How big data will help shape China’s economic future

Chinese companies, even smaller exporters, are increasingly focusing on developing supply chains to leverage data and consumer insights
Firms could target international and domestic consumers using data from e-commerce giants, with the main players shifting to meet demand for advanced technology

Jonathan Merry

Published: 3:30am, 8 Oct 2020

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As the Covid-19 economic crisis takes its toll, Chinese exporters are turning to big data to refocus their efforts in the domestic market and secure long-term export growth. Combined with the growing applications of big data, the rapid changes manufacturers have had to make this year give us a key indication of what the future holds for the Chinese economy.

China’s efforts to become the global epicentre of big data analytics, artificial intelligence and technology are no secret. President Xi Jinping has made clear Beijing’s plans to become the AI leader by 2035, using sequential data capabilities to guide strategies encompassing the economy, national intelligence and military enhancements.

A report from Mordor Intelligence surmises that Chinese companies are increasingly focusing on developing supply chains to leverage data and consumer insights. Examples of China’s plan for enhanced data capabilities can be seen in the business models of Tencent, Alibaba, JD.com and Baidu.

JD.com’s marketing strategy, for example, is underpinned by big data, navigating consumers’ online behaviour for insights in search trends, attention spans, order placements and clicks. Elsewhere, Baidu strategically uses access to big data to support hi-tech initiatives, including mass production of driverless cars and technology that can be integrated into a range of services.

The importance of big data and its multitude of benefits have been magnified by the economic uncertainty during the global pandemic.

Amid the shift in consumer behaviour during the Covid-19 pandemic, an interesting development has been smaller Chinese exporters turning to e-commerce giants such as Alibaba and JD.com for their big data capabilities to pivot towards the domestic market.

Chinese toothbrush maker Tommy Tu, for example, used Alibaba’s trove of data to refocus its products towards the domestic market. This reduced the company’s dependence on exports to 60 per cent of revenue, down from 90 per cent earlier in the year.

Similar effects can be seen in other domestic markets, with exporters making use of large data resources to adjust to changing demands. China’s online grocery market, for example, is predicted to grow by 62.9 per cent in 2020 compared to 29.2 per cent in 2019.

Alibaba and JD.com are leveraging big data to take advantage of the increasing shift towards stay-at-home meal preparation and consumer essentials over dining out amid local lockdowns. This shift in focus using big data can help us understand China’s economic future.

While the US and China have competed for years, there are two main reasons China is in a strong position when it comes to big data.

First, its sheer size gives insight into consumer habits. China has more people, more businesses and therefore more data to use. Second, China has rapidly adapted to growing global demand for mobile technology, putting itself at the forefront of markets on the cusp of huge growth.

One example is 5G. Huawei has played a central role in setting the standard for next-generation mobile networks globally and holds the most patents for 5G. The technology, enabling seamless data collection between devices with unprecedented potential for insights into human activity, has boundless possibilities for economic growth.

By 2035, the 5G value chain is expected to drive US$3.6 trillion of economic output, of which China is predicted to contribute the most in gross output followed by the US. The past two decades have seen huge advancements in the level of data collected by retailers to collate consumer trends, interests and behaviour.

The importance of big data and its multitude of benefits have been magnified by the economic uncertainty during the global pandemic. If this level of growth is matched in other industries in which big data is set to play a pivotal role, the potential impact of China’s economic growth in the future is clear, with innovation, economic upgrades and the labour market all delivering knock-on benefits.

In 2019, China’s big data sector was predicted to grow 30 per cent, earning more than US$106.3 billion in one year. With involvement from the government and major players in numerous industries, big data has become an important concept in defining the future of the Chinese economy.

In addition, the vast applications of AI can be seen in the fight against Covid-19. By integrating data into surveillance, the Chinese government has rolled out some of the most sophisticated track and trace mobile app capabilities in the world, along with facial recognition and thermal scanners to identify those who may have a fever and be carrying the virus.

How could this affect the economy in the future? China reports that its total export value of medical supplies between March 1 and April 30 exceeded 71 billion yuan (US$10.4 billion). Exporters have capitalised on overseas lockdowns and seen a surge in demand rather than the predicted fall.

This surge in demand for medical supplies and lockdown goods is likely to expand to encompass China’s huge advancements in technology within the health care industry, as well as using big data to predict trends and consumer demands for the future. The figures suggest a greater focus on using high-end technology in consumer markets and expanding to encompass military, surveillance and government applications.

There is every possibility that big data could be the catalyst for a shift in the Chinese domestic market altogether. Manufacturers could adopt a two-pronged approach to target both international and domestic consumers using insights and trends from e-commerce giants, with the main players in big data shifting to meet the rising demand for advanced technology.

Jonathan Merry is the CEO and founder of MoneyTransfers.com

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