Beijing

Future market China

In China, the world of tomorrow is emerging today. The Chinese pour billions of euros into research and development. This enthusiasm for technical advances, such as digitalization, artificial intelligence and electric mobility, has turned the country into the blueprint for the automotive world.

03/14/2019 Copy: Michael Radunski - Photos: Tobias Sagmeister, Jens Passoth - Illustrations: Eva Revolver Talking Business Reading Time: 5 min

General willingness to buy a self-driving car in 2017

Whether autonomous driving or digital services:  The Chinese are particularly open to anything new. 1

A park for artificial intelligence

Paved paths snake their way through meadows, shrubbery and trees. Decorative pavilions and small benches offer a place to relax. This tranquil park is located in the Beijing district of Haidian, where hundreds of high-tech companies have made their homes. Baidu is one of them, the company that operates China’s largest search engine – and the world’s first artificial intelligence park. Here, every visitor can take an individual journey into the future.

At the entrance, visitors stow their valuables and bags in lockers that operate using facial recognition. Afterward, self-driving mini-buses take them on an excursion through the 34-hectare park. Anyone who is interested can take Tai Chi lessons from virtual trainers in the augmented reality sections. Joggers can have their running performance monitored by smart streetlights and cameras, and then have their speed, route and calorie consumption analyzed and displayed on monitors. Artificial intelligence is no longer just about robots, says Robin Li, the head of Baidu: “Everyone can do AI.”

Shenzhen
Shenzhen, also known as China’s Silicon Valley, is considered the epicenter for electric mobility, electronics and telecommunications. The metropolis is one of the fastest growing cities in the world.
Illustration

Internet users in millions. Source: McKinsey Global Institute

Crazy for the latest technologies

The days are gone when China, as the workbench of the world, produced masses of cheap products for Europe and the United States. After generating double-digit growth for decades, the country is now one of the leading industrial nations. Today, billions of euros are being poured into the research and development of cutting-edge technologies. No other country registers as many patents as China. Propelled by the government’s strategic plan “Made in China 2025,” Beijing has finally set its sights on becoming an industrial superpower.

The interest of the Chinese in new technologies is a plus here. This is reflected in everyday life, for example at the restaurants operated by Haidilao, one of the most popular restaurant chains in China. The lines in front of its locations in such rapidly growing cities as Shenzhen, Chongqing and Guangzhou are as legendary as the quality of the hot-pot dishes in which fish, meat, vegetables and noodles are stewed in broth.

Your phone in the car, the car in your phone
The very first computer that most young Chinese ever had was a smartphone. However, the Chinese use their mobile phones less like computers and more like an electronic companion or even a virtual self. Interfaces between the digital and real worlds are plentiful. Chinese use their smartphones not just for chatting, but also to order and pay for clothes, food, vacations and, not least, cars. Loans and insurance policies? Handled by smartphone. The shuttle to the airport? Ordered and paid for by mobile phone. This open enthusiasm is turning China into an orientation market for the technologies of the future.

Fusion of the traditional and modern worlds

Haidilao combines tradition with the future in completely automatic restaurants. Robots take orders, cut up the vegetables in the kitchen, filet the raw meat and then serve the food at the tables. The customers appear absolutely delighted with the fusion of the traditional and modern worlds. Food preparation is cleaner and safer as a result. A cook can cut a finger, meat in the pot may not be cooked completely – but all these problems will be eliminated in the future thanks to this “smart” workforce.

Not a step without their smartphone

“The Chinese are much more open to new technologies than Europeans and Americans are,” says Jeffrey Towson of the University of Beijing. To understand this difference, the expert advises people to just look at what the Chinese hold in their hand: their smartphone. About 700 million Chinese use one today. Always online, always reachable.

The Chinese do absolutely everything with their mobile device, with phone calls being the most banal task of all. They chat, watch videos, place orders, take courses and book taxis, hotels and train tickets. Once they are done, they pay for everything with their smartphone, too. “In Europe, people carry cash, and more modern consumers use credit cards,” Towson says. In China, credit cards will never be modern: From luxury hotels to street vendors, a smartphone is used everywhere for mobile payment. Experts call this leapfrogging: when people deliberately skip over a particular technology.

Always online, always reachable. The Chinese do absolutely everything with their mobile device.

Always online, always reachable. The Chinese do absolutely everything with their mobile device.

Digitalization is the key to success

From mobile payment and big data to deliveries made just minutes after an order is placed – China’s rapid modernization is based on far-reaching digitalization. Users have one top priority: Service must be fast and convenient. This was the secret to success for a startup called Luckin Coffee. Luckin was not established until November 2017, but since then, the company has grown at a breathtaking pace and is now launching an attack on the giant in the business. “Starbucks is all about a good location, while Luckin wants to get into your smartphone,” Towson says, explaining the two companies’ different approaches. In the blue-and-white Luckin shops, customers can only use their mobile phones to pay.

The smartphone has paved the way to success in China. You can see that on the streets of Beijing, too: Here, the companies Mobike and Ofo have made the bicycle rental business attractive again with their digital sharing service. Dozens of bright red bicycles are parked on virtually every street corner. Fixed stations have been taken out of service. Instead, customers use GPS on their smartphone to locate the bikes. When customers scan the QR code located on the bicycle’s fender, they receive a text message with a code to unlock the bike – and off they go. It’s fast, inexpensive, digital and convenient.

Quota for electric cars

Yet while bicycles still rely on human pedaling power, cars are increasingly using energy produced by electric motors. “China can become a world market leader in the automotive industry thanks to new energy vehicles,” says Hu Xingdou, a professor at the Beijing Institute for Technology. In 2018, more than one million cars with electric or plug-in hybrid drive were sold for the first time in China. No other country has so many electric vehicles on the road.

And this share will climb, due to a government-ordered electric quota. Expressed in simple terms, car manufacturers must now meet the following requirements: Starting in 2019, 10 percent of the vehicles they produce in China must be electric, by 2020 the figure must rise to 12 percent. In 2025, 25 percent of all vehicles sold in China must be electric.

Ready for the digital era

Patents

420,144

In 2017, China was granted the most patents

Smartphones

85%

17 out of 20 Chinese have a smartphone

Internet

98%

Desktop or tablet? No: the Chinese almost always surf using their smartphone

China as the blueprint

In taking these steps, China is becoming the blueprint for the automotive world – not least due to its openness to technological innovations. 83 percent of Chinese would in principle buy a self-driving robot car, according to the Boston Consulting Group. Only 48 percent of Germans would be willing to do the same. A McKinsey study also found that 52 percent of Chinese were willing to give up car ownership. The main thing is car availability – conveniently orderable via an app.

For Chinese customers, what matters is how easily cars fit into their digital world – in terms of general availability and digital connectivity. In other words, in China the car is evolving into a type of smartphone for the road – a genuine mobile device.

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