Chinese consumers ahead of the pack thanks to local tech
Industry watchers expect an explosion of Chinese brands and companies after Internet giants like Baidu, Tencent and Alibaba created a platform for local entrepreneurs to quickly navigate the market landscape and cater to the needs of consumers, while global brands will have difficulty keeping up.
“The sophistication of Chinese consumers have also evolved and is already staying ahead of other parts of the world with the advancement of technology and smartphone applications," said Andrew Cosgrove, Ernst & Young's Global Consumer Products & Retail Sector Knowledge Leader.
"The limits of a number of industry segments are blurring and companies need to build up an ecosystem so that they can work closely with collaborators," he told Shanghai Daily.
"Industry convergence has been taking place in food and beverage and life sciences as well as media and entertainment businesses," he noted.
At the same time, manufacturers would need to offer tailor-made products or designs to Chinese customers.
This has already happened in China, with some medical service providers moving their research and development capability in China to offer local medical service providers more cost effective models.
Eric Chia, consumer product and retail leader for EY China, also expects China to take the lead in various aspects including consumer engagement, technology upgrades and digital, instead of just being a follower.
Technology disruption will be even faster in the next decade when it comes to the consumer market, and is happening faster in China. This means companies will be better prepared for technological shifts and stay ahead of competitors, he added.
The International Data Corporation anticipates there will be 28.1 billion connected devices by 2020, not counting smartphones, tablets, and computers.
Chinese technology companies — Huawei and Tencent being just two examples — are putting more effort into research and development, which means Chinese tech companies are becoming important platforms for entrepreneurs, ranging from driver-less cars to shared bike services, Chia noted.
China is also redefining retail models and has made significant steps toward the reinvention of the customer experience.
With technology upgrades, companies such as Xiaomi and Oppo are able to compete on a global level while seeking overseas expansion. Chinese home-designed technology, such as the high-speed rail network, will be exported to overseas countries at an even quicker pace over the next ten years, he added.
Consumer goods companies and retailers need to stay ahead of consumers and predict what they want, and artificial intelligence will play a role in offering consumer a variety of choices.