While for so many industries, the coronavirus pandemic has spelled disaster, there are some sectors in which the pressure of the crisis has produced diamonds and served as a launchpad for growth. These industries, in China like the rest of the world are now shaping a New Normal and it’s worth being aware of them while formulating your plans for the next steps for your China operation. Why? because their thriving could catalyze the progress of your industry too.
1 – Online education & e-learning
During the corona crisis, the number of e-learners has soared. Oliver Wyman, a management consulting company in the education industry, predicts an annual growth rate of 30-40% in China’s online after-school tutoring market over the next five years.
Disney English Language School’s manager, who recently had to close down in China, explains that the corona crisis has accelerated the already prevalent and unavoidable adoption of online teaching methods. Online education apps and programs have taken the place of traditional learning institutions, which struggled with cash-flow shortages and substantial refund requests. Data proves that more than 50 million students in 30 provinces across China attended online classes delivered through the DingTalk messaging app. Another figure from the same report reveals that the online classroom app, ClassIn, which hosted 200,000 students per day before the Corona crisis, now enjoys an average growth to a jaw-dropping two million students a day.
2 – Automation & robotics
In a reality where people can’t leave their homes, the need for mechanical and automatic services intensifies. Such services are now required in a wide range of industries, from automated manufacturing in plants (a trend that has been in full swing in China even before the corona crisis), through to logistics and remote medical/health services.
A survey by The Association for Advanced Automation discusses the critical role played by automation processes during the corona crisis. The participating companies said that over the last couple of months there was a high demand for automation solutions and a multitude of opportunities brought by the crisis. Over the next 5 years the global industrial robotics market size is predicted to grow by 63%, from 44.6$ billion to 73$ billion.
3 – Computer software & AI
The corona outbreak has shifted almost all every day activities to virtual platforms. From education, social life and bureaucracy, to manufacturing, work and management. The digital infrastructures that enable all of these normally physical tasks and functions to be done properly are software and AI services. These two areas are considered as the foundation on which global business recovery is achievable, as they create solutions that allow for an almost “normal” level of operation in a state of chaos.
Our clients have reported back that there’s substantial demand for AI-based software solutions for optimizing manufacturing processes in China. Despite the corona crisis, their teams in China are very busy, and they project a significant growth in their China operations in the near future. The Chinese market is a significant growth engine for international software companies, and this is not going to change.
Read more about solutions for manufacturing and assembly in China.
4 – Digital media & advertising
Gaming apps, streaming platforms, virtual visits in museums and social media have long been a source of communication, social and leisure. For example, in April the social media app TikTok surpassed YouTube’s users spending, making it the world’s most profitable non-gaming app whilst WeChat’s 2020 Q1’s revenue increased by 3% over each quarter in 2019.
These figures should be met with huge excitement for complementary industries such as Ad-tech, that can benefit from the surge of social and digital media usage. The Chinese digital advertising market has been booming and evolving for more than five years with no slowdown in sight.
Our clients who are operating in China in the Ad-tech industry have indicated an increase in demand for the services they provide, such as using users’ data and historical behavior to help advertisers effectively target their audiences. This is directly affected by the rising use of smartphones and has thus spurred a parallel growth in traffic for the advertisers who promote their brands or products on these apps.
5 – Cybersecurity
It is estimated that the cybersecurity market will grow by almost 50$ billion by 2021. This is of no surprise, as the constant use of and reliance on computers and Internet services raise the risk of malicious cyber-attacks. It is a platform and a medium in which everyone is exposed: organizations’ cloud systems, private users’ PCs/mobile devices, e-commerce websites and even hospitals’ computing systems. It means that all users however big or small need to be aware of data and digital security, especially during this period in which so many of our day to day functions are being digitalized.
Companies that we support in the Chinese cybersecurity industry anticipate a period of tremendous opportunities, as China’s economy continues to re-open and businesses are beginning to spend again. For entrepreneurs this is about new opportunities, and for companies already operating in China it is a chance to increase market share. We all feel that the market has returned to accelerated activity and businesses are trying to mitigate the damage that has been sustained.
As long as China continues to persist in the implementation of its 5G technologies so too will the internet consumption by private users and companies grow. According to a recently released report, by the end of 2020 nearly 300 major cities in China will be covered by 5G technologies. And this is just the tip of the iceberg for the Chinese 5G market which is expected to generate revenues of about $70 billion by the end of 2020 and climb to $540 billion within five years.
This pandemic hasn’t changed the plans of any of our clients and it doesn’t have to halt plans for any business considering an international expansion into a new territory, on the contrary. This could be a real opportunity.
Read more about our China business support and some steps to a solid business in China.