PERSPECTIVE: China's Digital Technology From Copycatter to the Copycatted

Part one of the two-part perspective on China's digital trends and the shift away from the copy-to-China mindset with super apps like WeChat.

Author: Steve Kanaval   

This year's digital trends report by Mary Meeker, Queen of the Internet, was not its usual enlightening ray, but there were some very interesting touchstones, and some of those had to do with China. In the past, Chinese apps and technology were copycats of American ones, rebranded. Now, China is leading the way in digital innovation with a harvest of "super apps" that are offering users services that have surpassed anything in the U.S. or Europe. 

To be clear and define terms, a super app is defined by its seamless, unified experience to major online hubs, bypassing individual company websites and different interfaces.

While American tech giants have struggled to contain the pervasive hate on the internet, China's WeChat connected the services of Amazon, Uber, Facebook, Instagram, and Venmo all under one interface. 

Furthermore, WeChat has built-in utilities with no rival in the western world like hospitals with appointment systems available right on WeChat or investing services also available right on the app. Reaching rare air, the app had surpassed a billion monthly users and many Chinese users essentially live in the app, while both Western and Asian companies have copycatted some of WeChat's features. For example, Facebook's messenger feature was supposedly inspired by WeChat and their popular red packet digital payment system (Red packets, or hong bao, are a well-established tradition within China) is now mimicked by many apps across the Mainland.

Another super app, Meiutan-Dianping is essentially built with this same architecture of an operating system. The app's offline-to-online and on-demand convenience generate 1,783 services every second with customers using the app three times a week. Meiutan's elegant interface and coding allow for complex services like hotel booking and food delivery to be completed with a few clicks. All told, the app facilitates 27.7 billion transactions (worth $33.8 billion) for more than 350 million people in 2,800 cities, which is why the app was named most innovative by Fast Company. 

However, Meiutan is more than just a clever app bringing retailers and services to consumers. The company deploys 600,000 motorbikes to deliver millions of food orders daily.

"Our strategy in integrating different businesses," Huaxia Xia, Meituan's chief scientist, told the magazine, "is to attract a large volume of users with high-frequency services, and then push forward some low- and medium-frequency ones like haircuts and marriage services."

This why Mary Meeker's report shows that most of the internet's growth is happening in China with 21 percent of global internet users. 

In fact, the data Meeker presents about China (via HillHouse Capital Partners) is astounding. Chinese cellular data usage accelerated 162 percent year-over-year from 2017 to 2018. In addition, another insight Meeker and associates pinpointed in China was that short-form video is one of the key drivers of internet growth, which is also driving time spent online. 

Meituan directly appears in Meeker's report as a super app with 30+ services and 412MM annual transacting users, and Meeker specifically points out the wide-ranging functions of the Meituan app versus separate U.S. peers. The image from her reports shows how the app combines Yelp, OpenTable, Square, Booking.com, GrubHub, Uber, Kayak, Airbnb, Fandango and more.

One look at the world's largest unicorn companies also reflects Meeker's data as ByteDance, owner of the inescapable short-form video app TikTok, sits at the Number One spot. And, unlike WeChat and Meituan, ByteDance's TikTok has a global devoted following spanning far outside of China, and the company is far from a one-hit wonder. 

(The opinions expressed by contributing analysts do not reflect the position of CapitalWatch or its journalists. The analyst has no positions in any stocks mentioned, no plans to initiate any positions within the next 72 hours, and no business relationship with any company whose stock is mentioned in this article. Information provided is for educational purposes only, may be incomplete or out of date, and does not constitute financial, legal, or investment advice.)

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