This is a summary of a presentation shared during KrASIA’s Magnify China 2021 on July 6 and 7.
China has experienced rapid growth since its reform and opening-up policy in 1978. To ensure that the country can sustain stable economic development going forward, the Chinese government has initiated a “dual circulation” strategy to shift the driving force of the country’s economy away from exports and focus more on domestic consumption.
Alex Zhao, head of research at 36Kr Global Research, looks into how the years of aggressive capital flow, infrastructural changes, and policies have culminated into the large waves of innovation in China today, contributing to its domestic strategy. In this presentation, Zhao unpacked the trends and developments behind three of the seven selected national industries that are undergoing changes brought by the “dual circulation” initiative—consumer retail, medical and healthcare, and smart cities.
With the explosion of e-commerce in recent years, China’s consumer and retail market hit a record USD 6 trillion in 2020. More than 780 million online shoppers contributed to nearly one-quarter of the total consumption. Apart from well-known e-commerce platforms such as Taobao and JD, various types of online sales channels are present in China as well. Some have social media functions, and some sell special types of goods such as fresh food. Major shopping festivals are also key drivers for market growth. For example, USD 78 billion worth of goods was sold on Tmall during last year’s Singles’ Day shopping festival. According to a report issued by the National Bureau of Statistics, China’s consumer and retail market volume is expected to surpass that of the US in the near future. This growth is driven by seven trends.
In 2020, we witnessed a milestone for capital investment in China’s healthcare industry. Both the total funding amount and the number of funding events set new records. According to “Healthy China 2030 Blueprint,” the market size of the Chinese healthcare industry will reach over USD 6.42 trillion by 2030, an increase of 230% compared to 2018. Zhao examined the following three market trends that have contributed to such growth.
First, as Chinese pharmaceutical companies gain international standing, tech giants have invested in the pharmaceutical industry to provide cloud computing services, AI algorithms, and other technologies. This reduces the time, costs, and risks that come with developing new drugs. Examples include the XtalPi partnership with Pfizer, Tencent’s iDrug platform, and Baidu’s BioMap.
The second trend is the widespread digitalization of healthcare in China. The Chinese government has been promoting the application of cloud computing, IoT, and big data technologies to digitalize health institutions. This has been instrumental in allowing distribution to the country’s less developed areas. These efforts have ultimately improved operational efficiency through remote diagnosis, electronic medical records, digitalized health insurance, and digitalized medicine distribution tracking. This strategy has proven effective in managing migration movement during the COVID-19 pandemic by issuing over 900 million health codes through the internet.
Third, AI in healthcare and medicine has become commercially viable with an official Class III certification by the China Food and Drug Administration, marking another significant milestone. AI companies can now invest in R&D and AI development with revenue generated from the market.
The last major development happening in China is smart cities, which are now in their third phase to build networks throughout the country. Zhao introduced the concept of smart city 3.0 using Shanghai and Tianjin as examples.
Shanghai Smart City ranks first in several key infrastructure aspects: e-government initiatives that link over 19 departments and cover 16 districts, and a centralized digital platform for wedding registrations, property transactions, birth certificates, and other local affairs. It has proven to be a success, with 50% of the population as registered users. Other initiatives include smart parking, muck truck //what is this? google says electric wheelbarrows?//management, and food safety management.
Tianjin Smart City was also highlighted as a case specifically for elderly care. The Tianjin Municipal Government partnered with JD Technology in its Hexi District to develop a digital platform for elderly care. The platform includes a database of more than 230,000 elderly people and provides digital tools for government personnel, volunteers, and cooperative agencies to manage daily services for seniors. The elderly care platform handles a daily average of 3,000 cases, including relocation, housekeeping, and medical care.
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