Data Analytics Will Enable China’s Economic Transition

With a huge number of internet users, Chinese companies are missing a trick


Attempts by China’s central government to transition the country’s economy away from exports and investment towards consumption and services has not gone as smoothly as it would likely have hoped. Economic growth in 2015 was 6.9% - the lowest it’s been for 25 years - and in Q1 and Q2 of this year it fell to 6.7%. These figures would seem high in most Western countries, but when it comes to China, it has been a cause for concern. However, there is one tool that could help significantly that has, until now, been relatively underused - big data and analytics.

China has nearly 650 million internet users, almost double the US’s 280 million. It is also the world’s largest e-commerce market, according to McKinsey’s 2016 China consumer report, generating revenue of $615 billion in 2015 - roughly the same as Europe and the United States combined. Its dominance in mobile is especially pronounced, with over 70% of China’s mobile internet users using m-commerce, compared to roughly 31% of US users.

The digital footprint left by all of these transactions is tremendous, and the potential for circumstantial, situational, and demonstrated behavior data can clearly reveal trends in consumption and consumer habits that could help companies create a truly personalized customer experience - boosting sales, increasing efficiency, and improving operations. Although still behind the west in terms of adoption, these advantages are now being realized. In a survey conducted by KPMG International and The Consumer Goods Forum, titled ‘Seeking customer centricity - The omni business model’, 400 consumer retail and manufacturing executives from 27 countries were asked about their top priorities over the next two years - 39 of which were from China and Hong Kong. Three-tenths of those 39 indicated that making better use of data and analytics is one of their top priorities over the next two years.

Despite slower uptake, Chinese companies hold an advantage in their ability to advance rapidly through the maturity cycle. Jessie Qian, Partner and Head of Consumer Markets, KPMG China, explained that, ‘To remain competitive and keep customers happy in a rapidly evolving marketplace, retailers and manufacturers require a deeper, multi-dimensional understanding of their customers. China does not have legacy issues and can therefore leapfrog straight to advanced data analytics and smart technologies to track and anticipate consumer behavior.’

As is the case in the West, where tech giants have led the data revolution, so too are the tech giants in China. Chinese search engine Baidu has hired Google’s former AI chief Andrew Ng to lead research efforts around improving how internet companies make the most of their data, while Alibaba earlier this year launched its own ‘big data cloud platform’ similar to that of Amazon, offering more than 20 products or solutions and services across the data development chain.

China’s data efforts are also being aided by other factors, including a government push in the field and an uptick in the number of data centers. New forecasts from analyst firm Technavio predict a 13% growth in the Chinese data center market between 2016 and 2020, with a number of managed cloud hosting providers allocating private spaces in their data centers for government agencies to gain benefits of modern infrastructure, cloud, and big data analytics. Intel has also partnered with the Beijing Municipal Government and the Institute of Automation of Chinese Academy of Sciences to boost Internet of Things (IoT) related technology research and innovation.

Moving forward, China is well-positioned to exploit the wealth of data created by the IoT. In 2015, the Chinese IoT market was valued at USD 104.2 billion, and is is predicted to grow to USD 248.5 billion by 2020 - CAGR of roughly 19%. Much of this has been driven by its applications in China’s still vast manufacturing industry, but this will also increasingly become relevant in the consumer sector as companies seek to provide a better service for customers. China is blessed by an urban population that readily embraces technology, and this should see companies swimming in data points to exploit, setting the country well on its way to becoming the consumption and services-driven economy it wants to be.

University lecture small

Read next:

How Are Higher Education Institutions Using Analytics?