China’s innovation and market development – 7 trends to watch in 2019

As the emerging “Saudi Arabia of data” and when the global “AI-race” and “5G-race” are on, China’s innovation and market developments are more cross-sectoral, multidisciplinary and dynamic than ever: From Internet+ and AI+ to...

As the emerging “Saudi Arabia of data” and when the global “AI-race” and “5G-race” are on, China’s innovation and market developments are more cross-sectoral, multidisciplinary and dynamic than ever:

  • From Internet+ and AI+ to Internet x and AI x, i.e. the cross-sectoral integration is not only broader, but also deeper.   
  • From scale-based consumer-market driven innovation, i.e. “to C” to more interactive consumer-market and business-to-business driven innovation, i.e. “to C” and “to B”. As a typical example, Jack Ma will not only do “New commerce”, but also “New manufacturing”.
  • Beyond innovation in manufacturing to innovation supporting societal functions and public governance/service provision.  

The impacts and implications of such an integrated digital, connected and smart transformation are complex and profound. Technology and innovation, particularly those of a disruptive nature, for instance AI, must be available, reliable, comprehensible and controllable, as Ma Huateng (CEO of Tencent) put it.  

7 strategically interesting innovation and market developments in China to watch in 2019 (and beyond):

  • Blockchain technology applications in daily life and business operations, instead of speculation and hype: Chinese tech giants, Alibaba, Tencent and Baidu dominate in terms of patent applications in the world in the past few years. For instance, Tencent and Baidu filed 56% of blockchain patents worldwide for a total of 406 in 2017.[1]The development of blockchain-based applications for transaction and tracking systems and falsification prevention will continue to grow in order to overcome the challenges of security, sustainability and inclusion in markets, such as China.   
  • Electric and autonomous vehicles: electrification and autonomous driving are two fundamental shifts in the transport sector, in terms of both technology and business model. China is determined to grasp this historical opportunity. The rapid roll-out of pilot-projects in China will be a demonstration of its new leap frogging innovation model, namely overtaking by changing lane.
  • Made in China 2025 revised: the debate over Made in China 2025 will continue, both inside China and abroad. And a revision is underway. Nevertheless, China’s ambition to upgrade its manufacturing and climb up the value-chain will not change. In Jack Ma’s words “it was great to be able to produce 2000 pieces of the same kind of garment in 5 minutes before. It will be greater to be able to produce 2000 pieces of different kinds of garment in 5 minutes in the future…”.              
  • Smart, sustainable and livable cities: More than 500 smart-city projects are on-going in China today. More and more cities will adopt “city brain” for applications of real-time urban infrastructure data, such as traffic, water, electricity and air quality. But smart cities in China need to be built with both social and ecological values – to be sustainable and livable.     
  • AIoT (AI + IoT) in smart homes: the shipments of smart-home devices of different types reached 1.5 billion units in 2018 in China. Over 60% of smart-home devices could be connected to IoT, which could provide new and key application scenarios for AI-chips development for smart living and smart home.[2]
  • Smart and affordable healthcare for all: Recognising the shortcomings in its healthcare system, such as a shortage of doctors and uneven access to and quality of healthcare, China has already seen the combination of big data, AI-assisted services and remote communication as the way forward. With 300 million people suffering from chronic diseases,[3] big insurance and technology companies, together with thousands of hospitals across the country, are now engaging in the development of future healthcare in China.
  • Digi-circular economy: China’s challenges of emissions reduction and resource efficiency are increasingly shifting from the production to the consumption side. China’s efforts to develop a circular economy need to and will be combined with its unique strengths in digital platforms and data resources. Innovations for a digi-circular economy can bring rapid and radical changes in both consumer behaviour and sustainability-driven business opportunities.        

These trends will, by and large, define the speed, scale and agility of China’s innovation development, which are key to dealing with competition, uncertainties and disruptiveness when technology and innovation are changing businesses, people’s life and the future of our society.

Nannan Lundin & Linnea Yang


[2] International Data Corporation (IDC).