China is rapidly becoming a leading designer of digital products, services, and business models, a seismic shift in focus that’s being enabled by its world-class communications infrastructure and the sheer numbers of its connected consumers.
That’s according to Mark Joseph, Technology, Media and Telecommunications Leader at Deloitte, who believes that these developments in the world’s most populous nation could have profound implications for South Africa and other African countries as internet connectivity becomes faster and more ubiquitous across the continent.
“China is no longer that place you get cheap tech products from; it’s a country that’s increasingly innovating in a number of critical areas that leaders here in Africa, both in the private and public sector, can look to for inspiration as they seek to solve local problems and unlock new opportunities for their citizens,” says Joseph.
“There’s a new role model out there and it’s bringing in a lot of innovation into the digital space.”
He was commenting on insights that emerge from Deloitte’s 18th edition of Technology, Media & Telecommunications Predictions. Some of the most startling of these are in the chapter titled China, by Design and relate to the enormous scale of internet connectivity there, both fixed and mobile.
The report predicts that in 2019 China is likely to have over 330 million full-fibre connections, representing about 70 per cent of the world’s total. It will have almost 5 million 3G/4G base stations and 1.2 billion 4G subscribers, representing at least a third of the world’s total.
Over the coming years, China is also poised to become one of 5G’s leading markets, enabled in large part by the volume and density of the 4G network that the country has already built out. China had almost 2 million cell sites in early 2018; this compares with about 200,000 in the United States.
Deloitte predicts that this world-leading communications infrastructure will provide the foundation for at least three significant new industries, each of which could generate tens of billions of dollars in revenue annually by 2023: mobile payments, online shopping via smartphones and bike sharing.
“In China, 600 million people will use their phones to make mobile payments in 2019, about 550 million people will regularly use their smartphones to shop online, and about 200 million people will use bike sharing services,” says Joseph.
“The huge number of people using these new industries is a real eye-opener, dwarfing the populations of all but the most populous countries. This allows China to innovate and test at scale, with the technologies, algorithms and business models that work best rising to the top.”
This, says Joseph, offers African decision makers an opportunity to emulate and adapt the models most relevant to local needs. “Bike sharing, for example, may not be immediately relevant to South Africa, but there may well be applications for other African countries.”
In addition to these three industries, Deloitte predicts that China’s communications network will be the foundation of several key new bandwidth-hungry applications, most notably machine vision, social credit, and new retail concepts.
“Machine vision uses artificial intelligence (AI) to recognise and categorise objects and images,” says Joseph, adding that an application already receiving significant attention is facial recognition.
According to the Deloitte report, machine vision’s potential for identifying criminals is being tested in many cities around the world, including Washington, DC, Dubai, and London. In addition, airports in the United States, Canada, Australia, and the United Kingdom are piloting the use of automated facial recognition to detect illegal aliens using a false identity.
Joseph says machine vision is also a key component of another trend identified in the Deloitte report, new retail concepts. As an example, he cites Amazon Go stores in the US which use machine vision, in combination with other technologies, to identify customers and the products they select, as well as to authenticate purchases, all without human intervention.
“While Amazon plans to have 10 of these autonomous stores operating by the end of 2019, Chinese companies are taking the self-service store concept to another level entirely. Bingo Box, for example, already operates 200 stores and plans to roll out 5000 by end of this year.”
Significantly for less developed markets, many of these Chinese businesses employ older technology like QR codes, meaning uptake is significantly higher than it would be if only cutting-edge technology were used.
“This is tremendously encouraging for us here in Africa. It shows we can start moving now to capitalise on these exciting trends, adapting and optimising our models as internet connectivity becomes faster and more widespread, enabling new technologies and unlocking significant new opportunities,” concludes Joseph.