China is the fastest growing and most dynamic global market for emerging digital technologies. With 900 million plus internet users and a vibrant consumer economy, China is experiencing rapid and large-scale deployment of emerging technologies, including 5G, advanced AI, IoT and blockchain-based technologies. Its digital economy is worth 30% of its GDP.
China accounts for almost half of the world’s e-commerce transactions, is home to nine of the 23 privately held FinTech unicorns and holds 29% of the world’s renewable energy patents. Advancements by companies like Huawei, Baidu, JD and Tencent are helping the Chinese economy grow at an unprecedented rate and influencing the global economy.
In 2019, China's total import and export of high-tech products exceeded 1.5 trillion US dollars and international collaboration has become the most important part of China's technology development. Leading Chinese tech companies work closely with overseas suppliers, start-ups, academic institutions, and investors. There are significant synergies between the UK’s innovation strengths and China’s deployment of technology on a massive scale.
Advancements in technology and innovation are at the core of China’s 14th Five Year Plan, which had set out new opportunities for UK exporters to enter China’s increasingly mature technology supply chains. However, market access challenges, IP-related concerns, and growing political barriers create several challenges for exporters in the UK tech sector. CBBC works closely with our Members and a wide range of tech clients operating across consumer, industrial and service industries to navigate market entry barriers, land softly, find business partners, and scale-up effectively in China. We provide a platform for you to develop your understanding of the Chinese tech landscape and to navigate market barriers by joining our curated digital missions and pitching events to meet tech investors, clients and partners, roadshows, accelerators and tech forums. Utilise our tailored market research and training services for exploring China opportunities and connecting with potential Chinese clients, partners, and investors.
An Overview of China’s Technology & Innovation Sector
Tackling Modern Challenges Post Covid-19
Widespread and rapid deployment of tech and big data to address the COVID-19 crisis highlights the positive and transformative impact China’s tech sector is having globally.
According to a 2020 report released by the World Economic Forum, the COVID-19 pandemic has accelerated 10 key technology trends, including online shopping and robot deliveries, digital and contactless payments, remote working, distance learning, telehealth, online entertainment, supply chain 4.0, 3D printing, robotics and drones, as well as 5G and information and communications technology. China’s indigenous innovation has shaped world class platforms and services, thus tech as an enabler has created new opportunities for international businesses to engage with the market.
China’s software sector revenue grew by 15.4% year-on-year to 7.2 trillion yuan ($1.03 trillion) in 2020, while profit was up 9.9% to 936.2 billion yuan, according to statistics published by the Ministry of Industry and Information Technology (MIIT).
In 2020, revenue from software products, information technology services, information security products and embedded system software increased by 12.5%, 18.4%, 12.4% and 7.8%, respectively. Sales of information technology services accounted for 59.3% of the industry’s total revenue in 2019.
Chinese buyers are increasingly focused on software performance over price, thus creating new opportunities for UK software providers. These opportunities span a range of sectors and application areas, including business analytics, system-on-chip applications, finance, healthcare, and the IoT.
Software As A Service (SaaS)
The dynamic nature of the China SaaS market presents opportunities for international SaaS vendors offering value-added solutions currently unavailable from domestic competitors. This includes SaaS solutions in sectors where adoption is currently low but expected to increase rapidly in the future, such as business analytics, finance, healthcare, and manufacturing.
SMEs in China contribute a significant share of GDP and employment (nearly 80% and 60% respectively), yet their development has been beset by a shortage of funds. As the country’s economy slows, banks are becoming more reluctant to address this issue—presenting a huge opportunity for the highly efficient, low-cost FinTech sector.
There are two key drivers of long-term growth for FinTech in China; the promotion of inclusive finance systems known as PUHUI and technological innovation.
There are three main trends of FinTech in China; Both the government and FinTech companies are devoted to building a social credit system; In 2020, the size of China consumer credit market is predicted to reach 12 trillion, excluding real estate sector. The big demand and the size of the Chinese credit market still provide opportunities for FinTech lending companies; FinTech can optimize management strategies and the price of financial services, which also improves the efficiency of management and services.
In transaction banking, Internet finance can provide time-effective supply-chain financing solutions and digitized cash-management systems to support high-quality management of corporate finance and capital for large companies. In asset management, Internet finance can better address increasingly complex customer needs by providing quick, customized, and differentiated product matching, especially when high-quality assets are difficult to find.
Investment in UK Tech
2020 investment levels in UK tech exceeded record levels achieved in 2019 – Glasgow, Newcastle, Leeds and Oxford surged ahead of pre-pandemic investment levels. According to Oxford Economics, UK digital service exports to China alone will reach GBP31.4bn by 2025.
There are also opportunities emerging within niche segments where international vendors offer unique solutions for Chinese clients. The nascent state of this market creates the opportunity to gain first-mover advantage for those choosing to enter sooner rather than later.
For the latest industry-leading events in the Technology & Innovation sector, please see our new 2023 Key Events Calendar.