How China is en route to becoming a digital superpower
Over the past couple of years, China has made significant progress and built a solid digital foundation. It is now on the verge of a digital transformation that will enhance productivity and elicit economic growth. At the end of 2015, China already had 688 million internet users and 620 million mobile internet users. Out of these, 413 million utilized e-commerce, collectively producing $623 billion in online sales, which accounted for 12.9 percent of China‘s total retail transactions. By 2018 at the latest, China is estimated to have double the United States’ annual e-commerce revenues.
China’s middle class is experiencing rapid growth, causing a sweeping social transformation domestically. According to Credit Swiss, China now has the largest middle class world-wide with 109 million members, surpassing the USA with 92 million. This cohort includes individuals with a wealth between $50,000 and $500,000. Since 2000, twice as many Chinese than Americans have joined this group. Additionally, there are more than 1 million millionaires in China – twice as many as in 2010. This group is again expected to more than double in size and reach 2.3 million individuals by 2020. In parallel, the upper middle class will account for 54 percent of all urban households and 56 percent of urban private consumption by 2022.
Young city dwellers in particular are highly westernized, with a strong tendency to seek emotional satisfaction or higher social status through the purchasing of exclusive brands and personal digital gadgetry. Wages are increasing among this cohort, and so is their appetite and willingness to consume. Many of them embrace a ‘digital-first’ mentality and are strongly inclined toward heavy smartphone and mobile internet usage as well as online power shopping. Here are a couple of examples:
During the second quarter of 2016, 111.2 million smartphones were shipped in China, with close to 90 percent of them having screen sizes that were 5 inches and above – thereby enabling a rich user experience and wide-ranging suite of applications.
The number of mobile subscribers already crossed 1.3 billion in 2015 — meaning that statistically, almost everyone in the country owns a SIM card. China’s mobile data traffic is projected to outpace that of the United States by the end of 2017, reaching 1.9 exabytes per month and 1.6 exabytes per month respectively.
For the last ‘Single’s Day‘ — on November 11, 2016 — Chinese e-commerce giant Alibaba reported an all-time high of $17.8 billion in sales within 24 hours, breaking the previous record of $14.3 billion set in 2015. In the first few hours, more than 80 percent of transactions took place on smartphones. No other platform comes anywhere close in terms of scale and reach.
Overall, Asia-Pacific is the fastest growing cloud community with a compound annual growth rate (CAGR) of 31.
