEP. He in Buca Luke Action Yields Twilight one point which I found very interesting in Sao actually people consume the consumption of the Internet sites okay to be more intense or for for Chinese especially young people compared to two west Westerners and is it something that it's still valid today. I mean they still like more time spent on the Internet on digital devices compared to the West Yeah basically I mean everyone knew that was going to be a lot of people with smartphones mark bones in China. That was pretty predictable. Seeing the same thing in India Indonesia places like that. I think what surprised people was how enthusiastic they are they just doc things faster than other countries APP mobile apps off like crazy and they they spend more time online than other consumers in other countries. They contribute more they post more. They add content more so just turns out they. Are you know some of the world's most enthusiastic netizens are Chinese. You know that wasn't necessarily predictable but it's true the other thing to keep even mind. Is You know there's a difference between regular consumers who go down to the supermarket by apples and online consumers because the online consumers effectively operate like network you know it's not just one person that person's sharing with another person sharing their interconnected and if you have three hundred million Americans or three hundred fifty million Americans. There's a certain number of connections. You'll get between them. When you have a billion Chinese consumers. It's actually exponentially financially larger so digital. China effectively operates like a network and it's very rapid very vibrant so so that part is sort of showing itself when you see a new aspect off in China. It goes for nothing to a hundred million users in two months three months now. We don't see that anywhere else that I've seen right and I thought it was interesting to see. Nowadays is a bit of a bads in the marketing world because they said these schools that the talk which they claim to be combated in like in social media space by finding because they sort of in some cases compare the metrics the users acquisition of blood from Lake that we the we we waste about a dozen the make in some ways. It's much sense because as you said I mean it's very eat steady easy to the up went up Atlanta actually they they might get Eddie began than median us so I think it very important to the seldom understanding of China and when he just something he's also that in China that he said that the phenomenon of a super APPs which is something that we didn't yet I guess seeing though in the in the West which makes me think that of course intend as technology China's evolved by looking at you know how Western companies any state companies work actual of the since it was more a I think a couple of years ago looking more in depth at the by do business business model but what I found interest with that right now recently they company like by do is not just a coping a something like a company that Google but actually innovating each way so it's waiting its own innovations as many things actually will will doesn't ever as well as always interesting to see these scandal. I mean what we'll do. They will you see on that standpoint. How does that look like right now. In China China obviously from the West and use any of combining the yeah I mean it's most people in I'd say the United States they got on the Internet by PC. You sit at home. You have your laptop your desktop. They discovered g mail than a couple years. Slater discovered youtube and they slowly adapted various tools over time that didn't happen in China. People basically joined around two thousand nine in two thousand ten only on their smartphones mostly. There were some users before that was very small and they got all these tools at once you know they went from nothing thing to. I've got a smartphone. I can do messaging. I do online video like drawing gaming so they kind of jumped in the deep end of the pool and they've only know the Internet on smartphones and the difference between a smartphone in a P. C. Is One you you work at home your office and then you leave the other one you carry with you all day long so they carry these around all day they message they take photos they watch videos all of that and one of the things that it was different early on people don't use email you send an email to someone in China. You better wait a week. 'cause permanent going to check their email. It was all about messaging so it started out with messaging with Q in that led to we chat and then from there they added payment which Allie pay in and we chat wallet and once you had messaging in and we chat take mobile payments set up that enabled you know e commerce to happen on your your phone anywhere you happen to be during your day that was the basis of the Super App and it turns out people just live on their smartphones. It becomes sort of the operating operating system for your life but we didn't see any of those three steps in the US you know people weren't living on WHATSAPP as much. Although they kind of are now they were using email they didn't adopt mobile payments because they were using credit cards which worked fine not awesome but they were functional

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