The Development of Digital Ecosystems in China

China has a population of about 1,4 billion people, and about 900 million internet users. Chinese companies have been really good at serving their massive consumer market, and been pioneering successful business models and platforms. Some of these business models are built of the idea of interconnected digital ecosystems, enabling an end-to-end seamless customer journey.

“A digital ecosystem is an independent group of actors (enterprises, people, things) sharing standardized digital platform to achieve a mutually beneficial purpose.”

– Gartner Research

Chinese companies are driving global trends with their ability to innovate, cooperate and identify gaps in their own service offering. Merger and acquisitions are common among the big tech companies, working as building blocks to their existing business model. If they see potential in enhancing their service offering, they acquire or merge with another company that strengthen their products and services. A common factor among the successful Chinese companies is their large partner network. By relying on having a good partner network, they are able to complement their own service offering beyond their core service offerings. Leveraging their own capability, in addition to their partners, they can build a unique ecosystem that benefits the end consumer.

I want to highlight three companies succeeding in developing and exploiting digital ecosystems:

Ping An – is Chinas largest non-state-owned conglomerate by revenue, covering a wide range of industries from automobile, financial services, healthcare and smart city solutions.

Alibaba – is Chinas largest e-commerce company, operating several online marketplaces.

Tencent – a Chinese multinational technology conglomerate operating in several verticals. They are most known for their super-app, Wechat, a social media app, also referred to as the lifestyle app, covering everything in your daily life from food delivery to travel to ride sharing services. Wechat has over 1 billion active users.


Ping An is most known for being a bank and insurance company. Ping An was founded in 1988 in Shenzhen, the “Silicon Valley” of China. Ping An spends more than $1.7 billion of their revenue every year in technology R&D. Their founder, Peter Ma, has been clear in his vision that technology is and will continue to be essential in developing the business going forward. When covid-19 hit China in early 2020, Ping An had to turn around quickly to support their clients, but also ensure their staff were equipped with the right tools.

Ping An has been focusing on innovation and facilitates seamless connection between their service offerings. Exploiting synergies in the ecosystem creates value for the end consumer, but also for their own employees. Ping An has traditionally called themselves an insurance company, but this has changed over time, as their insurance offerings are rather a result of their core business, which is finance and technology. They engage with the users by offering financial services from one platform, rather than focusing solely insurance.

“Finance and technology are our core businesses. Ping An leverages innovative technologies to support ecosystems: financial services, health care, auto services and smart city services.” 

– Ping An

Ping An’s customer base has grown as a result of their ecosystem model. Customer touch points are increasing as they leverage different services across their business. For instance, insurance does not involve a lot of customer touch points as its usually a one-time process, with auto-renewal. This is where Ping An has been strategic, developing a platform of financial services, leveraging technology to attract and support customers.

Image credit: group.pingan.com

“We’re part of the insurance industry, where face-to-face interaction is very important. We’ve always used digitization as support, and have our own video apps to do morning meetings and training remotely. But it’s not a sufficient sales-management tool. Our customers are not yet used to talking to us remotely, so our agents were actually back up and running very quickly. The leap to digital has to be done right.”

– Jessica Tan, CEO of Ping An.

Ping An was initially founded as an insurance company, but has now become a major player in financial-services, healthcare, insurance, and smart city solutions sectors. Ping An is able to drive growth through cross-selling by promoting their wide range of complementary services. This is when the true value of ecosystem is becoming present.


The different marketplaces operated by Alibaba

Alibaba is the largest e-commerce company in China, operating 6 marketplaces of which trade between buyers and sellers are being facilitated. Alibaba, founded by Jack Ma, has built its own ecosystem covering a wide range of services within finance, logistics, technology and commerce. To cover all aspects of the consumer journey, they have made a number of acquisitions along the way.

In addition to their e-commerce platforms, they also own and operate different companies that complements their e-commerce platforms:

ALIPAY: A third party payment platform launched in 2004. This is a major part of peoples lives, and is based of the embedded QR code technology which is widely used all over China. Alipay provides the consumers with a secure way to transact on their platforms.

ALIYUN: Alibaba’s own cloud platform which ensures the massive volume of transactions are being handled and processed.

ALIMAMA: Their own digital marketing platform that provides marketing and advertising services to the sellers.

SMART LOGISTICS (CAINIAO): Alibaba has a major stake (51%) in Cainiao, their logistics arm. They increased their stake in 2019, to strengthen their logistics capabilities. They have been struggling to compete against their rival, JD.com, when it comes to deliveries as JD.com has built their own logistic hub with warehouses all over China.


Tencent is the last company I want to highlight. Tencent is one of the largest investment companies in the world and the largest gaming company in the world. They are also one of the largest social media companies, most known for the “super-app” Wechat. Their fintech business is a result of their wechat platform/app, where wechat pay is the foundation for all transactions.

Screenshot of Wechat app and wechat pay.

Wechat has become the central ‘tool’ in Tencents development of their intelligent ecosystem. Everything is connected through Wechat, and as you can see on the screenshot, you can access plenty of services inside the one app, resulting in a lifestyle app. By connecting partners onto to this app, they are simplifying the customer journey. One example is when I need to grab a taxi, then I can find a taxi using a so called ‘mini program’ (sub-application) inside Wechat. When I am arriving at my destination, I pay using the same app, Wechat pay. Everything is done through Wechat. Read more about Wechat in my previous blog post: https://digovation.com/2020/07/10/the-superapp-wechat-connects-companies-with-millions-of-consumers-through-mini-programs/

Tencent has invested heavily in developing their partner network, and efficiently connect this into a powerful ecosystem that serves customers and enterprises. This has been applied across many industries, including retail, finance, tourism, healthcare, transportation and education. One of Tencent’s partner within commerce is JD.com. This partnership has been formed to compete against Alibaba. JD.com is a e-tailer, and leverages Wechat as a social media platform to engage with the users in the social commerce space.

Image credit: Pintrest

Looking into Tencent’s ecosystem, we quickly find partners across several industries. For instance, In the commerce space, Tencent has their partnership with JD.com, which is seamlessly connected with their Wechat app. Consumers can share and buy products together, creating a social shopping experience. Tencent also have their own cloud service, Tencent Cloud.

When it comes to payment, Tencent has Wechat Pay, a part of the Wechat app. Wechat Pay and Alipay (Alibabas payment service) have a total of over 90% market share in China. These two payment apps are essential in day-to-day life in China.


In today’s society, lines are becoming increasingly blurred. This has only been amplified by the pandemics. There are no clear definitions of industries anymore. Its much more about the value chain, and how to create a seamless end-to-end experience for the consumer.

Sources:

https://group.pingan.com/about_us/our_businesses.html

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