The recent record-breaking IPO of Hangzhou-headquartered Alibaba marked a seismic shift taking place in the evolution of the internet and digital business.
Alibaba, already the undisputed king of e-commerce handling more sales than Amazon and eBay combined, is now the world’s fifth most valuable tech company, valued at over $200bn. With money comes deep pockets for innovation.
Where once the world saw Silicon Valley as the hub of all digital innovation this is fast shifting East towards the Hangzhou Hills, 180 kilometers south of Shanghai. China’s digital innovation is taking an excitingly different tack to that of the West too, as the huge market it caters to affords more possibilities.
China’s Ecommerce Lifestyle
As the world’s biggest and fastest growing e-commerce market, 600m online Chinese consumers will spend an estimated $541bn online next year, each making over 100 purchases. Alibaba’s flamboyant founder, and now the richest man in China, self-made e-commerce billionaire Jack Ma recently explained, “in other countries, e-commerce is a way to shop, in China it is a lifestyle”.
With little legacy technology holding it back, China’s e-commerce market is not only big, it is advanced; the world’s highest penetration of post-PC devices means that e-commerce here means mobile commerce. Size combined with an advanced market offer plenty of opportunity for new directions in digital innovation.
In this huge, growing and advanced market, Eastern internet giants such as Alibaba, JD.com and Baidu still benefit from an enviable degree of market protection – at least from foreign firms. In the case of Alibaba, this has allowed the Hangzhou firm to build up an eyewatering 80 percent share of the domestic e-commerce market. Four out of five purchases online in China are made via one of Alibaba’s B2B, B2C and C2C marketplaces, and half of all online payments are made using Alibaba’s ‘Alipay’ electronic wallet. Such market dominance in benevolent market conditions may help foster the confidence to buck innovation trends by creating new ones.
If Alibaba is anything to go by, we’ve some exciting new innovation trends to look forward to. Take, for example, micro-investments. We’re all familiar with micro-payments and micro-lending, but China’s Alibaba is leading the way in online micro-investing. Its innovative Yuebao feature (meaning ‘leftover treasure’) lets consumers make one-click micro-investments in a high-yield money-market fund using the small change from their online purchases. Yuebao now has more investors than China’s stock markets and is the largest public fund in China.
Positioning itself wherever money changes hands and without respect for industry verticals, Alibaba is also experimenting with a variety of commercial innovations from demand-led ‘team-buying’, to virtual malls and shoppable streaming video. There are also rumours afoot that the company may partner with Apple on mobile payments, resulting in an Alipay and Apple Pay tie up – a serious force to be reckoned with if it comes to pass.
The New Hotbed Of Innovation
Dismissed as imitators rather than innovators, the new Eastern internet giants are starting to flex their freshly-funded innovation muscles as Asia becomes a new hotbed of digital experimentation. It is quickly becoming the place where you’ll most likely find the ‘next big thing’ - and the company behind it.
So if you want to look to your digital future, look East. As William Gibson remarked – “the future is already here, it’s just unevenly distributed”. We now know that uneven distribution has shifted East. East is where the sun will rise on tomorrow’s breakthrough digital ideas, innovation and inspiration.
We need to open ourselves up to the truth that Western digital hegemony is finally over.