Alibaba vice chairman Joseph Tsai said at a recent forum in Hong Kong that the city is lagging behind the mainland in internet development.
China has huge regional disparities and imbalances. Only the internet can reach different areas and communities in such a vast country.
Internet focuses on personalization, such as B2C or C2C. Tsai believes there are still enormous opportunities in China’s internet space. The nation is a vast test room, which offers great opportunities for technology firms to explore.
Unlike other mature markets, the nation has far less rigid regulations that could stifle innovations.
He said Alibaba and other Chinese technology firms will continue to concentrate on the rapidly growing domestic market, which is the world’s biggest market.
Success in China will boost their cost efficiency and competitiveness, which in turn will help them expand elsewhere.
Hong Kong is quite unique. The tiny city has very efficient transport networks, which in a way have made internet development quite slow.
Tsai stressed that Alibaba is only an investor in internet finance, and has set up Zhong An Insurance with Ping An and Tencent.
“If you think there is no rival in a certain market segment in China, you should jump into it. Then focus on expanding and becoming the market leader, taking up the biggest market share,” he said.
Internet creates demand or fills market gap. For example, those born in the 1980s or 1990s are used to interacting through the internet. They don’t like reading newspapers, and they would rather spend three hours on their smartphones every day.
In fact, mobile phones have already become mini-computers. And members of the young generation, who are mostly the only child in the family, care a lot about their personal identity.
Their consumption and investment habits are quite different from those of the older generation.
For example, young people would spend 80 or 90 yuan if they have 100 yuan. By contrast, middle-aged or elderly people would save more.
In terms of investment, young investors have not lost confidence in the stock market despite the market turmoil this summer. They continue to trade and invest more in stocks.
They use the internet to buy and sell stocks more frequently and aggressively, thereby boosting the revenue of financial service providers.
How could Hong Kong tap into China’s vast and deep market?
The city should enhance its role as a global financial hub after the A-share market meltdown. Global investors will still favor Hong Kong thanks to its legal system and rule of law.
Hong Kong needs to develop internet finance, which would enable mainland investors to access its market through the internet. Also, foreign financial organizations are keen to enter the China market through Hong Kong.
Meanwhile, traditional industries normally lure customers through discounts or sales. However, customers may not visit them again after the promotion.
These traditional companies need to strengthen their bonding with their customers, and offer more customized products or services, like tailor-made suits, make-up, hair styling, etc.
In order to achieve rapid growth, these companies need to rely on big data to understand the specific needs of every customer.
Meanwhile, there are up to 100 trillion yuan of investable assets held by Chinese investors, and only 2 percent are being invested at present. There is a vast potential for growth.
Internet can help understand customers’ needs, and help adjust their investment goals, demand and risk appetite, in order to find the most suitable products and services for them.
Internet finance would enable Hong Kong to leverage on its strength and expand its presence all over the country.
It would also be a hot spot for China’s economic restructuring in the next five years.
This article appeared in the Hong Kong Economic Journal on Nov. 27.
Translation by Julie Zhu
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