22% of China’s GDP growth to be driven by web apps


Lots of things have happened during the silent days of Chuan’r blog. Hong Kong’s democratic demonstration was the biggest shock to Chinese government, but not to most Chinese mainlanders due to mainland’s very effective censorship job. Firechat, an application that allows users to connect without internet (when the government shut down the connection) became a new headache for the authority.  But technology can also be used to spy on the protestors, like a newly discovered iOS malware. The competition will go on for a while.

The other hot topic on Chinese social media is why Japan can produce so many Nobel Prize winners (obviously the Chinese are not talking about Peace Prize here). Seeing the citizens of its “enemy” harvesting Nobel Prize in science and technology is a hard pill for China to swallow.

Before that, of course, was the legendary Alibaba, which made the most spectacular story in global stock market for the decade. A new study assigned by Geometry Global explained one of the reasons for the success of Alibaba: China is the world’s most prolific nation of internet shoppers. While on average people around the world make 3.25 purchases online each month,  5.88 of Chinese do it. 61 per cent of Chinese shoppers do not visit stores in person.

But Chinese do travel more and more, which is why Alibaba bought 15% stake (US$25 billion) in hotel tech service Shiji to grab a piece of online travel market. Shiji Information is a Shenzhen Stock Exchange-listed firm that develops software mamaging room reservations, purchasing, inventory, and point of sales systems, as well as broadband networks and billing systems.

Enough of the giants. New comers are equally interesting! In Shenzhen, a start-up called OnePlus is taking pre-orders for a “fantastic” and low-price (of course!) phone called “the One” (sounds quite exicting).  Low-price is great, free is even better. You can see this from a survey about the 330 million mobile gaming users in China, most of whom don’t care about advertisements (as long as the game is for free, that’s my very sound guess).

What’s the potential of the web application market in China? Big, but according to the McKinsey Global Institute projects, it will be bigger: new Web applications could enable as much as 22% of China’s total GDP growth through 2025. “The Internet enables startups to scale up rapidly and at a low cost, unburdened by legacy systems and traditional methods of doing business, while blurring the lines between sectors. ”

A few cases here: Tongbu, Mobile App distributor by 91 Wireless Founder is expected to Sell for US$174.5M to a Taiwanese game developer XPEC Entertainment.  Dianrong, a Shanghai-based P2P funding site on which members can borrow and lend money among themselves at better interest rates than a bank typically offers, has gained more investment for market expansion. Dianrong’s average yield is said to be around 14%.

While the anti-trust storm seems to have waned a little in the media, Mercedes reported best-ever monthly sales as new models, with contribution from Chinese market. This news came out at a time when China and EU are reportedly close to a deal on telecoms trade dispute, which might open the door to more EU market access for Chinese giants like Huawei.  China’s investment in Europe has been found, despite all the inaccuracy of numerous data (which drove me crazy last week while preparing for a speech at Club Globals), to surge at the height of debt crisis. But the volumes are still not very large because Europe is unwilling to sell China its top technologies. Among all the investments, Italy’s power grids and luxury brands are hot pieces.

Just for fun, China will take over North America as the biggest movie market (like everything else) in 2018, predicted Dalian Wanda Group, a real-estate and entertainment conglomerate. Wang Jianlin, Wanda’s chairman said this is a “conservative estimation” after “repeated calculation based on mathematic models built by several economists”.

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