Digital Transformation in China: The Rise of BAT Giants and a Cashless Society

Digital Transformation in China
Take-aways from Alibaba Global Dreamer Program
Jiaqi Chen
Candidate of 2017 Alibaba Global Dream Program
7 September, 2017

1
Open Sesame to infinite imagination and inspiration for the future. 1
Agenda
• Digital Economy in China
• Three Digital Giants in China – The BAT
• Digital Life in China
- Communication
- E-Commerce (Shopping, Payments, Financial Services)
- Transportation (Logistics, Smart City)
- Digital Era for Environment, Children and Women
- Internet of Things
- Manufacturing Evolution
• About The Author

2
(1) Calculation similar to GDP, refers to the substance economy projected to the total
market value of all digital production in a period of time
Source: Tencent Research Institute
China's booming digital economy serves as a major
engine for the country's economic growth
70%
50%
2016
30%
2030 Est.
50%
Substance Economy
Digital Economy¹
• USD 3.35
Trillion
• Created 2.8
million Jobs
Digital Economy Contribution to China’s GDP

3
Open Sesame to infinite imagination and inspiration for the future. 3Source: Mckinsey Global Institute
China's digital economy is a story of commercial
success and excitement among investors
• Mckinsey attributes the great success in digital transformation in China to its
enormous internet users group.
• The sheer scale of the internet user-base encourages continuous experimentation
and enables digital players to achieve economies of scale quickly.

4
Chinese
Population:
1.38 billion
Chinese
Internet
Users:
731 million
(53.2% of the
population)
Source: CNNIC 2017
Chinese
Internet Users
on mobile:
695 million
(95.1% of the
internet users)
Online
payment
via mobile:
67.5% of
mobile
internet
users
Offline
payment via
mobile:
50.3% of
mobile
internet
users
Internet Users in China

5
Agenda
- Communication

6
Three Digital Giants in China – The BAT
Search Social
E-Commerce
• In the late 1990s and early 2000s, digital transformation was boomed in China when
these three conglomerates began their business.
• After nearly 20 years of development, these three giants have made huge impacts on
people’s everyday life, creating a digital ecosystem in China.

7
Baidu
• Incorporated in 2000, Baidu is the biggest
search engine in China, meanwhile offers
many services and builds up online
communities and forums.
• Focusing on AI, in 2017 Baidu
announced an ambitious autonomous
driving program “Apollo” and hopes to
offer a platform that can handle full
autonomous driving on both urban roads
and highways.

8
Tencent
• Founded in 1998, Tencent is a leading
provider of Internet value added services
in China. Starting from an IM product,
today Tencent is one of the three internet
giant in China with many different products:
video, games, social network, payment
and etc.
• Its IM product, changed the social
network in China.

9
• In 1999, Alibaba was founded
as a B2B marketplace,
targeting SMEs.
• In 2017, Alibaba has become
a conglomerate including
different business units: B2B,
C2C, Logistic platform,
Cloud Service, New Retail
Service, Financial service,
IM for work, Entertainment
and etc.
• It is estimated that by 2035,
Alibaba Group will be the 5th
largest economy in the world
Alibaba Group

10
• 28 candidates out of 500+ from all over
the world with different backgrounds
(business, technology, non-profit,
education)
• 2 weeks in the headquarter (Hangzhou)
• 10+ business units visiting
• 20+ talks
• 2 biggest internet conferences in 2017
• 1 shopping party: Taobao Market Festival
• 1 non-profit project: Make no child hard
to be found
2017 Alibaba Global Dreamer Program
The Goal: to inspire and encourage young people to keep chasing dreams and do
something good to the society

11
Agenda
• Three Digital Giants in China
- Communication

12
Open Sesame to infinite imagination and inspiration for the future. 12Source: Ethnodialouge; Tech.qq; Sekkei studio;Quartz
WeChat – The Biggest Social Network in China
New Function 2
Search Engine within the app
Cover +90% mobile internet users in China by 2015
889 million active users in China and oversea by Q4 2016
10 million official accounts by Q4 2016
Average Time Spent 66 minutes per day in 2016
New Function 1
Mini Program
• Bridging online to offline
(O2O)
• Enables users to access
mobile services within the
WeChat app

13
DingTalk – New Way of Communication At Work
• DINGTALK, launched in 2015 by Alibaba, is a collaboration and messaging app
for small-to-medium sized businesses.
• More than a communication tool, DingTalk wants to shape the way of working
for SMEs. Some functions:
Personalized Data
Visualization
Basic AccountingCommunication
Customer Relationship
Management

14
AI Application in Communication
• AI is widely developed and adopted in many products.
• Alixiaomi, a product of Alibaba, is a smart personate
assistant with AI application (Chatbot)
• During 11.11 Global Shopping Festival in 2016,
Alixiaomi helped 1 million people with 90% accuracy.
• With Chatbot, the number of customer specialists
reduced from 50,000 to 3000.

15
Agenda
- Communication

16
Shopping: The Biggest Online – Shopping Website in
China
Active
Taobao
seller:
13 million
Active
Taobao
buyer:
454
million
200
million
users open
Taobao
per day
• “Omnipotent Taobao”, is so called by users in China.
• In 2014 to 2015, the personalized consumption era arrived in China, and
Taobao was the cradle.
• For both sellers and buyers, for people live in metropolitan or people live in the
remote area, for people have abundant budget or have scarce budget, people
can always enjoy shopping in this inclusive platform.
• By opening a store in Taobao, many people have realized their dreams and
changed their lives, getting rich, getting independence and also getting dignity.
More than
1 billion
goods in
Taobao
Source: Taobao

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• “11.11 Global Shopping Festival”, is
“Cyber Monday” or “Black Friday” in China.
• In 2016, in the 1st minute, Taobao and
Tmall (a B2C platform) received their first
1 billion GMV¹ in RMB (Gross
Merchandise Volume).
Shopping: 11.11 Global Shopping Festival
(1) GMV: a total sales dollar value for merchandise sold through a particular
marketplace over a certain time frame
Source: Wikipedia

18
Shopping: 11.11 Global Shopping Festival
2010 20112009
13.0
5.2
8.2
0.1
20162015201420132012
0.7
0.0
17.2
2.7
GMV (in $bn) on 11.11 of Taobao and Tmall from 2009 to 2016 with a CAGR 163%
$7.4
million
$133.7
million
$743
million
(1) GMV: a total sales dollar value for merchandise sold through a particular
marketplace over a certain time frame
Source: Wikipedia

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Shopping: New Retail Experience
• Synchronize prices in real-time
• Synchronize stocks in real-time
• Capture consumer behavior
(monitor shopping path in “cm” unit)
• Improve customer experience
• Maximize profit
• Boost up mom and pop store

20
Shopping: in Rural China
• In 2014, Alibaba expanded business in rural China, targeting 500 million people
with Rural Taobao.
• Taobao in rural China adopts a business management approach, but achieved
more than business expansion: make people live in rural China well connected
to the urban life and have a better life.
Public
ServiceShopping
People living in remote regions
can now also enjoy goods
from everywhere and of higher
quality
can now easily pay different
bills without commuting to
towns
can now sit at home receiving
or sending their packages
Partners of rural Taobao are
mainly women, with low
education, married and have
children. Now they can take
care of their family meanwhile
have their own business
Benefits

21
Payments: Cashless City
+
Alipay and Wechat Pay, together brings China into a cashless society

22
Payments: Cashless Lifestyle
A street food stand accepts Alipay with its QR code A store accepts both WeChat Pay and Alipay
• Nowadays in China, even the smallest businessman can benefit from a digital payment:
avoiding fake cash, better manage cash-flow. etc.

23
Payments: Evolution
Facial Recognition plan
to roll out in 2018
Voiceprint Recognition to
be developed
Fingerprint
Recognition
Cash Cards Smartphone
unique as fingerprint, but
more cost effective

24
Payments: Smile to Pay by Alipay
• In 2017, Alipay launched Facial Recognition payment – Smile to Pay. With an existent photo, Alibaba is
able to revert 100% a three-dimension face and catch your facial emotion change.
• With a smile, or a grimace, in 10 seconds, the payment can be done.

25
Financial services: Big Data and Inclusive
Financial Service
￥1
No Deposit
No Credit Record
Limited
Information
Accessible to Insurance Service
Inclusive
Financial
Service
Accessible to Wealth Management
￥
Source: Ant Finance, “Ant Financial – Our Rural Finance Practice”

26
Financial Service

27
Financial Service

28
Agenda
- Communication

29
Logistics: Big Data and Logistics
• In 2013, Cainiao Network was founded in order to enable higher efficiency in
China’s logistic industry.
• Cainiao operates a proprietary logistic information platform that links a
network of logistic providers, warehouses and distribution centers
together.
• 9 trillion data to be dealt with every day
In 2016
Package arrival time:
2.6 days in
China
In 2023
Package arrival time:
24hin China
72h in the rest of the world
Source: Xinhua

30
Smart City: Big Data and Traffic Control
Source: Smartcityhub
• Hangzhou City Brain,
driven by the Alibaba
Group aims to use big
data to help the city
‘think’ and make
decisions.
• Alibaba’s traffic control
pilot program, showed
that by controlling
signals and predicting
traffic trends there has
been an 11% increase
in speed on a few road
sections.

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Agenda
- Communication

32
Environment Protection: Turn Packages Green
• In 2016, there were 31.3 billion
package consumed in China,
half of the total worldwide
consumption, including 17
billion tapes and 8.3 billion
plastic bags.
• New package made of
degradable materials is
promoted by Cainiao Green
League, which leads by Alibaba
and includes 32 local and global
logistic companies.
• With new material and design,
the box can be packed without
tapes and be recycled right after
being used.
Source: Cainiao

33
Children Care: Big data and Lost Children Found
• “Tuan Yuan” (means
“reunion”) was modeled on
the America's Missing:
Broadcast Emergency
Response (AMBER).
• At the beginning, it was a
volunteer project developed
by Alibaba technicians and
launched in 2016.
• Collaborating also with the
government as well as other
companies, in a year, the
platform broadcasted 1317
messages in different apps
and helped finding 1274 kids
(recovery rate 97%).
Source: Alibaba

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Competitive/Aggressive Collaborative/Care
Logical Thinking Emotional Intelligence
“Along with the technology development, we have to admit that ‘SHE Era’ is coming. There has never been a
period as digital transformation that are in favour for women leadership. ”
-- Jack Ma (Founder of Alibaba)
Women Leadership
Creativity
Women leadership: SHE Era is Coming

35
Agenda
- Communication

36
Internet of Things
Bike-sharing Wireless Projector
Insert the code of the projector of the meeting room and your
computer can be projected on the screen.
• People can take and leave the
bike everywhere with a low
price that anyone can afford –
more or less￥1 per hour.
• Mobike, a bike-sharing platform
arrived also in Florence and
Milan, with deposit 1 EUR and
0.3 EUR for every 30 mins.

37
Agenda
- Communication

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• The next internet opportunity is the manufacturing industry. With big data, the
manufacturing resources will be synergized and upgrade to a new level of capacity
and efficiency.
• Manufacturing will be no more a blindfold work in the factory and will be better
connected to end consumers.
Big Data and Manufacturing Evolution
Source: Netentrepreneur Conference in 2017

39
Agenda
- Communication

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• Jiaqi Chen (Maggie), was born and grew up in Dongguan, a manufacturing
city in Canton Province in Southern China, near Hong Kong.
• I have always been curious about all the unknown/to be discovered things,
and I have always been passionate about learning new things, knowing new
culture, making new friends and bringing goods to others.
• So far, I have studied four different majors: Journalism, Italian, Tourism
Economics and Marketing Management in university, meanwhile I am
interested in many different subjects and would like to learn more about
Statistics, Space Science, Quantum physics, Philosophy, Classical Latin,
History, Anthropology, Law and etc.
• Luckily, I have lived in three countries in three different continents: China, Italy
and Canada. Moreover, I have had many business visits in different firms, as
well as many family visits to friends from different countries. Having had these
experiences, I can see how big the impact can be made by new technologies
in this digital era. But as Steve Jobs said “It’s not a faith in technology. It’s
faith in people.”, I do believe that more than high-tech, qualities such as
empathy, inclusiveness, courage and determination, play a more important
role to make a difference for people and society.
• Master of Science of Marketing
Management of Bocconi University
• Intern in Innovation and Change
Management Division in UN World
Food Programme
• Candidate of 2017 Alibaba Global
Dreamer Program

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Digital Transformation in China: The Rise of BAT Giants and a Cashless Society

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