The Biggest Tech Trends From China To Watch Out For In 2017
China’s technology sector dominated headlines in 2016 both in the Middle Kingdom and abroad, ranging from coverage of Uber’s merger with Chinese rival Didi Chuxing to the newly popular bike-sharing apps.
Just a few years after China’s tech scene emerged, the conversation has shifted from questioning if Chinese firms can innovate to how Western firms can mimic the success of Chinese mobile apps, such as WeChat. As the year comes to a close, analysts and VCs are now shifting focus to new emerging trends and companies.
A Boom in Fintech
Financial products aimed at an emerging and growing middle class are on the rise and are expected to grow amid burgeoning demand.
China’s consumers have skipped many stages in their technological progression, bypassing aging Western technology in favor of new trends, said Jeremy Peruski, from ICR, a consulting firm.
“I really do believe that China is becoming a global hub when looking at global technology and they historically have led with creating financial products,” Peruski said. “This will only continue to accelerate because we see China skipping growth patterns we saw in the U.S.”
Credit cards have never taken hold, with most customers opting instead to use their phones and payment apps such as Alibaba’s payment system, Alipay, and WeChat. An Ernst & Young report found that 40 percent of consumers in China now use new payment methods.
Further underpinning growth in the country’s fintech segment is a new social credit system that the government expects to fully implement by 2020. The system assigns each citizen and business a credit score based on their social behavior, previous purchases and other financial data. The score would then be used to determine a person’s eligibility for everything from loans and government jobs to where they can travel.
While the system has been criticized as draconian and a further reach into the lives of the country’s private citizens, eight of China’s largest companies are developing credit systems that could be incorporated into the new system, including Alipay and Sesame Credit – both offshoots of Alibaba.
In the meantime, China’s peer-to-peer lending segment is expected to continue to grow over the next year to fill the space left by more traditional banking. China Rapid Finance, one of the country’s largest consumer lending platforms, facilitates in providing loans to online consumers and the middle class, who by and large do not have access to credit scores. The company currently has more than 1 million borrowers, and analysts anticipate that number will rise.
About the Author
Mark Schlarbaum, Irvine, California