innovation trends in China

Daxue Talks transcript #22: Corporate innovation trends in China in 2019

Find here the Daxue Talks episode 22. Learn with Max Peiro, Daxue Talks’ new guest, about innovation trends in China and South East Asia.

Full transcript below:

Max Peiro: My name is Max Peiro. I’m obviously not Chinese. I’m from Barcelona, but I’ve been living for 12 years in Shanghai. I am the CEO of Re-Hub. At Re-Hub, we are problem solvers. We work with large corporations here in China to help them identify business challenges and match them with proven startups that can solve these problems.

Interviewer: What are the differences and similarities of the Corporate Innovation in China compared to the West? 

Max Peiro: I think first of all China and other economies in the West are very different. And these differences are the ones that shape this Corporate Innovation. I would say that these differences are mainly three.

The first one is the ecosystem. Probably everyone in the audience already knows the ecosystem in China has been parallel with the dominance of giants like Alibaba and Tencent. So, of course, the needs that brands will have when it comes to innovation will be very different than in the West.

I think that the second unique point is Chinese consumers. I would say that it’s somehow related to the first point in the sense that Chinese consumers have been somehow shaped by the ecosystem. So, I would say that nowadays Chinese consumers are extremely digital-savvy to a point that they are more digital-savvy than most consumers in any other country in the world. And they are very demanding and elusive. So, again, the problems that these brands will face when reaching out to these consumers might somehow differ to those in the West.

And the third one is our culture. Chinese culture has thousands of years of history. So, the mindset of the consumers is also somehow different. So, in terms of Corporate Innovation, it’s about embracing these differences and then adapting your strategy to be aligned with them. I would say purely from corporate innovation, the way brands are setting up their innovation strategies or their innovation efforts are similar, but then when it comes to the specific business challenge that they are facing or the ways to deliver these innovations or direct them into the ecosystems will be different. 

Interviewer: What are the Corporate Innovation trends in China and South East Asia in 2019?

Max Peiro: I think 2019 is a very important year because I think that it’s a turning point in China. And it’s the first year that we really see all the growth slowing down. Up until now, I think that brands in China were leveraging this incredible growth that the country experienced for many consecutive years. But now, the growth is slowing down. So, I think that in a way these brands realize the importance of innovation to be able to stay ahead, in this fast-changing environment. In terms of trends, I would say that it’s still all about data. It’s about the importance of data in this digital world. One of the advantages is that we leave traces of data in terms of consumption behavior patterns everywhere. So, it’s about how to leverage this data in order to improve operations processes, make better decisions, etc. And obviously AI.

I would say that in 2019, AI is at the center of every decision. Even though AI has been here for many years now, it’s when we see all of the brands putting it on top of their list. This year, we also see a large increase in setting up specific innovation strategies—for example, innovation teams.  Earlier, for many brands, there was an innovation mindset but it was not properly funneled. Whereas now we see more and more brands setting up dedicated innovation teams so they can funnel this innovation and collect the needs from the different business units and be able to deliver what they need. And also, there is a rise in corporate venture capital. So, it’s not only seeking internal and external innovation, but also the willingness to invest in different startups which I think it’s something that is growing a lot in 2019. I think it’s interesting enough. If we see the difference between China innovation, we see more innovation teams being set up and more CVCs in Singapore, for example, as a focal point for Southeast Asia than in China itself.

Obviously, when it comes to global corporations, it makes sense in terms of some global corporations being more comfortable doing business in Singapore or recruiting global talents in Singapore than in China. But I think that this also can create some problems on the road. When the decision is funneled for Singapore, if you want to implement this innovation in China, it might be a little bit difficult. 

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