China s digitalization push accelerate YOur potential

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1 China s digitalization push accelerate YOur potential OppOrtunities for foreign enterprises in China s evolving digital world YOur local expert China digitalization COmpetenCe Center

2 digitalization as CatalYst for growth China accounts for almost one quarter of the global manufacturing capacity. however, rising labor and capital costs increasingly pressure companies in China to innovate beyond mere efficiency improvements. with a young and highly tech-savvy population combined with a ready-to-take-risk business mindset, China is rapidly embracing digital technology in consumer sectors. in particular e-commerce and mobile payment platforms have transformed business models, disrupted traditional sectors and heavily increased the convenience for the Chinese consumer. platforms have emerged in China at an unprecedented scale and provide a substantial basis for an accelerated digitalization push. strongly driven by first-tier internet giants Baidu, alibaba and tencent as well as later emerged players didi, meituan and toutiao, China is creating a multi-industry digital ecosystem with tremendous investments into digital technologies and is now home to almost one-third of the world s unicorns 1). policy makers actively support digital innovation and entrepreneurship by offering investment support, driving the development and consumption of new technologies and giving companies room for experiments. Chinese companies are rapidly catching up to shape global industries through innovative digital technologies. in order to benefit from China s digital transformation, foreign companies need to put China at the center of their digital strategy. furthermore, one can establish watch lists on billions of dollars of investments in hidden and public digital outbound acquisitions in western markets. China is no longer just developing isolated digital applications for the middle Kingdom but is re-defining the global innovation ecosystem. eac has been active in China for more than 25 years. Our first-hand knowledge through local resources and existing networks enable our strong digitalization competence in a dynamic business environment. Benefit from our extensive industry and asia insights and use us as a catalyst for your future success on digitalization in China and beyond. dietmar KusCh eac partner madlien lorenz eac managing COnsultant China goes digital numbers to impress: China s digitalization scale is leading the world 36% of global unicorns are from China 2 >1 bln monthly active users are on wechat >3 bln usd is the valuation of the world s most valuable ai start-up a Chinese company 1) unicorns: privately-held startups valued at > 1bln usd

3 KeY digitalization pillars shaping China s economy supported by government investments and regulations, various industries increasingly digitize their operations and business models. foreign players can benefit from the existing ecosystem and platforms in China but need to act now to participate in future growth. ambitious targets and strong investments transform industries 30% of global robotics purchased in China in 2017 China s government invested >15 bln eur into ai By 2025, China is expected to account for 40% of global 5g users KeY forces for China s digitalization end-to-end COnneCtivitY sharing economy dematerialization digital services and platforms to cut out middlemen are booming in China for both B2B and B2C sectors end-to-end connectivity can amplify business performance by bridging the contact between manufacturers and end customers sharing of durable goods, daily supplies and even services is already deeply embedded in day-to-day life of Chinese consumerism user reviews are proactively given and commonly shared by consumers in digital ecosystem which strongly impact user experience visualization with assistance of digital ecosystems and vr to achieve real time tracking and experience affect both B2C and B2B industries (e.g. customer service via vr) additive manufacturing to turn 3d data into physicals leapfrogging in China QuestiOns to foreign COmpanies is YOur COmpanY utilizing the Chinese ecosystems? are YOur retail Channels and CustOmer touchpoints up-to-date? is YOur factory ready for China s dynamic innovations? 3

4 eac digitalization model Of China s KeY industries smart manufacturing n digitalization and automation in manufacturing are one of the key pillars of the made in China 2025 initiative industrials > China still lags behind industrialized nations in smart manufacturing and thus heavily relies on foreign technology however, application openness (i.e. for robotics and additive manufacturing) far outsteps the west > innovation frontrunners like home appliance manufacturer haier, hisense and midea as well as construction machine suppliers sany and zoomlion have built internet/ digital factories 4

5 mobility disruption n digitalization focus driven by Oems, policy makers but also experimental consumers/ early-adapters mobility > integrated shared mobility concepts such as shared bikes and shared cars digitally connected to one another and integrated with public transportation > Business model innovation: by-passing dealerships via apps or e-commerce platforms to enable direct touchpoints along the customer journey > Car connectivity, focusing on in-vehicle infotainment, customer-driven co-creation, smart surfaces and connected after-sales offering targeted at tech-savvy Chinese smart healthcare n empowered by a rising middle-class, digitalized smart healthcare is transforming China s inefficient medical system n China s government pushes smart healthcare through internet plus health policy and healthy China 2030 initiative healthcare > iot-driven remote treatments and online doctors enable direct connections with patients and remote digital health and wellness treatments > ai-empowered diagnosis supports the accuracy and consistency of treatments > wearables and platforms like alihealth combined with cloud-based healthcare Big data inform patients on their health conditions instantly digital COmmerCe n early adaption of digital technologies has transformed a highly inefficient and fragmented retail industry into one of the most digitalized ones COnsumer goods > Omnichannel retail, strongly invested by China s Bat (Baidu, alibaba, tencent) promotes completely new retail concept: seemless integration of online into offline channels > digital grocery stores with online payment and vr/ ar solutions completely unmanned stores are a reality already > e-commerce driven logistic innovations like Jd s drone delivery increases efficiency through last mile optimization and user base by reaching rural areas > Content-focused e-commerce, driven by social media and KOls, is amplifying customer centricity > analytics-driven offerings generated by China s massive consumer base on China s super-apps enable mass customization 5

6 implications for foreign COmpanies to go digital in China strategy implementation achievement CustOmer-CentriC digital strategies Identify (unmet) customer needs and digitalization opportunities Outline partnering and invest opportunities in China s ecosystem full utilization Of digital ecosystem Influential role of digital platforms in China due to cross-sector services and super-apps Re-design the online/ offline customer journey maximized Big data and analytics Massive amounts of data generated every day (>700 mio users) with open data sharing and strong opportunities to monetize agile OrganizatiOns digitalize OperatiOns utilize newest Business models Big game: China s ecosystem for digitalization partnering and investment OppOrtunities for foreign COmpanies made in China 2025 initiative to comprehensively upgrade Chinese industry by implementing various guidelines that link digital information technology tools with production processes innovation ecosystem China internet plus+ government initiative to introduce internet, cloud computing and iot into industrial production goal is to stimulate economic growth and to take advantage of the trend towards digital businesses smart Cities Chinese government pushes into funding official smart-city initiatives interlinking public services and bringing real-time information for citizens online technology funding Chinese technology companies have easy access to various funding sources, i.e. government subsidy, angel/vc/pe investors, crowd funding, Chinese new third board market and China new era technology fund 6

7 digitalization in China eac support ahead of innovation trends through strong regional expertise and networks along all major industries eac project focus and enablers understand digital market & ideation attractiveness Outside-in assessment n major digitalization trends and future scenarios in China n implications on current business model and product offering digital strategy development n prioritization of digital initiatives and levers shaping customers digital journey n Clear digital strategy roadmap facilitated by digitalization workshops learn Best-in-Class digitalization use Cases Competitor Benchmarking n Key digitalization success factors of domestic and foreign best-in-class competitors in China digitalization ecosystem n Best-practice benchmarking n digitalization white spots n improvement levers: Business models, processes and structures, product features implement digital Organizations and Competences Organizational Change requirements n Comprehensive assessment of organizational and talent requirements necessary to meet digital transformation guide & facilitate Qualification initiatives n identification of organizational and qualification gaps n Concrete initiatives to close them: coaching, workshops, restructuring accelerate speed up your digitalization strategy digitalization Cooperation Options n identification and assessment of potential partnering/ cooperation options n innovation through platform and start-up collaboration eac local network n strong understanding of local market trends and key players as well as access to corporates and start-up s in China / for China eac expertise at a glance functional COmpetenCies strategy m&a OperatiOnal excellence > 100 experts OffiCes in munich shanghai mumbai moscow emerging markets China india south east asia north asia russia Cee industry COmpetenCies mobility industrials infrastructure environment ChemiCals healthcare COnsumer goods advanced technologies YOur local expert in emerging markets since

8 n Digital sourcing platform with early warning system for machinery components n E-service platform including after sales support, spare parts ordering and remote maintenance n Business model ideation for EV s and related charging services latest eac digitalization projects n Dynamic real estate footprint assessment and appraisal tool n Digital sales platform for commodity chemicals n Business model piloting for supply chain integration n Ideation & innovation on integrated smart home from focus groups to design and engineering studies n Platform utilization for integrated Marketing and Sales concept YOur eac experts for digitalization n E-commerce go-to-market strategy n Touch point optimization along digital customer journey n Social Media branding push dietmar KusCh eac partner phone dietmar.kusch@eac-consulting.de madlien lorenz eac managing COnsultant phone madlien.lorenz@eac-consulting.de n Start-up and ecosystem screening for ehealth offerings n Market and infrastructure potential for remote diagnostics eac munich headquarters eac shanghai eac mumbai eac moscow eac euro asia Consulting partg widenmayerstr munich germany eac euro asia Consulting sunyoung Centre rm Jiangsu road shanghai China eac euro asia Consulting pvt. ltd peninsula plaza a/16 veera industrial estate andheri (west) mumbai india eac euro asia Consulting OOO melnitskiy per moscow russia phone eac-muc@eac-consulting.de phone eac-sha@eac-consulting.de phone eac-mum@eac-consulting.de phone eac-mos@eac-consulting.de