\Over the last six months I have had the privilege to undertake several trips to China, visiting more than 20 businesses along the way. Each trip was rich with provocation and inspiration.
Without hyperbole, I am now pretty convinced I have seen the future. So much so, it’s led us to develop a Wavelength China: Inside Innovation programme.
Why? The pace, agility, scale and ambition of what’s going on there is truly awe-inspiring. Once viewed as the ‘world’s factory’ China is leading the charge in tech innovation and subsequently re-defining the expectations and behaviour of tomorrow’s customer.
The country is already at the forefront of the deployment of artificial intelligence (AI), robotics, mass produced self-driving delivery vehicles and has – arguably – taken over the West in terms of innovation.
So, what should we look out for? Here are my top observations.
Alibaba – is this the future of business?
Over the last ten years, Chinese power house Alibaba has evolved from being just an e-commerce company into a vast digital economy that spans across e-commerce, logistics, financial services, cloud computing, digital entertainment and new retail. The breadth of their business is staggering.
Widely acclaimed for ground-breaking innovation, they are changing the future of shopping, banking, dining, sleeping, hospitality, entertainment and no doubt a whole host of other things to come. Their campus rivals the best of Silicon Valley.
As Euromonitor so aptly reports: “their imagination is the limit”.
They are one of the biggest disruptors I have seen and have literally built the future they want their customers to adopt.
HEMA Supermarkets – is ‘new retail’ the future of shopping?
Which brings me to one of Alibaba’s greatest achievements – HEMA supermarkets. Pioneers in ‘new retail’ these cleverly converge on and offline shopping. Part retail theatre, part dining experience, part logistics business: they have created a proposition so compelling grocery shopping becomes a real pleasure!
How does it work? I enter the supermarket with my host. We walk to fresh fish. Using the HEMA app on his mobile he scans the QR code on the crab. The app then tells him when they were caught, by whom and how fresh they are (very as it transpires!). We are given three options: to buy and take home, to have them delivered or to eat them there and then. Within 20 minutes we are dining on fresh crab and lobster in one of the supermarkets beautiful dining areas.
Alternatively, we can place items on a conveyor belt anywhere in the store, to be delivered to home (within a three-mile radius) within half an hour. In fact, hungry customers don’t even need to leave home, a tap on the app arranges for food to be delivered to the door in the same timeframe.
Oh, and he pays using Ant Financial – Alibaba’s fintech platform which has 400 million customers and not a single branch (and is also the world’s highest valued start up!).
HEMA offer fantastic displays of produce. Scanning products with the app reveals details on provenance and shares recipes and ideas. This combines with seamless logistics and distribution. It has entirely transformed the experience of supermarket shopping.
Plus, the HEMA app builds an incredible picture of each shopper, using this data to tailor bespoke offers and promotions. Alibaba’s more than 60 HEMA stores are in major cities across China and aggressive growth is planned. As of October 2018, they had served more than 10 million customers and deliver ten times the profit of Carrefour.
Hi touch and hi tech – the future of service
Alibaba’s boundless tech innovation is also evident in their hotel chain Flyzoo, where I had the pleasure to stay. No more fumbling for (all too often dysfunctional!) room keys as facial recognition technology checked me in and provided automatic lift and room access. I enjoyed the benefits of a fully voice activated hotel room where I could request changes in everything from temperature to lighting to curtains to music. The restaurant cleverly combined human waiters with robots for a seamless (and highly entertaining) meal. I even ordered a bloody mary (extra spice) made by a robot. The rooms deliver excellent uber-cool design and comfort, offering the standard of a Marriott at the price of a Travelodge – £100 a night.
It was abundantly clear that technology is re-defining the future of service. I also met Beijing based Yunji, who develop robots for the hospitality industry. Currently 500 hotels around the world deploy their robots and they can do everything from mobile vending services to meet and greets with customers and guests.
How do they work? A super friendly ‘star robot’ met me in reception, checked me in using facial recognition technology, led me through security, passed me to a smaller robot who led me into the lifts and gave the necessary instructions. The robot then led me out of the lift, down the corridor into the offices, passing me to the third robot that delivered me to my meeting. It was an amazing and seamless experience!
The robots are not designed to look like humans and contrary to popular myth, they are not designed to replace them. But they do have the ability to enormously enhance the customer and co-worker experience, fulfilling basic requests within seconds and streamlining mundane processes that too often involve painful queuing.
Watch this short video which really brings to life the usage of robots and AI in Chinese business.
Then there’s Neolix (also Beijing based) who have developed the world’s first mass produced self-driving vehicles the size of tuk tuks. It’s easy to see how these could quickly become the future of vending, delivery and freight, as they can be fully branded (think driverless mobile ‘Pret a Mangers’ bobbing around Soho!). Twenty vehicles can be operated by a single person and their safety features make them hugely viable for busy inner-city locations. Already these are being deployed around industrial estates and large businesses. In fact, the Swiss Post Office has just acquired four to go between their sorting offices.
Performance electric cars – the future of driving
And it’s not just service vehicles that are being mass produced in China. I also met car company NIO, widely described as the Tesla of China. They design and develop electric autonomous vehicles and were instrumental in the development of the first Formula E series. They describe their cars as ‘a digital companion, a robot on wheels’.
NIO have driven service innovation by making it possible to charge the car’s battery at home in three minutes and offering mobile ‘charging’ vans to come to specific locations.
And they have pushed this service innovation even further through the development of NIO Houses, located directly above their shops and showrooms. These are ‘members clubs’ for NIO users and their friends which they describe as ‘a joyful lifestyle beyond a car’. They offer everything from event spaces to living rooms to creches (or joy camps as they call them!) to forums for talks and workshops. The NIO houses are working so well that there are waiting lists and amazingly customers offering their time to sell cars in return for access. They are a clever and highly innovative marketing platform for the brand, generating good will which can be shared socially and via word of mouth.
Luckin – the future of coffee
And finally, a huge part of daily life for most urbanites – coffee! Chinese start-up Luckin Coffee (launched October 2017) has taken the country by storm operating in excess of 1700 coffee shops and planning another 2800 outlets by the end of 2019. Clever use of technology and competitive prices are attracting customers in droves and forcing Starbucks to up their game (by teaming up with Alibaba). Their exponential growth is astonishing. Most of their outlets are tiny booths that take orders online for pick up and delivery and they don’t take cash. Customers pay with the Luckin app which also offers a generous loyalty scheme, making an essential purchase for the masses easier and cheaper.
Ultimately, they demonstrate Mark Rampell’s (Andreessen Horowitz) astute observation that “the battle between every start up and every incumbent comes down to whether the start-up can get distribution before the incumbent gets innovation.” Starbucks are now furiously scrambling to catch up with Luckin, a business that didn’t exist eighteen months ago.
This piece skims the surface of some truly fascinating and awe-inspiring innovation taking place in China. And in the spirit of Wavelength – we’re eager to provoke, inspire and learn more in the process. So, it’s China here we come!
For more information on the Wavelength’s China: Inside Innovation programme taking place October 13th – 18th 2019, please contact me at email@example.com