People fixated on China's perceived slower growth rate and debt problems are at risk of missing an exploding digital China at the very forefront of the Fourth Industrial Revolution with huge global implications.
A McKinsey Global Institute report of December, 2017 - Digital China: Powering the economy to global competitiveness - shows how:
- China accounts for 42% of global e-commerce – more than France, Japan, the U.K. and the U.S. combined.
- Mobile payments are used by 68% of China’s Internet users, totaling $790 billion last year — 11 times more than the U.S.
- China’s venture capital industry has exploded from $12 billion in 2011–13 to $77 billion, or from 6% to 19% of the worldwide total in 2014–16. China leads the U.S. in fintech venture investment.
- The BAT companies – Baidu, Alibaba, Tencent – account for 42% of the venture funding in China, compared to 5% provided in the U.S. by the FANG companies - Facebook, Amazon, Netflix and Google.
- The U.S. remains far ahead of China in venture investment in areas like AI, big data and robotics.
- While China leads the world in digitization of commerce, U.S. industry is 3.7 times more digitized than China, although the gap is rapidly narrowing from 4.9 times in 2013.
There are three digital forces at work -
- Disintermediation - cutting out the middleman services
- Disaggregation - fragmenting customer services e.g. shared mobility
- Dismaterialization - shifting from the physical to the virtual, unbundling demand with digital delivery and enabling consumers to receive products or services anytime, anywhere.
They are poised to shift 10 to 45% of the revenue pool by 2030 across players in four key sectors - Consumer goods and retail, Automobile and mobility, Healthcare and Freight and logistics.
This digital game-changer is very much supported and promoted by the Chinese state. It is viewed as a key to drive higher productivity, keep pace with the Lewis Turning Point of dwindling surplus rural labor, and to help realize the China Dream of innovative renaissance.
Download MGI-Digital-China-Report-December-2017 (1)
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