Is China’s new ‘internet plus’ ambition all about new smartphones?

China’s ‘internet plus’ strategy, announced in early March, promised to integrate mobile Internet, cloud computing and big data for manufacturing and promote the development of e-commerce, industrial networks and internet banking.

But how would this ambitious plan to transform the country into a digital economy work in practice? Already more than 630 million Chinese use the Internet and there are 570 million mobile users who feed Internet businesses worth more than 2 trillion yuan (US$323 billion), according to a Ministry of Industry and Information Technology report in 2014.

Yang Weiqing, the founder of iResearch, a leading research group on the Chinese IT industry, thinks that end-user devices are the most important, so the government should focus on smartphones and similar devices, which will be at the centre of all Internet-related businesses and the Internet Plus.

“The smartphone is the fundamental tool to connect all parties on the Internet and can be the starting point of Internet Plus to link consuming, industries and finance,” he said in an interview.

Smartphone makers have already been pushing this view, given the potential for them to grow their sales. Entrepreneur Lei Jun, the CEO of Xiaomi, China’s largest smartphone maker, has called for the devices to be able to connect to all home appliances, which should be built to a universal standard to facilitate connecting them all to the internet.

“Imagine when you put the smartphone on the desk at office or home, all electronic devices will automatically link to it. It will be an amazing experience,” Lei said at a press conference in March.

Xiaomi sold 61 million smartphones and made 74.3 billion yuan in revenue in 2014, and recently has taken a step towards its founder’s ambition by investing in one of the mainland’s major home appliance makers, Midea.

Its rivals have also been active in trying to push smartphones to the fore.

In just the past few weeks, companies have hosted half a dozen new smartphone events around the country, including LeTV, an online video service company that wants to be China’s Netflix and whose phones are optimised for video viewing. It even has designs on the auto industry, looking at internet-connected devices for use in cars.

Meitu, a company popular among the young for its photo editing app, has launched a line of smartphones aimed at young women with high-resolution cameras and apps that can make the user look more beautiful in a selfie.

Some industry watchers have warned of potential bubble in the rapidly growing smartphone business.

Other entrepreneurs think that what the internet can provide in terms of content and services matters than the devices used to connect to it.

“When our business adopts the Internet Plus strategy, it needs to make the transaction from B2C to C2B,” said Shao Jingning, the president of China’s largest online car marketplace, Yiche, referring to two business models for the internet sector: business to customers and customers to business.

He said providing customers with good offline services is the key. Yiche connects more than 70 Chinese cities and provides millions of Chinese with information on buying cars every year.

Liu Yang, founder of YOU+ International Youth Community, which rents low-cost apartments in communities via the web to young people in large Chinese cities through the internet, uses its website as its main platform to do business and is not in a rush to develop mobile phone apps.

“How they like the environment what we provide and whether enjoy living in the community really matters,” Liu said. “But we may develop a mobile app one day. The Internet business is always changing.”

 

Text: SCMP by Wu Nan 23-04-2015

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