In today’s fast-paced and interconnected digital landscape, understanding the varying trends in global digitalisation is invaluable. I discussed these dynamics with Alexandra Stefanov, a China observer specialising in digitalisation in China versus the trends in Germany.
With their reputation for cutting edge engineering solutions, it would be easy to assume that Germany could be a pioneer in adopting new technological solutions. Anyone who has visited will have realised though that this isn’t really the case across the board and in many ways China is more technologically advanced.
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Background on Alexandra Stefanov
Alexandra has dedicated her career to exploring digital trends and innovations, gaining insights that place her at the forefront of discussions in Europe surrounding digitalisation in China. With over ten years of hands-on experience and considerable time living in the country, she is well-versed in the intricate nuances of China’s digital culture and market dynamics.
As a co-author of “Digitalization Made in China,” Alexandra offers readers a thorough overview of how China has transitioned into a tech-driven society, and as a PhD researcher at the University of Marburg, her emphasis on the German-Chinese automotive industry’s digitalisation offers a case study into how traditional industries are adapting to rapid technological change.
Alexandra’s journey into this realm began with her love for languages. Initially captivated by the beauty of the Chinese language, she studied it extensively, leading to her first visit to China in 2008. The dramatic transformation she witnessed since then—seeing China transition from a largely offline culture into a realm dominated by online interactions and technologies—deeply inspired her to bridge the gap between Chinese innovations and Western perspectives, particularly German comprehension.
Embracing Digital Innovations in China
It’s often hard for Europeans to grasp just how far advanced much (but not all) innovation in China’s digital landscape is.
Alexandra emphasises a key difference between the Chinese and Western mindsets: while Europeans tend to maintain a cautious approach toward emerging technologies, the Chinese populace exhibits an eagerness and enthusiasm to accept and integrate new digital products and services into their daily lives.
Anything that could make life more convenient or fun is adopted enthusiastically (also only to be dropped just as quickly if it doesn’t suit them). The population makes up such a huge test data set that apps are able to quickly innovate and adapt based on data…
Mobile-Only Society
One of the most striking differences between the two nations is seen in China’s rapid evolution into a mobile-only society. Chinese citizens have largely bypassed desktop computers, opting instead for smartphones to perform almost all daily tasks. Applications for food delivery, ride-hailing, social media, and shopping are predominantly accessed via mobile devices, marking a shift in engagement with technology that is largely unparalleled.
In stark contrast, Europe continues to experience resistance to mobile-centric solutions in various sectors, resulting in a lag in fully adopting these transformative technologies. Alexandra explains that this discrepancy can be attributed to differing societal contexts. China’s burgeoning middle class, coupled with significant urban migration, has heightened the demand for digital solutions that enhance convenience and accessibility.
Moreover, this shift can be interpreted as part of a broader trend Alexandra refers to as the “Convenience Society,” after the phrase coined by Dr. Hannes Jedeck. Urban environments in China, characterised by their massive populations and extensive commuting needs, drive the demand for technologies that streamline daily life. Digital applications have become crucial in easing mundane tasks. This convergence of technology and daily living ensures that technology is not just a tool but a facilitator of improved quality of life.
Digital Payments and Cashless Society
A pivotal topic in this discussion is China’s rapid transition toward becoming a cashless economy. Applications like WeChat Pay and Alipay have revolutionised digital transactions, making cash almost obsolete in most urban centers. This transformation reflects more than just consumer preference; it’s a cultural shift.
Initially, many Chinese were skeptical about digital wallets, worrying about security and technical glitches. However, the societal shift toward convenience and efficiency has paved the way for rapid acceptance of digital payments even amongst older generations. Alexandra mentions that, although myths abound about cash being entirely unaccepted in urban areas, it remains in circulation. The rate of cash transactions is simply on a steady decline, particularly in major cities like Shanghai and Shenzhen where even beggars will hold up a QR code for you to transfer money to their Alipay.
This is one of the topics that foreigners planning to visit China, often struggle to set up. In mid-2023 I wasn’t unable to connect my phone number to Alipay (“number format is invalid”)however in the end I managed to connect it with the number attached to my SIM, rather than the transferred number I have from a different provider that is 2 digits longer than usual in Austria.
During my last visit to China a couple of months ago, we didn’t spend any cash at all in 2 weeks, but used Alipay and WeChat Pay for almost everything. Accomodation and trains were booked via Trip.com and paid directly with the credit card as the fees there were cheaper than putting large amounts via Alipay. I saw a couple of people paying at food stands in residential areas with cash, but that was it in 2 weeks travelling around.
The Rise of QR Codes
QR codes exemplify another defining feature of China’s digital ecosystem. Unlike in Europe, where skepticism about scanning QR codes has hindered widespread adoption, these codes are deeply embedded in the fabric of everyday life in China. From restaurants to shops, QR codes facilitate seamless payments, bookings, and customer service interactions.
In Europe, there is a lingering distrust concerning potential scams associated with QR codes, contributing to slow integration. Alexandra explains the reasoning behind this acceptance in China, attributing it to a cultural inclination to embrace technology rather than fear it. This openness has led to a decrease in cash usage and heightened engagement with digital innovations.
For instance in major cities such as Shanghai or Beijing, I can generate a transport QR code in Alipay and then just tap, scan and travel on local transport.
Super Apps and Mini-programs
Many people have heard of WeChat by now, but most don’t realise that you could basically run your whole life without ever leaving the app, due to so-called mini-programs: Lite versions of other apps that won’t drain your phone battery or take up as much memory as individual apps would.
Also within Alipay you can buy tickets, order a taxi or a coffee, pay your electricity bill etc.
When you are dependent on your phone for payments, it’s great that there are options to help conserve battery (not to mention you can rent power banks in lots of places, even up mountains).
Chinese vs. German Data Protection Mindsets
There are definitely contrasting perspectives on data protection in China versus Germany. Germans are renowned for their stringent attitudes toward data privacy, with the General Data Protection Regulation (GDPR) being one of the most comprehensive data privacy laws in the world. Conversely, data collection in China often garners societal support, primarily when aligned with perceived benefits for the community at large.
Historically, the Chinese population has exhibited a willingness to share their personal information when encouraged to do so for the enhancement of services that improve convenience. This mindset is reflective of a collectivistic culture where community wellbeing is prioritised over individual privacy and has been one of the driving factors for digitalisation in China. Over the last few years, this perspective has evolved; since 2019, the Chinese government has begun implementing stricter data protection regulations, responding to growing public concerns about data security and misuse. Hence, younger generations in China are increasingly beginning to question how their data is utilised and how much they want to share.
This contrast in cultural and regulatory attitudes leads to differing digital landscapes, particularly in how businesses operate and how consumers engage with technology. In Germany, rigorous compliance with data protection laws can prove cumbersome for businesses wishing to adopt innovative technologies, often stifling creativity at the expense of consumer trust, whereas in China, the balance leans toward fostering rapid innovation despite concerns about privacy.
Innovation: From Imitation to Creation
The notion of innovation is another essential topic that we had to address in our discussion. Historically, Europe and North America have perceived China as predominantly engaged in low-cost imitation. However, this outdated notion fails to account for recent advancements that have propelled China to the forefront of global innovations.
According to the Global Innovation Index, China ranked 12th in innovation, only two spots behind Germany, highlighting a significant improvement from its previous position in the 29th slot. The rising number of patent applications and increasing global recognition of China’s advanced digital landscape further validate this shift.
The Chinese approach utilises imitation as a strategic learning tool; it’s not merely about copying established models but advancing toward distinct innovations that cater to local audiences. The evolution of super-apps, such as WeChat, serves as a prime example—what began as a basic messaging platform (& copy of WhatsApp) has metamorphosed into a multifunctional application that integrates social networking, online payments, and e-commerce capabilities.
Consequently we need to challenge the narrative around innovation, and acknowledge the sophistication that comes with Chinese adaptations and entrepreneurship. In particular, look at the success of various start-ups that have emerged from the roots of imitation but have developed unique products and services addressing market gaps.
The Retail Transformation in China
The retail industry in China, which has experienced an unprecedented shift due to digitalisation, has been completely transformed. Unlike in Germany, where online shopping has primarily developed around using desktop computers, Chinese consumers have engaged in e-commerce through mobile devices from the outset with single click to buy options now being very normal.
This mobile-first approach has led to a pronounced integration of online and offline experiences in China’s retail landscape, often referred to as “New Retail.” Alexandra credits Alibaba and its founder Jack Ma for pioneering this seamless integration. By utilising big data and AI-driven algorithms, companies are now capable of creating personalised shopping experiences that cater directly to consumer preferences, leading to improved customer satisfaction and loyalty. Of course, platforms like Amazon are also able to do this, however the fact that the Chinese ecosystems are so interconnected means that in China this takes place to a much greater degree.
One of the most groundbreaking innovations that emerged within this framework is live-streaming e-commerce, which has skyrocketed in popularity in China. During these live-streaming sessions, influencers showcase products, interact with audiences, and create an immersive shopping experience that has yet to gain the same traction in Europe. The success of this model can be attributed to a cultural affinity for entertainment and social interaction in consumer engagement.
Future Directions and Cultural Learnings
Alexandra is optimistic regarding the future trajectory of digitalisation in both China and Germany. Her insights suggest that lessons learned from China’s rapid digital advancements can inspire European businesses to adapt and innovate their strategies. There is a wealth of opportunities to explore from advancements in customer experiences, user engagement strategies, and tech integration approaches.
When navigating the challenges of digital transformation, businesses must embrace cultural openness and adaptability. It is essential for organisations to remain receptive to emerging trends while also considering local market needs and values. So companies shouldn’t just blindly copy what is working in any single market and copy to another one, but look to see how the ideas and technology can be adapted to meet the needs of consumers in the 2nd market.
We need to have a balanced perspective—one that guards data privacy while promoting technological growth and innovation. Therefore I’d encourage businesses to foster an environment of trust and transparency, as these aspects are vital to maintaining consumer loyalty and satisfaction whichever market you are focusing on.
Some final thoughts from our discussion around digitalisation in China
As shown in our full discussion, the differences in digitalisation trends between China and Germany underscore the cultural and societal influences that shape technology adoption. China exemplifies a vibrant digital economy characterized by rapid innovation and consumer engagement, while Germany’s methodical approach emphasises a strong commitment to regulatory frameworks and data protection.
In understanding and acknowledging these differences, businesses looking to expand internationally can strengthen their strategic approaches, fostering collaborations that integrate lessons from diverse practices. By recognising the values and expectations intrinsic to each market, companies should tailor their strategies to align more effectively with local consumer behaviours.
This critical dialogue between traditional methodologies and groundbreaking advancements will be a core topic for most companies in the coming years. It’s not enough to treat “digitalisation” as a dirty word. Companies need to inform themselves both about their obligations and opportunities as well as learning from those further along in the journey. Embracing cultural learnings will play a crucial role in fostering future advancements and ensuring that organisations remain at the forefront of their respective industries.
I hope that this discussion was thought provoking with regard to where your own country and company stands in their journey. The global digital landscape presents an array of challenges and opportunities. The willingness to adapt, innovate, and learn from the successes and failures of different cultures is key to survival. We chose Germany as our example for contrast, and for sure Germany’s journey in digitalisation will be very different from that of China, but both sides need to observe and learn from one another – without judgement.
You can watch the full discussion here:
You can find out more about Alexandra and her work here:
- LinkedIn: https://www.linkedin.com/in/alexandrastefanov/
- Website: https://www.china-impulse.de/
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Kathryn firmly believes that business is done between people, and therefore places her focus on building strong relationships that form a solid foundation for doing business.
When she's not travelling around the world, Kathryn enjoys playing clarinet in her town's wind orchestra or sharing her love of the outdoors with her Scout group.