OppOrtunities fOr fOreign enterprisesin China’s evOlving digital wOrld

YOur lOCal eXpertChina digitalizatiOn COmpetenCe Center

China‘s digitalizatiOn push– aCCelerate YOur pOtential

2

digitalizatiOn as CatalYst fOr grOwth

1) unicorns: privately-held startups valued at > 1bln usd

China accounts for almost one quarter of the global manufacturing capacity. however, rising labor and capital costs increasingly pressure companies in China to innovate beyond mere efficiency improvements.

with a young and highly tech-savvy population combined with a ready-to-take-risk business mindset, China is rapidly embracing digital technology in consumer sectors. in particular e-commerce and mobile payment platforms have transformed business models, disrupted traditional sectors and heavily increased the convenience for the Chinese consumer. platforms have emerged in China at an unprecedented scale – and provide a substantial basis for an accelerated digitalization push.

strongly driven by first-tier internet giants Baidu, alibaba and tencent‚ as well as later emerged players didi, meituan and toutiao, China is creating a multi-industry digital ecosystem with tremendous investments into digital technologies and is now home to almost one-third of the world’s unicorns1). policy makers actively support digital innovation and entrepreneurship by offering investment support, driving the development and consumption of new technologies and giving companies room for experiments.

Chinese companies are rapidly catching up to shape global industries through innovative digital technologies. in order to benefit from China’s digital transformation, foreign companies need to put China at the center of their digital strategy. furthermore, one can establish ‘watch lists’ on billions of dollars of investments in hidden and public digital outbound acquisitions in western markets. China is no longer just developing isolated digital appli-cations for the middle Kingdom – but is re-defining the global innovation ecosystem.

eaC has been active in China for more than 25 years. Our first-hand knowledge through local resources and exis-ting networks enable our strong digitalization competence in a dynamic business environment. Benefit from our extensive industry and asia insights and use us as a catalyst for your future success on digitalization in China and beyond.

dietmar KusCh madlien lOrenzeaC partner eaC managing COnsultant

China gOes digitalnumbers to impress: China‘s digitalization scale is leading the world

36% of global unicorns are from China

>1 bln monthly active users are on weChat

>3 bln usd is the valuation of the world’s most valuable ai start-up – a Chinese company

digital services and platforms to cut out middlemen are booming in China for both B2B and B2C sectors

end-to-end connectivity can amplify business performance by bridging the contact between manufacturers and end customers

end-tO-end COnneCtivitY

is YOur COmpanY utilizing

the Chinese eCOsYstems?

sharing of durable goods, daily supplies and even services is already deeply embedded in day-to-day life of Chinese consumerism

user reviews are proactively given and commonly shared by consumers in digital ecosystem which strongly impact user experience

sharing eCOnOmY

are YOur retail Channels and

CustOmer tOuChpOints up-tO-date?

visualization with assistance of digital ecosystems and vr to achieve real time tracking and experience affect both B2C and B2B industries (e.g. customer service via vr)

additive manufacturing to turn 3d data into physicals leapfrogging in China

dematerializatiOn

is YOur faCtOrY readY fOr

China‘s dYnamiC innOvatiOns?

3

KeY fOrCes fOr China‘s digitalizatiOn

QuestiOns tO fOreign COmpanies

30% of global robotics purchased in China

in 2017

China‘s government invested

>15 bln eur into ai

By 2025, China is expected to account for 40% of global 5g users

amBitiOus targets and strOng investments transfOrm industries

KeY digitalizatiOn pillars shaping China’s eCOnOmYsupported by government investments and regulations, various industries increasingly digitize their operations and business models. foreign players can benefit from the existing ecosystem and platforms in China but need to act now to participate in future growth.

4

eaC digitalizatiOn mOdel Of China‘s KeY industries

smart manufaCturing n digitalization and automation in manufacturing are one of the

key pillars of the “made in China 2025“ initiative

> China still lags behind industrialized nations in smart manufacturing and thus heavily relies on foreign technology – however, application openness (i.e. for robotics and additive manufacturing) far outsteps the west

> innovation frontrunners like home appliance manufacturer haier, hisense and midea as well as construction machine suppliers sany and zoomlion have built “internet/ digital factories“

industrials

5

mOBilitY disruptiOnn digitalization focus driven by Oems, policy makers but also

experimental consumers/ early-adapters

> integrated shared mobility concepts such as shared bikes and shared cars digitally connected to one another and integrated with public transportation

> Business model innovation: by-passing dealerships via apps or e-commerce platforms to enable direct touchpoints along the customer journey

> Car connectivity, focusing on in-vehicle infotainment, customer-driven co-creation, smart surfaces and connected after-sales offering targeted at tech-savvy Chinese

smart healthCaren empowered by a rising middle-class, digitalized smart

healthcare is transforming China’s inefficient medical system n China’s government pushes smart healthcare through “internet

plus health” policy and “healthy China 2030” initiative

> iot-driven remote treatments and online doctors enable direct connections with patients and remote digital health and wellness treatments

> ai-empowered diagnosis supports the accuracy and consistency of treatments

> wearables and platforms like alihealth combined with cloud-based healthcare Big data inform patients on their health conditions instantly

digital COmmerCen early adaption of digital technologies has transformed a highly

inefficient and fragmented retail industry into one of the most digitalized ones

> Omnichannel retail, strongly invested by China’s Bat (Baidu, alibaba, tencent) promotes completely new retail concept: seemless integration of online into offline channels

> digital grocery stores with online payment and vr/ ar solutions – completely unmanned stores are a reality already

> e-commerce driven logistic innovations like Jd’s drone delivery increases efficiency through last mile optimization and user base by reaching rural areas

> Content-focused e-commerce, driven by social media and KOls, is amplifying customer centricity

> analytics-driven offerings generated by China’s massive consumer base on China’s ‘super-apps’ enable mass customization

mOBilitY

healthCare

COnsumergOOds

6

Big game: China‘s eCOsYstem fOr digitalizatiOn – partnering and investment OppOrtunities fOr fOreign COmpanies

made in China 2025initiative to comprehensively upgrade Chinese

industry by implementing various guidelines that link digital information technology tools with

production processes

internet plus+government initiative to introduce internet, cloud computing and iot into industrial production – goal is to sti-mulate economic growth and to take advantage of the trend towards digital businesses

smart CitiesChinese government pushes into funding official smart-city initiati-ves interlinking public services and

bringing real-time information for citizens online

teChnOlOgY fundingChinese technology companies have easy

access to various funding sources, i.e. government subsidy, angel/vC/pe investors,

crowd funding, Chinese new third board market and China new era technology fund

innOvatiOneCOsYstem

China

impliCatiOns fOr fOreign COmpanies tO gO digital in ChinastrategY implementatiOn aChievement

CustOmer-CentriC digital strategies

full utilizatiOn Of digital eCOsYstem

maXimized Big data and analYtiCs

Identify (unmet) customer needs and digitalization opportunities

Outline partnering and invest opportunities in China‘s ecosystem

Influential role of digital platforms in China due to cross-sector services and super-apps

Re-design the online/ offline customer journey

Massive amounts of data generated every day (>700 mio users) with open data sharing and strong opportunities to monetize

agile OrganizatiOns

digitalize OperatiOns

utilize newestBusiness mOdels

6 7

eaC prOJeCt fOCus and enaBlers

digitalizatiOn in China – eaC suppOrtahead of innovation trends through strong regional expertise and networks along all major industries

eaC eXpertise at a glanCe

YOur lOCal eXpert in emerging marKets sinCe 1993

funCtiOnal COmpetenCiesstrategYm&aOperatiOnal eXCellenCe

> 100 eXperts

OffiCes inmuniChshanghai mumBaimOsCOw

emerging marKetsChina indiasOuth east asia nOrth asiarussiaCee

industrY COmpetenCiesmOBilitYindustrialsinfrastruCtureenvirOnmentChemiCalshealthCareCOnsumer gOOdsadvanCed teChnOlOgies

Outside-in assessmentn major digitalization trends and future

scenarios in China n implications on current business

model and product offering

Competitor Benchmarkingn Key digitalization success factors of

domestic and foreign best-in-class competitors in China

Organizational Change requirementsn Comprehensive assessment of

organizational and talent requirements necessary to meet digital transformation

digitalization Cooperation Optionsn identification and assessment of

potential partnering/ cooperation optionsn innovation through platform and start-up

collaboration

digital strategy developmentn prioritization of digital initiatives and levers

shaping customers’ digital journey n Clear digital strategy roadmap

facilitated by digitalization workshops

digitalization ecosystemn Best-practice benchmarking n digitalization white spotsn improvement levers: Business models,

processes and structures, product features

guide & facilitate Qualification initiativesn identification of organizational and

qualification gaps n Concrete initiatives to close them:

coaching, workshops, restructuring

eaC local networkn strong understanding of local market trends and key players as well as access to corporates and start-up’s in China / for China

understanddigital market &

ideation attractiveness

learnBest-in-Class digitalization

use Cases

implementdigital Organizations

and Competences

aCCeleratespeed up your

digitalization strategy

eaC muniChheadQuarters

eaC shanghai eaC mumBai eaC mOsCOw

www.eac-consulting.de

latest eaC digitalizatiOn prOJeCts

YOur eaC eXpertsfOr digitalizatiOn

eaC – euro asia Consulting partgwidenmayerstr. 2980538 munich germanY

phone +49 89 922993-0eac-muc@eac-consulting.de

eaC – euro asia Consulting sunyoung Centre rm. 801 - 398 Jiangsu road 200050 shanghai China

phone +86 21 3250 5960eac-sha@eac-consulting.de

eaC – euro asia Consulting pvt. ltd.306-310 peninsula plaza a/16veera industrial estateandheri (west) 400053 mumbai india

phone +91 22 26742491eac-mum@eac-consulting.de

eaC – euro asia Consulting OOOmelnitskiy per. 1 105120 moscow russia

phone +7 495 6401013eac-mos@eac-consulting.de

dietmar KusCh eaC partnerphone +49 89 922993-0dietmar.kusch@eac-consulting.de

madlien lOrenzeaC managing COnsultantphone +49 89 922993-275madlien.lorenz@eac-consulting.de

n Business model ideation for EV’s and related charging

services

n Dynamic real estate footprint assessment and appraisal tool

n Digital sourcing platform with early warning system

for machinery components

n E-service platform including after sales support, spare parts orde-ring and remote maintenance

n Digital sales platform

for commodity chemicals

n Business model piloting for supply chain integration

n Start-up and ecosystem screening

for eHealth offerings

n Market and infrastructure potential for remote

diagnostics

n Ideation & innovation on ‚integrated

smart home‘ from focus groups to design and engineering studies

n Platform utilization for integrated Marketing and

Sales concept

n E-commerce go-to-market strategy

n Touch point optimization along digital customer journey

n Social Media branding push