When China's President Xi Jinping visited Tajikistan during the Shanghai Cooperation Organization (NYSEARCA:SCO) Summit in September 2014, the smartphone from China's domestic brand ZTE was on his list of national gifts. Historically, China mostly used traditional artworks such as silk, porcelain and painting as national gifts in diplomatic contexts. Using domestic smartphones as "national gift" showed the progress China had made in the technology sector in recent years, and it also demonstrated China's determination to transform itself from the "world's factory" for low-tech manufacturing into a global power in the "new economy."
As such, year 2014-15, Winston Ma's "China's Mobile Economy" book insists, marks "the most important inflection point" in the history of "the Internet in China." The development of China's mobile economy is one of the most important trends that will reshape the future of business, technology and society both in China and the world.
According to CNNIC (China Internet Network Information Center) data, at the end of 2015, China had 688 million internet users, and the number of mobile internet users reached 620 million, accounting for 90.1% of the total internet users. For many people in China, especially in rural areas, their first internet experience is often mobile instead of PC - the moment they start using a smartphone. In other words, the Chinese population has transitioned directly into a mobile-first mobile-only era.
China's middle class group is already the size of the US population and is expected to double within seven years. In addition to its large population size and significant disposable income, this new middle class is also characterized by its quick adoption of mobile applications in their everyday activities. Almost overnight, the world's largest digitally-connected middle class went both mobile and multi-screen (smart phone, tablets, laptops and more), with huge implications for how consumers behave and what companies need to do to successfully compete.
Dominic Barton, CEO of the global consulting firm McKinsey, certainly took notice. He listed "China's Mobile Economy" on his current reading list. In his Foreword for the book, CEO Barton noted that from McKinsey's work with leading global private and public sector clients across many industries and regions, the firm knows "just how keenly they are following the next phase of China's economic evolution." As illustrated by the cases of brands and retailers in the book, for both multinational companies in China and any merchants thinking of bringing products to China, mastering mobile internet strategy and developing social network advertising will separate the winning retailers from the rest of the pack from their competition.
While the internet-enabled business and innovation is set to play a major role in fueling China's economic growth, it has also led to profound implications across the China society. As more and more people use their mobile devices to chat with their social network, to find and share information, to manage their banking deposits and financial investments, and to access entertainment content anywhere and anytime, their daily lives have effectively emigrated to this new mobile environment.
As befits an experienced investor, deeply grounded in both Western capital markets and in local equities, through his career at the Wall Street in New York and more recrently China's Sovereign Wealth Fund in Beijing Ma strikes the right balance between enthusiasm for the opportunities that China's mobile marketplace offers and a clear-eyed assessment of potential challenges ahead. For example, while Chinese Internet giants such as Alibaba and Tencent have made waves in the global markets, the chapter on Chinese companies' expansion into foreign markets is titled "Going Overseas - a Bumpy Road."
The CEO of CNNIC, Dr. Xiaodong Lee, highlighted the discussion of China's public policy and internet strategy in his Introduction for the book. The rapid growth of the internet has been enthusiastically embraced by the Chinese government. However, with increased efficiency and productivity, as well as tremendous business opportunities being brought about by the internet revolution, many challenges in the public and private sectors still remain. As fellow Young Global Leaders (YGL) at the World Economic Forums, Lee and Ma have been involved in discussions of related policy issues, with some of which reflected in the book.
In summary, the mobile transformation has had profound implications for foreign companies doing business in the China market. During China's digital boom, foreign investors are richly awarded, more consumer goods companies see new accesses to reach the expanding middle class, multinationals who have had early presence in China are rethinking their strategies in this fast changing market, but Silicon Valley tech giants are taking notice of new competition arising from the East. As next-generation mobile devices and services take off, China's strength in this arena will transform it from a global "trend follower" to a "trend setter."
In a broader context, Chinese society is experiencing a rapid transformation, becoming increasingly industrialized and digital-based. The uniqueness of China's experience deserves a close investigation from policy-makers, technology start-ups, internet companies, corporations and organizations facing an upgrading challenge due to the ongoing internet revolution, as well as other global stakeholders who are interested in entering the China market.
Winston Wenyan Ma, CFA joined the China Investment Corporation (NYSE:CIC), the country's sovereign-wealth fund, at its inception in 2008. He focuses on long-term investments in large-scale concentrated positions. He was the founding member of CIC's private equity department and later its special investment department. From 2011 to 2015, he was the managing director for CIC in North America. Winston has also worked as deputy head of equity capital markets at Barclays in New York and as a vice president in investment banking at JPMorgan. Before the new book "China's Mobile Economy", he is also the author of Investing in China: New Opportunities in a Transforming Stock Market (Risk Books, 2006) and has been widely quoted in global financial media.