Innovation Pays Rich Dividends

March 11, 2019
Editor: Wei Xuanyi

A train attendant helps foreign student trainees dress up in a car of a high-speed train about to depart from Xi'an, Shaanxi province, and bound for Beijing. [Photo by Tang Zhenjiang/for China Daily]

 

Two sessions shine light on how Four Great Modern Inventions have enriched life not just in China but across the world

The ongoing annual "two sessions" of China's top legislature and top political advisory body have brought into sharp focus the rich dividends reaped from the country's thrust on innovation in recent years.

In fact, innovation has become the mainstay of statements of government officials, deputies (or lawmakers) and political advisers.

All of them underline that constant industrial upgrade and technological breakthroughs alone can ensure China will attain its national goal of high-quality growth, thereby making life easier for citizens.

In this discourse, the newly-found idea of the Four Great Modern Inventions has attracted much attention. High-speed railways, mobile phone-based electronic payments, e-commerce or online shopping, and bicycle-sharing apps have shown how innovation, in the form of tech-enabled convenience and efficiency, makes life easier in contemporary China.

And now, these innovations are becoming China's best-known exports too, promising to enhance the quality of billions of lives worldwide, thus heralding a wave of world-class Chinese businesses.

For instance, China's bullet train company has a market presence from Indonesia to Hungary. Alipay's digital payment tool is ubiquitous in India. Online shoppers in Russia receive parcels from China in days rather than weeks. And brightly-colored Chinese-made shared bicycles that require no docking stations, were a common sight in the United Kingdom, Singapore and many other countries over the past few years.

To fully understand and appreciate the power and potential of China-led technological and business innovations, it is important to take stock of them, one at a time.

High-speed trains

China Railway Rolling Stock Corp or CRRC, which makes high-speed trains and operates them, has a footprint that covers over 100 economies, including Indonesia, Russia and Brazil.

CRRC's latest offerings are the Fuxing bullet trains. With its partners from the infrastructure sector, CRRC has already pushed forward the construction of the Jakarta-Bandung high-speed railway in Indonesia and the Hungary-Serbia railway linking Budapest and Belgrade.

It is now preparing for preliminary work relating to the Moscow-Kazan high-speed railway.

Fuxing, also known as "Rejuvenation", represents China's self-developed new-generation bullet trains. They are capable of running at speeds of 350 km per hour on the Beijing-Shanghai high-speed railway line. When the feat was achieved in 2017, Fuxing became the world's fastest operational train service.

By the end of 2018, China's high-speed railway network had reached 29,000 km, accounting for nearly two-thirds of the world's total, as per industry data.

With over 170,000 employees, the Beijing-headquartered CRRC plans to deploy more resources into operations, including localized manufacturing, procurement, employment, services and management, to drive growth in global markets.

Its high-speed train business is going to be the key to high growth in the future, given that CRRC is locked in fierce competition with other established rivals from Japan and Germany. But its big opportunity is projects from economies participating in the Belt and Road Initiative.

Lou Qiliang, vice-president of CRRC, said emphasis on innovative high-tech and global expansion will help the group to grow. Over the past five years, the company has already built a number of manufacturing bases in Australia, South Africa, Malaysia, India, Turkey and other countries.

The group's overseas assets jumped from $432 million in 2013 to $5.02 billion in 2017. It currently employs 5,700 people overseas across its various projects, compared with a mere 509 in 2013.

At the end of 2017, CRRC had 83 subsidiaries overseas, 58 of which were established after the Belt and Road Initiative was launched in 2013. It also has 13 research and development centers in 26 countries and regions around the world.

Mobile payments

Digital payments are old hat as far as China is concerned. But now, China-originating e-payment tools such as Alipay and WeChat Pay are becoming increasingly common in many overseas tourist havens, as retailers, merchants, hotels, banks, airlines, travel agencies, transportation players and others adopt them, mainly to serve millions of Chinese tourists better.

Tencent's WeChat Pay is accepted in 49 economies around the world. It is soliciting a number of local smart solutions and service providers, or SSPs, to help its payment method deepen presence outside China, according to the company's overseas business director Fan Wei.

The idea is to make its WeChat app's payment function run as smoothly in a foreign market as it does at home, by incorporating more app programming interfaces and payment-to-marketing tools developed by third-party providers.

Early adopters of a comprehensive WeChat solution included Japan's Fuji-Q Highland amusement park. Since July last year, the park has introduced a mini program that offers introductions to facilities in Mandarin Chinese, provides special entrance offers and supports renminbi-denominated mobile payments.

Starting 2015, Alipay has formed nine strategic partnerships with local partners outside the Chinese mainland. This trend of fostering ecosystem development with local partners across Asia is likely to continue, according to a report by data and analysis company CB Insights.

Alipay's approach is to extend its own technologies and experience to incubate local payment solutions and allow for settlement using local currencies, which are mostly reflective in India's Paytm app and the Alipay HK app.

Alipay's parent Ant Financial, which is under the overarching Alibaba umbrella, has entered into a string of agreements in Bangladesh and Pakistan, pledging to help destination countries with technological upgrades to serve unbanked and under-banked populations.

In the tie-up with bKash of Bangladesh, Alipay will help create a local version of a mobile payment tool mimicking Alipay, with core functionalities like money transfer embedded on feature phones at the current stage.

Ant Financial signed a deal in January with Pakistan's Telenor Microfinance Bank to power the nation's first cross-border remittance service using blockchain technology.

"The new remittance service is one of the examples of how emerging technologies can help countries meet their digital and financial inclusion goals," said Eric Jing, chairman and CEO of Ant Financial.

Alipay, which started out as a payment solution to facilitate e-commerce transactions of Alibaba Group Holding Ltd, is in a position to provide the financial infrastructure critical to Chinese small and medium-sized enterprises as they expand overseas, said Li Chao, an analyst at iResearch.

"Ant needs to be present in markets where its corporate clients go. Economies related to the Belt and Road Initiative are no doubt among the biggest draw."

E-commerce

Cross-border e-commerce is marked by two themes unfolding at the same time.

First, Chinese people's growing appetite for high-quality products and the convenience brought by the ubiquity of mobile internet are generating a shopping frenzy in the segment of imported commodities.

Nathan Salisbury, general manager of Ingenico ePayments Asia-Pacific, said the French payment processor has witnessed significant changes in Chinese consumers' consumption behavior, and more and more Chinese are willing to buy imported goods and products.

Executives of Amazon China agreed, saying domestic consumers' growing appetite for high-quality overseas commodities has fostered a cross-border e-commerce boom across the country.

A recent survey conducted by Amazon China and market consultancy Data 100 showed most respondents sought to buy goods online via cross-border platforms at least twice a month in 2018. And more than half of those surveyed said their average monthly spend reached more than 2,000 yuan ($298).

Second, foreign buyers are looking to purchase from China as cross-border e-commerce platforms mature and logistics advance.

Black Friday, a shopping extravaganza on the Western retail calendar, has become an occasion for Chinese brands to shine. Average per-customer transactions doubled during the promotional day on Nov 23 via AliExpress, a Chinese business-to-customer or B2C site that exports to over 200 economies.

Transaction volumes from the United States and a number of developed economies across Europe saw twofold growth. They represented 90 percent of the top 30 countries in terms of gross merchandise volume, said Wang Mingqiang, general manager of AliExpress, a subsidiary of e-commerce giant Alibaba.

"Mid-to high-end products from China are replacing budget items like toys, lighters and other daily necessities, which reflects the changing mindset of the global consumer toward Chinese exports," Wang said.

To shorten the delivery period, Ali-Express teamed up with Cainiao Logistics by organizing daily chartered flights to/from key European destinations, and allowed for global traceability of parcel shipment movement. It also extended digital customs solutions to Russian postal services and helped the agency to speed up the clearance process.

"Improved product quality and dynamic sales and distribution channels are contributing to the enhanced profit margin per unit for export," said Wei Hao, head of the department of international trade and economics at Beijing Normal University.

Shared bicycles

After years of rapid growth, China's bicycle-sharing business is entering a new era of stable development. The players concerned are shifting their focus from aggressive market expansion to improving their functionality and customer experiences across all their offerings.

The likes of Ofo and Mobike have charted their course to major European and Asian metropolitan areas. But, due to a capital crunch, they had to scale down, or even withdraw, some of their services.

Beijing-based bike-sharing company Ofo has reportedly been suspended from operating in Singapore, as the local authorities said the company had flouted their regulations.

"The bike-sharing sector is now going through a downsizing phase, requiring better operational capabilities as well as more investment in high-quality products," said Raymond Wang, a partner at consultancy Roland Berger.

Data from app tracker Analysys Qianfan show Ofo's top rival Mobike, with 16.72 million monthly active users, has taken the top spot in December. For its part, Ofo has slipped to No 2 with over 16.6 million monthly active users, followed by Alibaba-backed HelloBike with nearly 5 million monthly active users.

A report released by the State Information Center in February this year showed that the sharing economy sector has generated more than 2.94 trillion yuan in transaction volume in 2018, up 41.6 percent year-on-year.

The report noted the sharing economy sector has entered a new stage where quality matters more than the speed at which it expands.

In the next three years, its annual growth rate is expected to remain steady at 30 percent, slower than previously estimated, but signaling more sustainable development nevertheless, it said.

A customer pays by using Alipay in a shop in Rovaniemi, Finland. [Photo provided to China Daily]

Yanis (right), who is from Turkey and goes by just one name, browses Tmall with his girlfriend. Yanis likes to buy Chinese snacks online. [Photo provided to China Daily]

A woman uses a Mobike bicycle in Manchester, the United Kingdom, in this file photo. [Photo by Eamonn and James Clarke/for China Daily]

 

(Source: China Daily)

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