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Case study – Big data: a media buzzword or something carries substantial meaning for Hong Kong SMEs?

27 February 2017

Case study – Big data: a media buzzword or something carries substantial meaning for Hong Kong SMEs?

South China Morning Post Tech News Team

SMEs start to gradually adapt to this new “big data world”



If you live in the 21st century then liking your friends’ Facebook posts might be one of the first things you do after waking up in the morning.

But it might never occur to you that the simple actions such as liking a post, staying long on a web page or searching for hotels far away from your current location can all be collected by companies that want to make money out of you.

That include the 320,000 Hong Kong small and medium enterprises (SMEs), referring to companies that have less than 100 employees according to the Hong Kong government’s definition.

Hong Kong SMEs are an essential part of the city’s economy, as they account for nearly 98 per cent of the total business units and offer jobs for more than 1.3 million residents of the city.

Although lots of them, who are mostly in manufacturing and retail sector, are still promoting their business using traditional ways such as holding exhibitions and buying advertisements on major TV channels, start to gradually and somehow painfully adapt to this new “big data world”, according to experts from big data application industry.

“When I first started my company in Hong Kong, people totally did not understand what I was doing,” said Francis Kwok Ching Kwong, co-founder of Radica Systems Limited, a big data marketing company headquartered in Hong Kong and has three regional offices in mainland China.

Inspired by Amazon’s renowned recommendation feature that can refer different book to users according to their buying habits, Kwok said he was fascinated by this technology and decided to help companies in Hong Kong to expand their business with a similar strategy.

Having more than 300 enterprise clients at the moment, Radica delivers millions of emails and SMS to help companies do targeted marketing according to its own numbers. They also use data collected from companies’ social media accounts to analyze customers’ behavior, including where they would like to go shopping the most and what web pages they browse more often.

Although only a small portion of Radica’s clients are SMEs, the situation is gradually changing, with more of them being aware of the importance of the use of big data as pushed by fierce competition and a slowing economy, said Kwok.

One of the examples is ASANA, a local cosmetics brand.

They first came to Radica wishing to do  “smarter marketing” for their core product “ASANA No.1” toner, which is being peddled in supermarket chain Mannings’ branches in Hong Kong.

Anki Lam, Manager of Radica’s e-marketing commerce department, said the main approach they use was to extract data from ASANA’s historical statistics collected from the company’s own website and Facebook page, after which the customers’ purchase pattern could be learned and applied for promotion.

Radica also takes a proactive approach to trace potential customers for ASANA and studies promotion strategy through big data. 

For example, Radica would study what age groups ASANA’s customers fall into by checking up the Facebook users who have liked the company’s public face book page, after which they would learn what products customers liked the most and what promotion strategy would suit them the best.

They would also use the data coming from ASANA’s Customer Relationship Management system, to analyze customers’ purchase pattern, such as what products they have been repeatedly buying and what have long been ignored.

“Their Facebook page attracted much more likes after applying our data analysis,” said Anki. The Facebook page of ASANA now has more than 40,000 likes.

In addition to cosmetic products, Kwok said small local bookstores and trade companies also use their technology to lure global customers.

“It’s usually very simple algorithm for boosting sales,” said Kwok, “in one case every time the temperature dropped the sales of a jewelry shop slumped as well as people needed to spend more on clothing. So we would advise them to do promotion before the weather cools down.”

According to a report on Big Data Adoption in Retail Sector compiled by the Hong Kong Productivity Council in October 2016, 48 per cent of surveyed SMEs in this sector said they agreed “SMEs need big data” and 40 per cent of them showed the willingness to adopt the technology in the future.

However, “cost” remains the second biggest concern for SMEs in using big data, following "Insufficient knowledge", said the report.

Bosco Lam, founder of Alike Audience, a young big data analytics company in Hong Kong founded in 2015, said he agreed the a limited budget was one of the biggest obstacles when cooperating with his smaller company customers.

“They don’t have good budget and that’s a problem,” he said.

The basic cost for big data application will be at least 1 million, which is a huge amount for most SMEs, according to a research by the Hong Kong Trade Development Council.

However, some experts say there are cheaper ways for SMEs to enjoy the benefit of adopting big data in daily operations.

“Big data projects don’t need to start ‘big’”, said Professor Kar Yan Tam from the Hong Kong University of Science & Technology.

He said that there are many free tools available on the internet that SMEs can use to kickoff pilot projects on business analytics such as built-in functions of MS Excel, or even simply chart their current data can provide a lot of insights and don’t cost much.

Echoing Kar’s conclusion, Anki Lam said she preferred the term “small data” for SMEs. “We would usually suggest our SME customers decide what they want the most with a limited budget,” she said, adding that they would then help them get data from registered customers’ information, campaign advertisements or social media pages.

With all potential obstacles, Kwok stays positive about the future of the use of big data.

© 2017 South China Morning Post Publishers Limited.  All rights reserved.        
The information, findings, projections, representations, opinions or comments in this article (the "Content") are those of South China Morning Post and they do not constitute any form of opinion, advice, recommendation, representation or endorsement of The Hongkong and Shanghai Banking Corporation Limited (the "Bank").
The Bank makes no representation or warranty (express or implied) of any nature and accepts no liability or responsibility with respect to the Content and any inaccuracy or omission in it.

Digital for Business Market Study

Most Hong Kong companies know the benefits of applying digital technology to their business, yet 74 per cent have no plans in place to do so, a new report from HSBC Commercial Banking reveals.

Find out more from the video.

 

View summary report (PDF, 197KB)

Disclaimer:

  • The Digital for Business Market Study is compiled by Kantar TNS and comprises of quantitative and qualitative parts. Senior executives from over 300 Hong Kong companies were interviewed in June and July 2016.
  • The Content in this video are subject to change without notice and should not be construed as a recommendation of any individual holdings or market sectors.
  • Investment involves risks. Past performance is no guide to future performance. Investors must refer to the offering documents for further details and the risks involved. The information contained within this video has not been prepared in view of personal financial circumstances. Investors should satisfy themselves that any investment product is suitable for them in terms of their own investment experience, objectives, financial resources and relevant circumstances before making any decision to invest in the investment product.
  • The Hongkong and Shanghai Banking Corporation Limited (the "Bank") neither endorses nor is responsible for the accuracy or reliability of, and under no circumstances will the Bank be liable for any loss or damage caused by reliance on, any opinion, advice or statement made in the video.

Investing in digital innovation

28 December 2016

Investing in digital innovation

HSBC is working with the Hong Kong government to develop the next generation of banking technology at a new digital innovation lab. Read more...

Case study - Robots are taking over Chinese factories in ‘historic’ fashion, as Hong Kong rides the innovation wave

9 January 2017

Case study - Robots are taking over Chinese factories in ‘historic’ fashion, as Hong Kong rides the innovation wave

South China Morning Post Tech News Team

China plans to produce 100,000 industrial robots every year by 2020, or 150 robots per 10,000 employees.



A factory full of robots instead of humans may seem like something out of a science fiction movie, but in China, it is already becoming a reality.

The rise of robotics in Chinese manufacturing is part of the government’s latest five-year plan, which aims to produce 100,000 industrial robots annually by 2020, reaching a density of 150 robots per 10,000 employees.

China is the number one market for robots, with sales seeing a 20 per cent uptick in 2015 with 68,600 units, more volume than all of Europe combined, according to the International Federation of Robotics (IFR).

“This rapid development [in China] is unique in the history of robotics,” an IFR report said. “There has never been such a dynamic rise in such a short period of time in any other market.”
Particularly in the Pearl River Delta, the country’s number one hub for labour-intensive production, manufacturers are increasingly replacing human labour with robots.

The use of robotics was not popular even five years ago, said Xi Ning, chair professor of robotics and automation at the University of Hong Kong (HKU). But the new wave of technological developments and the need for Chinese manufacturing to regain its “competitive advantage” have spurred government subsidies for the industry and a recommitment to see the sector flourish.

Guangdong announced last year it would spend 943 billion yuan (HK$1.1 trillion) to undergo this process over a three-year span, and Guangzhou aims to automate over 80 per cent of the city’s manufacturing by 2020.

In Dongguan, over 60 per cent of the industrial enterprises have used robots instead of humans, and Foshan hopes its automation and robotics market will be worth 300 billion yuan by 2020.

Now, Hong Kong is also hopping on this robotics wave.

The city’s dynamism and its connection to the global investment technology community allowed artificial intelligence (AI) to grow, and show itself as a necessity, Xi said.

“Major industries in Hong Kong right now [are] facing a huge labour shortage,” he told the Post. “All of this [means] they want to use advanced technology like AI and robotics to solve this kind of problem ... they desperately need robots.”

Last year, 96 per cent of the city’s use of industrial robots were in the electronics industry — around 64 per cent of its total exports — but it has yet to utilise robotics in automotive, chemical, metal, and food and beverage production, according to IFR data.

One of the tech companies working to tap into the city’s potential is Hong Kong-based Hanson Robotics, where founder and CEO David Hanson previously told the Post he wants to create a robotics hub, since the city has “a lot of expertise and design infrastructure.”

Hanson Robotics, which builds interactive and lifelike robots, touts Hong Kong’s location “on the doorstep of the ‘world’s toy factory’” in Guangdong, where it has helped engineer and manufacture robotic toys.

“The rich electromechanical know-how in Guangdong is analogous for robotics to the depth of IT know-how in Silicon Valley,” the company’s website says. “Guangdong toy engineers and factories are uniquely capable of designing and building high performance, inexpensive, reliable and scalable products.”

As a gateway of sorts between mainland China and the rest of the world, Hong Kong is in a unique position to deploy the power of robotics, particularly with its established financial services industry and talent pool, Xi said.

“The mainland industry needs these kinds of resources, this kind of complement with what the mainland has,” he said.

Shenzhen-based tech innovation platform IngDan does this as “the semiconductor” connecting Chinese robotics start-ups with global resources and overseas funding. IngDan, backed by Hong Kong-listed Cogobuy, announced in July a partnership with Intel Corp and Japanese robotics suppliers to create a robotics ecosystem.

“This is a pumping industry,” Novam Ng, marketing director of IngDan, said. “Manufacturers are looking for robotics system for their production line, solving the problem of manpower shortage and [fulfilling] the needs from the innovators for some high-tech detailed device.”

IngDan’s platform has 13,000 Internet of Things (IoT) projects — the connectivity of physical devices — and over 14,000 suppliers, while supporting various robotics projects from the supply chain to the market. The company announced also a US$50 million fund for hardware start-ups focused on smart devices or technologies.

Industrial robots help increase “labour productivity, total factor productivity, and wages,” a recent report by Guy Michaels, professor at the London School of Economics, found.

For instance, Foshan-based LXD Robotics’ robots cost between 800,000 to 1.5 million yuan, but can replace as many as six humans.

But these robots reduce the employment of low-skilled workers, Michaels said.

While certain individuals may be replaced by robots — a truck driver put out of work by an autonomous truck — societies as a whole see a total net gain of jobs because robotics improves productivity, creating more opportunities, Xi said.

Most of the industry’s focus has been on industrial robots and consumer robots such as drones and vacuum cleaners, but “there is now an increasing focus on service robots,” Dr. Jeanne Lim, chief marketing officer of Hanson Robotics, said.

For personal robots in the consumer space, the market is expected to exceed US$10 billion in the next three years, while analysts say service robots could be worth over US$17 billion in three years, according to Lim.

“We are already seeing a lot of demand for service robots in a broad range of applications,” she said. “These applications are relevant to a broad range of industries.”

“We found there are a lots of opportunities in robotics, no matter [whether it is] consumer or industrial robots, both of them have a large demand in these two years,” Ng added.

While China is still catching up to Europe in terms of techniques for manufacturing automation, it is poised to make up 40 per cent of global sales of robots by 2019, according to IFR data.

“Right now, China is not just the biggest robot market, also the biggest producer,” Xi said. “This is a very historic opportunity and very historic time for the development of robotics technology.”

Can virtual reality overtake driverless cars?

18 November 2016

Can virtual reality overtake driverless cars?

Davey Jose and Anton Tonev, Thematic Strategists, HSBC

Driverless cars and electric vehicles mean the transport world will undergo huge upheaval in the next decade. Vehicle safety, ownership patterns and insurance models will all be affected, as will work, leisure and manufacturer business models.



It is already happening. Vehicles using some form of autonomous driving, aided by computer vision, are starting to appear on the streets of cities in the US, China, the UK, Sweden and the Netherlands. Not only cars, but vans, trucks, buses and even drones are using artificial intelligence to navigate the environment with complex sets of sensors. Corporations and governments are beginning to build the infrastructure and draft the regulations needed for this new era.

However, we think autonomous transportation will itself be disrupted by another powerful technology – virtual reality.

Alongside physical autonomous transportation, the future may also bring ‘virtual transportation’ and eventually the two are likely to be in competition with each other.

The changes could be momentous. Autonomous transport offers commuters and travellers the prospect of increased safety, lower travel costs and reduced city congestion. But, if virtual reality is widely adopted, physically transporting people could be considered as inefficient, inconvenient and slow.

It might eventually be preferable to ‘travel’ for work and social purposes via virtual reality.

Virtual reality creates a sense of 'presence' that allows users to feel as if they are in another place entirely – regardless of whether that location is imaginary or a replication of reality. Additionally, it allows people to be social remotely – offering a much more immersive experience than other forms of communication like the simple telephone call or even video-conferencing.

The next generation may find it preferable to travel 'virtually' rather than 'physically'.

The implications are enormous. Autonomous transportation is likely to disrupt car-making and driving jobs, but virtual reality will create a swathe of technical roles, including filling these new virtual worlds with 3D content.

The housing market could be affected as well as offices: virtual reality could allow us to live in a very small room but have the experience of living virtually in a mansion. Cutting out commuting could mean less need to live near cities. And if we drive fewer miles, that reduces the need for physical transportation infrastructure.

Perfecting autonomous transportation will involve substantial economic and intellectual capital. Countries are likely to upgrade their current physical infrastructure by adding a digital element, transforming old 20th century infrastructure with artificial-intelligence-driven transportation networks to create ‘smart cities’.

That’s not to say that autonomous-transportation infrastructures will quickly become redundant in a virtual reality-centric society. But, instead of transporting people as their primary use, they may convey physical items that cannot be replicated in virtual reality, such as food, medicine or clothes.

We believe autonomous transportation – vehicles or drones – can co-exist with virtual reality. While autonomous entities transport physical things, virtual reality will take people to virtual places that could eventually be indistinguishable from the actual locations on which they are modelled. This could bring closer the day when everybody can not only have anything they want, anytime they want, but also be anywhere they want, any time they desire.

This research was first published on 19 October 2016

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Understanding the tech consumer

Understanding the tech consumer

Noel Quinn, Chief Executive, Global Commercial Banking, HSBC

Millennials are increasingly spending their money on experiences rather than the latest products.



Twenty years ago the World Wide Web was in its infancy, mobile phones were still a luxury item and listening to music on the go meant carrying a portable CD player.

Since then, advances in digital technology have revolutionised the way people access, buy and pay for goods and services. Music and news are consumed via digital download or streaming. Social media sites are helping people to connect, and a new generation of online consumers is emerging. 

For companies, understanding these shifts and recognising what will influence consumers in the future will be increasingly important.

Thanks to the rapid growth of internet-enabled mobile phones and tablets, e-commerce has thrived over the past decade. Companies in developed countries are expected to have an interactive online presence. Rising income levels in emerging markets mean that companies will increasingly need to think about how they sell online to a burgeoning middle class there, too.

In emerging markets such as Brazil, Thailand and Turkey, more than 40 per cent of consumers now buy something online at least once a month. That figure is set to grow.

China, too, has embraced digital innovation. The number of internet users has risen rapidly over the past 10 years – more than half of the population has an internet connection – and China is now the world’s largest e-commerce market.

This means that – whether they are targeting Chinese consumers or those in other emerging markets – companies will need a clear mobile and digital strategy.

Meanwhile, just as demand for goods rises in emerging markets, there are signs that Western consumers are reaching saturation point when it comes to owning material goods. HSBC’s new Future of Consumer Demand report highlights how for ‘millennials’ – those born after 1980 – the focus is increasingly on experiences. Eating at the latest restaurant, going to a music festival, travelling – these are the new status symbols for a generation that wants to document their lives on social media.

A ‘sharing economy’ has emerged, with a growing number of people choosing to exchange goods or pay for temporary access rather than owning them permanently. With population growth outstripping housing growth in many countries, it makes sense for a generation of renters to share rather than own. It is also more sustainable – something that is increasingly important to ethically-minded consumers.

Changing consumer tastes are encouraging companies to diversify and reconsider the way they sell and distribute goods. Trade is no longer just about physical goods – increasingly it’s also about services that are delivered digitally.

Marketing goods and services to a global audience requires thought, however. Companies may need to rethink their business model, seek advice and ask themselves some key questions to be effective in new markets. Do they understand the markets they are targeting? How does local culture affect buying tastes? What do millennial consumers want? Is it best to enter a new market alone or with a business partner? How is new technology affecting buying habits?

Making sense of the answers will help companies to successfully target an increasingly tech-focused society. And with the right strategy in place, there are huge opportunities for businesses to expand overseas at a rapid pace.

AI robots – dawn of a new era in service industry

3 October 2016

AI robots – dawn of a new era in service industry
Hong Kong Economic Times IMS Team

As aging populations become a prominent trend and the technology of AI robots advances by the day, AI robots are expected to make further strides into the service industry

"Hello, my name is Pepper, what would you like for lunch today?"


In the not-too-distant future, instead of the welcoming voices of waiters, the first thing that greets you when you walk into a restaurant may be Pepper, the artificial intelligence (AI) robot that can recognise human emotions. If you cannot decide which dish to try, Pepper is able to make suggestions by asking your preferences. Since its unveiling by Softbank last year, the friendly robot has been an instant hit; the company released 1,000 Pepper robots to the market each month, and for seven consecutive months the robots sold out within one minute. Now, MasterCard is cooperating with Pizza Hut to take Pepper’s fame one step further – the two companies are planning to employ Pepper robots as waiters in every Pizza Hut outlet throughout Asia before the end of the year.

While Pepper is making a grand entrance in the catering industry, this is just the robot’s first step. As aging populations become a prominent trend and the technology of AI robots advances by the day, AI robots similar to Pepper are expected to make further strides into the service industry.

From ordering food to paying bills – a one-stop solution

"Consumers are demanding more personalised services, tailor-made products and smoother user experiences. This is where Pepper comes in – it can shape a memorable personalised consumer experience for customers. The Pepper robots implanted with AI are vastly different from the automated machines you see today", says Tobias Puehse, Vice President, Innovation Management, Digital Payments and Labs Asia-Pacific at MasterCard. Puehse also leads the Pepper project.

When Pepper navigates its environment, it can move around by detecting its surroundings via sonar, infrared and laser sensors. At the heart of Pepper’s intelligence is the ‘emotion recognition’ function that enables it to read emotions by observing the speaker’s facial expression and tone of voice. As Pepper can tell the difference between joy and sorrow when it interacts with customers, it literally breathes life into robotic customer service with an impressive human touch.

"You can log in to your own Masterpass account by simply inputting data into Pepper’s tablet or by using the QR code scanner in your mobile phone to scan the QR code on the tablet”, says Puehse. “Then, Pepper can provide a personalised food ordering service that suits your preference".

The programme has been rolled out by Masterpass, an electronic payment platform under MasterCard, and will be launched at Pizza Hut. The technology can link to customers’ Masterpass electronic wallets through secured Wi-Fi networks, so that the whole ordering and billing process runs smoothly. If customers want more information, such as the number of calories in each food item and the latest offers, just ask Pepper and it will fetch them for you. The robot can even make dish recommendations that suit your tastes. "In the future, wherever Pepper is present, you will find personalised consumer services provided by robots everywhere you look; retail outlets, hotels, banks, airports and so on", Puehse says.

Aging population fuelling demand

In fact, the use of robots is nothing new, and different models have been introduced in the past. However, with the rise of AI, robotic technology has been infused with a new element; AI robots are born with a ‘heart’ that can recognise human emotions and a ‘brain’ that can make judgements under various circumstances. The monotonous robots that were used in industrial assembly lines and only knew how to follow orders have been given a facelift – they are now equipped with the groundbreaking ability to evaluate. Today, robots can step out of the manufacturing sector and find their place in other industries, meaning wider robotic applications going forward.

The world is facing great challenges of an aging population and labour shortage. AI robots can help alleviate these imminent problems. According to a global human resources report compiled by human resource company ManpowerGroup, Japan ranked highest in the world in terms of the degree of difficulty in hiring – in 2015, 83 per cent of the Japanese employers surveyed said that hiring is difficult, followed by Peru and Hong Kong where 68 per cent and 65 per cent of employers, respectively, said they face the same challenge. Therefore, governments in different countries are looking to promote the use of robots to mitigate the negative economic impacts caused by labour shortages. The International Federation of Robotics (IFR) anticipates that the number of AI robots will surpass 15 million by 2020, representing a USD1.5 trillion business.

Due to the labour shortage in Japan, and given the fact that Pepper is the world’s first ‘emotional robot’, its debut in Japan last year was a huge success, especially among employers in the service sector. With Pepper, the Japanese telecommunications firm NTT DoCoMo introduced unstaffed stores where only Pepper robots are available to serve customers. The footprints of Pepper are everywhere in the streets of Tokyo; the PARCO department store in Ikebukuro ‘hired’ Pepper as the store manager to lead a one-day promotion campaign; in front of the Famima coffee shop in the Shiodome Subway Station, Pepper sings and dances to entertain passers-by; and in the Tsutaya Electrics store in Futako Tamagawa, Pepper plays interactive games with kids.

Besides retail stores, hospitals and kindergartens in Japan are embracing Pepper too. In paediatric clinics, you will find Pepper robots dressed as nurses making appointments for kids, while in kindergartens, Pepper robots even turn themselves into ‘stupid students’ that are taught English vocabulary by the real students. Since Pepper robots are ‘poor learners’, little kids have to repeat the vocabulary time after time. In the process, the new knowledge is reinforced in the children’s memories. AI robots can help mitigate the problems of an aging population too; they are expected to take up a larger role as caregivers in the future.

© 2016 Hong Kong Economic Times. All rights reserved.

The information, findings, projections, representations, opinions or comments in this article (the "Content") are those of Hong Kong Economic Times IMS Team and they do not constitute any form of opinion, advice, recommendation, representation or endorsement of The Hongkong and Shanghai Banking Corporation Limited (the "Bank").

The Bank makes no representation or warranty (express or implied) of any nature and accepts no liability or responsibility with respect to the Content and any inaccuracy or omission in it.

Blockchain breakthrough for trade

15 August 2016

Blockchain breakthrough for trade

How a new proof of concept could simplify trade processes...read more

The industrial internet of things - The great convergence

29 August 2016

The industrial internet of things - The great convergence
The Economist

China aims to lead the world in connecting the factory

THE "internet of things" (IoT) is much hyped. For a decade, a world in which household appliances, packaged goods, clothes, medical devices and much more besides would be connected to the internet via smart chips and capable of sensing and sharing information has been just around the corner. Progress remains slow in the consumer market, despite a few hit products, such as the Fitbit, an activity tracker that connects to smartphones. An industrial form of the IoT, however, may come to fruition much faster.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As the world’s biggest manufacturing power, China is well placed to lead this transition. Which is why this week GE, the world’s biggest industrial company, opened what it calls a "digital foundry" in Shanghai. The centre will help Chinese companies develop and commercialise products for the industrial internet of things, which involves factory machines and industrial goods communicating with each other and their surroundings. It will probably be a much bigger market than the one for consumers. China has millions of factories with billions of machines and it also makes most of the world’s electronics, including many of the sensors and other electronic devices that would form the backbone of such a network. Moreover, the government is keen to upgrade the country’s manufacturing base.

There are already more things connected to each other in China than in any country, with the numbers set to skyrocket further (see chart). IDC, a research firm, forecasts that the overall market for IoT kit of various forms in China will rise from $193 billion last year to $361 billion in 2020. Accenture, a consultancy, reckons embracing IoT in manufacturing could add up to $736 billion to China’s GDP by 2030.

GE’s new centre (it will soon open a similar one in Paris to tap into the European market) is part of its efforts to get firms to use Predix, its proprietary software for the industrial IoT. The American company had already signed up China Eastern Airlines and China Telecom, two big state-owned enterprises, and this week Huawei, a Chinese telecoms-equipment giant, also came on board as a partner. GE is not alone in seeing China as a potential hotbed of the industrial IOT. Siemens, a German rival, held an event in Beijing earlier this month to trumpet its own technology. HP, Honeywell and Cisco, all big American technology firms, are also rushing in.

Sany side up

Chinese firms, however, have their own plans. China Mobile, the largest mobile-phone firm, has established its version of a digital foundry: a "cellular IoT open lab". Li Yue, the company’s chief executive, dreams that he could earn 100 billion yuan ($15 billion) from the IoT with as many as five billion devices connected by 2020.

Chinese firms also have local knowledge. Sany, which makes construction equipment, started connecting machines on its factory floor in 2008. It then put sensors on its diggers and cranes to monitor them in real-time to improve operating efficiency. The company has invested in data analytics and artificial intelligence. He Dongdong, who leads those efforts, brags that unlike foreign multinationals his firm knows how to make affordable kit that works in “Chinese conditions”. By that he means places where workers are low-skilled, conditions are dirty and operators often push equipment to its limits.

That points to another sort of local advantage. Foreign firms might have fancier kit, but locals know how to make things cheap and cheerful. Huawei’s push into the IoT got a boost in June when a new protocol it helped to develop, known as “narrow band IoT”, was approved as a global standard. The new protocol works with devices that require inexpensive sensors that use little energy.

Still, there are three potential snags to China’s IoT ambitions. Firms, squeezed by both a weak local and global economy, may not be able to afford to connect their machines to the cloud. Sany’s Mr He, however, reckons the downturn will be good for stronger firms as their low-end competitors will be forced out.

Secondly, Chinese factories are less technologically advanced than those in America or Europe, so moving to advanced computer-controlled production and automation could be daunting for some.

Finally there are standards. Despite the new narrow band IoT protocol, there is a lack of overall global standardisation, such as the common GSM protocol that allowed Europe to leapfrog others in mobile telephony. Jagdish Rebello of IHS, a consultancy, argues that a push from Chinese regulators, combined with the country’s massive home market, could lead to domestic standards dominating the global market. Firms elsewhere, and in a variety of different industries from cars to robotics and cloud computing, will have other ideas. Consumers, meanwhile, will continue to wait for the refrigerator that can contact the supermarket to restock itself.

© 2016 The Economist Newspaper Limited. All rights reserved.

From The Economist, published under license. The original article, can be found at http://www.economist.com/news/business/21702487-china-aims-lead-world-connecting-factory-great-convergence?zid=306&ah=1b164dbd43b0cb27ba0d4c3b12a5e227

The virtual-reality age

10 June 2016

The virtual-reality age
Davey Jose, Thematic Strategist, HSBC

Virtual reality could be even bigger than the internet in the way it affects our lives

Virtual reality will fundamentally change how we work, learn and are entertained. It could be even bigger than the internet in the way it affects our lives, how society is structured and how the economy works. It will be used to build new worlds and replicate the sense of being somewhere else within these new digital realms.


 

 

 

 

 

 

 

 

 

 

This new mass medium will be the first to attempt to block out all of our existing reality by using head-mounted displays or ‘goggles’ and to craft an entirely new reality by re-routing our perceptual system.

Virtual-reality concepts are not new and there have been many false starts. But advances in technology including low-cost supercomputers and smartphones, plus new sources of funding, mean virtual reality's time may now have come.

In 2011, an 18-year-old Californian entrepreneur used a smartphone to create a low-cost virtual-reality headset prototype aimed at computer-games developers. He then raised money through crowdfunding for his project, hitting the initial target within 24 hours. Less than 20 months later, Facebook acquired the business and inspired a new and fast-growing virtual-reality industry.

One obvious long-term advantage of virtual reality will be the reduced need to commute or travel. This has implications for the transport sector and entertainment businesses such as concerts and amusement parks. However, whether this will cut energy consumption is questionable: virtual-reality server-farms will still consume significant amounts of power.

And the social and health implications are still to be fully understood. What is the long-term impact on developing young children before their eyes and brains are fully mature? Or the effect of isolation and less physical movement? Who is liable for mental or physical injuries from virtual-reality experiences? What happens when brain-computer interfaces are used to alter electrical signals inside the head?

Virtual reality will create jobs but will also hit employment. Retail jobs may go as shoppers view goods in virtual reality rather than in stores: virtual classrooms, with students using headsets at home, would allow each teacher to reach many more scholars.

However, virtual reality can help the developed world’s ageing population participate in activities that otherwise would be impossible, thus making the elderly feel less isolated. Some senior citizens in Australian care homes have used headsets to take virtual trips to the African savannah and Antarctic ice sheets.

Virtual reality may not change the way we live straight away, but it will give us a range of opportunities to experience things that were previously physically or economically impossible. Eventually it could rival the broad impact that the advent of the internet had on society.

This research was first published on 27 April 2016.

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The following analyst(s), economist(s), and/or strategist(s) who is(are) primarily responsible for this report, certifies(y) that the opinion(s) on the subject security(ies) or issuer(s) and/or any other views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Davey Jose

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VR and AR open up promising opportunities for businesses

8 August 2016

VR and AR open up promising opportunities for businesses
Hong Kong Economic Times IMS Team

How can different industries navigate the wide ocean of VR and AR?

With a flood of new gadgets in the market, such as Google glasses and various types of controllers and headsets, virtual reality (VR) and augmented reality (AR) technologies have become a big hit. In fact, medical practitioners started using VR technology 20 years ago, allowing surgeons to practise dissecting the human body in simulated operating rooms. AR technology is the integration of virtual elements into the real-world environment. For example, AR can be used in orienteering training to simulate the experience of being chased by wild beasts. Users will no doubt find this virtual adventure a thrilling experience. But how can different industries navigate the vast ocean of VR and AR? We invited an expert in this field, Dr Lam Hiu-fung, to share his insights.


 

 

 

 

 

 

 

 

 

 

 

 

What are VR and AR technologies? VR is a simulated 3D environment created by computer technology, offering a fictional world of illusion for the user. In the VR dimension, users can perform a variety of functions by using different kinds of controllers that can detect body movements and respond to users’ motions. AR is an even more impressive experience created by auxiliary tools, such as optical projection gadgets, in particular, Google glasses, heads-up displays or even special contact lenses. By using cameras installed in this device, the real world is blended together with virtual reality, allowing users a peep into a virtual space from a real-world environment.

Founded on academic research

Dr Alan Lam Hiu-fung, one of the Ten Outstanding Young Persons Awardees in 2015, is a Hong Kong based technology entrepreneur. Building on the knowledge of his mentor, Dr Sun Hanqiu, Dr Lam is a pioneer of VR and AR technologies in Hong Kong and has been researching on these technologies since 1999. Dr Lam came up with his first brainchild – a virtual keyboard and mouse that can be used in mid-air, when he was pursuing his Master’s Degree in Engineering at the Chinese University of Hong Kong. Before his graduation, Dr Lam obtained funding from manufacturers to produce the world’s first VR gaming controllers.

Do you remember “Legends of the Giant Dinosaurs” Exhibition at the Hong Kong Science Museum in 2014? One of the most remarkable scenes was the dinosaurs on the screen mimicking viewers’ moving footsteps and this literally marked a new chapter in interactive entertainment. In the food and beverage industry, the Little Prince themed restaurant Meraviglia Bar e Ristorante leverages AR to enhance its dining experience – the Little Prince hands out flowers to diners through a VR screen and the whole process is automatically captured by a computerised camera. In fact, VR and AR are not new technologies, but the advances in hardware in recent years have broadened and deepened the use of the technology applications, thus increased the awareness.

New opportunities for the retail industry

“VR technology has been used for medical training 20 years ago,” says Dr Lam. “Before performing clinical dissertations or operations in the real world, medical practitioners would first learn the relevant surgical procedures with the help of VR. This can strengthen the surgeons’ confidence and minimise the consumption of laboratory samples.” Dr Lam also notes that VR technology can be applied on tasks most people are unwilling to do, or procedures that people are unable to do. Through VR, we can repeatedly test the interplay of different variables in, say, building constructions, or we can move mountains and experiment with different construction methods. In the construction of “windshield buildings” (high-density buildings), architects can gauge the impact of rainstorms and strong winds on buildings, and even on the natural environment, in a VR simulated world.

Education is another area that can benefit from VR. It can be used for demonstrating physical phenomena that can’t be seen by the naked eyes, or for explaining abstract ideas. And of course, the gaming and retail industries are the other platforms through which VR and AR are taking flight. The technologies’ application in gaming is obvious. In retail, VR and AR are mainly applied in online shops (and physical shops, too). Customers can try out new outfits and other products in a virtual environment. This helps take the shopping experience to the next level and thereby may increase sales.

VR and AR technologies are easy to learn but difficult to master. Their development may involve a large sum of initial capital. In some cases, a little can go a long way. The development of login code is a good example. Besides the most traditional kind of static 2D codes, there are dynamic 2D codes and, in recent years, interactive and dynamic 3D codes developed with relatively high initial costs. Although companies from various industries are enthusiastically embracing VR and AR, their success is not guaranteed – it depends greatly on programming skills, the speed of the processor and user feedback. If the VR or AR application leads to dizziness or discomfort, it may not be able to attract new customers.

Driving customer flow and revenue

“In Hong Kong, there aren’t many people engaging in the development of VR and AR technologies. In contrast, businesses in the US have invested considerable resources in this field,” admits Dr Lam. Besides the US, China may be the next market with the greatest potential. If Hong Kong businesses can capture the trend by leveraging the city’s geographical advantages and valuable human resources, we can invigorate the retail sector by applying the latest VR and AR technologies. For example, retailers can blend innovative user experience into consumers’ daily spending habits. If the general public can easily access these technologies, the wider reach will create greater potential for their use.

Without a doubt, VR and AR present attractive opportunities. Whether businesses can grasp the opportunities depend on their willingness to devote extra resources and turn challenges into opportunities during the prevailing economic difficulties. The innovations can be applied across different kinds of retailers, such as fashion, leather shoes, leather goods, jewellery, smart products, stationery, electronic goods, household appliances and even tailor-made furniture. Retailers can develop their own VR or AR applications to entice their target customers and give a boost to business revenue. These technologies can bring changes to other sectors/industries, such as construction, private educational institutions, exhibitions, private galleries and shopping malls. The seemingly static activities in these areas can be enlivened through the interactive functions of VR and AR.

Going forward, the competition between electronic controllers (such as various kinds of remote controls and controllers) and the online gaming industry will be increasingly intense. However, as knowledge of VR and AR is rapidly spreading, they will continue to gain wider acceptance from the general public, and ultimately lead to a win-win situation for both developers and users.

© 2016 Hong Kong Economic Times. All rights reserved.

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The information, findings, projections, representations, opinions or comments in this article (the "Content") are those of Hong Kong Economic Times IMS Team and they do not constitute any form of opinion, advice, recommendation, representation or endorsement of The Hongkong and Shanghai Banking Corporation Limited (the "Bank").

The Bank makes no representation or warranty (express or implied) of any nature and accepts no liability or responsibility with respect to the Content and any inaccuracy or omission in it.

Bridging customer engagement through the bricks and clicks of the omnichannel experience

4 July 2016

Bridging customer engagement through the bricks and clicks of the omnichannel experience
South China Morning Post Tech News Team

As technology adoption and e-commerce offerings bring more consumers online, traditional brick-and-mortar SME retailers are learning that opportunities for the retail industry do not only exist in the cyber world, but often as a combination of online and offline (O2O), where crossovers can be effectively used to engage with consumers.


 

 

 

 

 

 

 

 

 

 

As the O2O industry develops and gains more momentum, multi or omnichannel retailers have a significant opportunity to provide consumers with a personalised shopping experience, tailored to their individual preferences. “The key is to recognise that each customer is unique and tailor the experience to them,’’ says Victor Ruiz-Sanchez, CEO and co-founder of actiMirror, a Hong Kong based Internet of Things (IoT) business.

For about the same cost as a mid-range domestic television set, Ruiz-Sanchez says Hong Kong retailers can install an in-store custom programmed platform that functions in a similar way to a large smart-phone.

Activated by a shoppers’ reflection, in less than a second, actiMirror can process 25 feature points which are processed through custom-designed apps and built-in sensors to display real-time personalised content to individuals. For facial recognition, actiMirror measures distances between jaw, shape of forehead and bone structure feature points. In addition to gender, indicated by face structure, sensors can also analyse and respond to different facial muscle groups used to display expressions of happiness, excitement and intrigue. The system is also programmed to determine age group triggered by skin imperfections, and ethnicity indicated by skin colour, tonalities and facial structure. Once facial recognition is complete, actiMirror can trigger product information applicable to age and gender, a product tutorial (perhaps a makeup tutorial, for a young woman) or a sales offer to match the appropriate demographic. “For most people it is a natural reaction to look in a mirror, so there is a very normal and instinctive human engagement with the actiMirror system as well as the curiosity aspect, ’’ observes Ruiz-Sanchez.

Based on a combination of anonymous demographic traits and object identification, actiMirror can profile a customer and suggest products they may want to buy. In a retail environment, this anonymous information can also be combined with ‘’object identification’’, for example, via radio-frequency identification (RFID) tags on shop merchandise that a customer is holding, to trigger personalised interaction including product matches to different demographics or cross-selling with additional product suggestions. For instance, for a man standing in front of a shop mirror, actiMirror may provide the following message: “people who bought the shirt that you are trying on also bought these trousers” or for a young lady preparing for her wedding: “that dress would match well with these shoes and this necklace”. “One area Hong Kong traditional retailers have been struggling with, is how to make a personal and emotional connection with customers in an easy and cost efficient way, which actiMirror does by bridging the gap’’ notes Ruiz-Sanchez who says the system can also help retailers gain a better understanding of exactly how their customers wish to interact with them so as to increase their share of shopping occasions.

Ruiz-Sanchez explains that actiMirror technology can be adapted to any retail product from watches and fashion items to health products and services. For instance, RFID chips in the price tags attached to watches and fashion items, allow actiMirror to trigger related on-screen content - perhaps a video about the history of a watch or a fashion show where an item of clothing was worn on the catwalk. For health products, biometric characteristics (age, gender etc) can be used along with the RFID chip in the gadget (perhaps a Fitbit sports monitor or a blood pressure guage) to offer personalised advice on use of the product for maximum benefit. ‘’By implementing a simple omnichannel system, retailers create a strong physical presence with an inexpensive online presence to satisfy the needs of the new generation of shopper and add another layer of engagement with traditional shoppers,’’ says Ruiz-Sanchez.

Locally, actiMirror devices have been installed in the Swire Group’s Mr & Mrs Fox restaurant and the El Willy’s Group of restaurants. By either taking a selfie, scanning a QR code or taking a photograph of a actiMirror display, and then ticking a box to ensure full compliance with Hong Kong’s Personal Data (Privacy) Ordinance, customers can receive details on their smart devices about future events such as special promotions and new menus. Through customer engagement, the restaurants can also collect information about customer likes and dislikes and dining ambiance preferences.

To discover deeper customer and retailer insights, Hong Kong supply chain management firm Li & Fung have installed actiMirror devices in its Business Research Laboratory “Explorium” in Shanghai, which is dedicated to conducting experimentation with omnichannel to observe and explore in real-time how consumers interact with new technologies, products and their environments where they shop.

Without the need for data storage, Ruiz-Sanchez says actiMirror is less intrusive than a CCTV camera and is compliant with Hong Kong’s Personal Data (Privacy) Ordinance. “No pictures or video footage are retained, therefore no link is made between a user’s anonymous demographic profile and their identity,’’ stresses Ruiz-Sanchez who explains a deeper customer relationship can be developed with customers when users scan a QR code and enter their details to download a picture or video. This allows customer data to be legally collected to further develop a personal and unique customer and retailer experience. For example, after a customer visits a store, at a later stage a cosmetic retailer could send a beauty tutorial to a mobile phone or tablet device. “By bringing the brick and click activities together, retailers are able to personalise the in-store experience with the potential to extend the customer relationship,’’ says Ruiz-Sanchez who predicts a future where offline and online shopping experiences are no longer two separate business models, instead, “shopping” will be an integrated omnichannel experience.

Since today’s consumers increasingly use multiple channels to support their shopping experiences, proactive retailers understand how each customer touch point adds value and by adopting omnichannel strategies, they can maximise customer satisfaction and profitability. A prime case-in-point is the way online retailer Zalora has opened a physical store in Singapore and operates pop-up stores in Hong Kong, which offer a retail experience with a difference. Instead of using cash registers and shopping bags, with mobile devices an essential part of the customer’s shopping journey, shoppers are encouraged to scan a QR code to download the Zalora app to a personal device using the store’s complimentary Wi-Fi. While shoppers can see, handle, and try on clothing at the store, they don’t take items home. Instead, they purchase items at the store, which are then delivered to their home. The company says the omnichannel initiative is a way for Zalora to grow its customer base and educate potential customers who may not yet be comfortable shopping online.

© 2016 South China Morning Post Publishers Limited. All rights reserved.

The information, findings, projections, representations, opinions or comments in this article (the "Content") are those of South China Morning Post and they do not constitute any form of opinion, advice, recommendation, representation or endorsement of The Hongkong and Shanghai Banking Corporation Limited (the "Bank").

The Bank makes no representation or warranty (express or implied) of any nature and accepts no liability or responsibility with respect to the Content and any inaccuracy or omission in it.

Case study: Hong Kong - The perfect climate for startups?

6 June 2016

Case study: Hong Kong - The perfect climate for startups?
The Economist

The founder of Ambi Labs, a hardware company which seeks to augment everyday household objects with intuitive, useful and usable technology, believes the city is a place where digital innovation can thrive

The story of Hong Kong-based Internet of things (IoT) startup Ambi Labs, based in the entrepreneurial Sheung Wan area, starts with a hot dog. An ageing husky named Levy, to be precise.

Julian Lee, a Singaporean and CEO of Ambi Labs who has spent the bulk of his life in Hong Kong, was looking for a way to keep his Siberian pet cool during Hong Kong’s sweaty, humid summer months. The solution he struck upon was a smart, data-driven approach to climate control.

Control air conditioners from afar via an app

“We founded Ambi with a very simple purpose. In the summer it’s always a struggle – do I leave the AC air conditioner on 24/7? It feels very energy wasteful; like you’re not a responsible global citizen,” he says. “At the same time you can’t leave your husky at home in the heat of summer in Hong Kong and not worry about him.”

Ambi Labs’ core product, Ambi Climate, tackles one of subtropical Asia’s most enduring problems – keeping cool – by optimising the air conditioners that are ubiquitous in the region’s homes. According to the Euromonitor data that Lee and his team have crunched, 300 million of the roughly 415 million air conditioner-equipped households in the world are in this region.

Ambi Climate started off as a relatively simple solution that allowed users to control their air conditioners from afar. But Lee is looking beyond that towards ways to capture and use the torrent of data that every aspect of our smartphone-equipped lives generates.

Ambi Climate is a small, sleek device that acts as a monitoring station as well as a proxy remote. When installed in a room it feeds data about climate conditions and climate control usage to users via an app downloaded to their smartphones. The app also acts as an interface that allows users to adjust temperature and humidity settings remotely, ensuring any kids, furniture - and huskies - in the house are well cared for no matter where the user happens to be.

Automation with data intelligence

Importantly, by seeking feedback and cataloguing and analyzing data patterns in temperature shifts, the device learns a user’s habits and preferences and responds accordingly. “Thermal comfort” is thus entirely automated, in the most energy efficient - and cost effective - way possible.

For Lee it’s important that any connected device makes the data gathering and usage process intuitive and non-invasive. With Ambi Climate, for example, “you don’t have to program things or set timers. (Data) intelligence should be seamless; it should be part of everyday life and transparent to the user.”

Ideal climate for digital startups in Hong Kong

Lee sees Hong Kong as an ideal base for digital startups like Ambi Labs. While the city has its downsides - high rents being among the biggest - young professionals continue to be attracted by its low taxes and quality lifestyle, ensuring a healthy supply of talent. In addition, as an affluent, tech-savvy - and hot - place, Hong Kong is the perfect test bed for Ambi Labs’ flagship product. The city is also full of early adopters, since people in Hong Kong “are risk takers; they’re learning to follow their passions and dreams,” Lee notes.

Lee also credits the government for being generally supportive of the start-up culture. Local and foreign companies can take advantage of multiple resources to assist in the setup process, from government-funded incubation programs and small enterprise support schemes to InvestHK, an agency dedicated to helping foreign businesses gain a foothold in the city.

While Lee leveraged his private equity background and tapped friends and family for the initial funds to get Ambi Labs off the ground, he says that the city is also a hotbed for venture capital and angel investment. “Hong Kong has a lot of smart people with deep pockets who are willing to back projects.”

Also important is the vibrancy of the start-up scene, largely centered in Hong Kong’s historic Sheung Wan neighborhood, where app builders and programmers work in offices that rub shoulders with shops selling Sheung Wan’s other famous export - dried seafood.

Before launching Ambi Labs in 2012, Lee and his co-founders met in a Sheung Wan ‘hacker space’ - a community-operated workspace where like-minded programmers and technicians gather - called Dim Sum Labs. “We wanted to stay in the area, partly because we got to meet a lot of other startups. So we kind of entered the ecosystem in a non-official way.”

The proximity of so many would-be founders and inventors encourages plenty of collaboration and meetups, Lee says. “I feel that we’re very fortunate in Hong Kong. We’ve visited startup communities in Taiwan, in South Korea, in Japan, and one thing that we’ve seen is that the startup scene, particularly the hardware startup scene, in Hong Kong is very collegiate. Everyone tries to help each other, share ideas, brainstorm.”

Ambi Climate’s focus on hardware may put it in the minority of tech startups, but Lee feels Hong Kong is a particularly compelling destination for companies with a hardware component as they can take advantage of the city’s proximity to neighboring Shenzhen, arguably the world’s greatest manufacturing hub.

“Hong Kong and the Pearl River Delta have a long history of manufacturing: electronics; toys, whatever you want to name. There are a lot of services here that you can tap into to accelerate your development and a trip across the border to Shenzhen is very easy.

In addition, online marketplaces like Taobao make it easy to source parts for protoyping “very quickly and cheaply. It’s orders of magnitude cheaper than if you were to do this anywhere else in the world. For me it’s a critical success factor for this type of startup in Hong Kong.”

Ambi Labs has grown into a team of 20, has users in 39 countries, and is looking to ship its 10,000th device within the next year. The company was also a presence at the 2016 Las Vegas Consumer Electronics Show and has been feted with multiple awards, including grand prize for top pitch at the 2015 RISE startup summit, and an IoT gold award in the Hong Kong ICT Awards 2015.

But Lee sees all this as just the beginning. “To all intents and purposes we consider our product mature enough now to really fully launch out and scale up. That’s our key goal for the next couple of years. For now, we’re focused on being the best possible solution for this air-conditioning problem.”

© 2016 The Economist Intelligence Unit Ltd. All rights reserved.

Whilst efforts have been taken to verify the accuracy of this information, neither The Economist Intelligence Unit Ltd. nor its affiliates can accept any responsibility or liability for reliance by any person on this information.

The mobile consumer

29 April 2016

The mobile consumer
Reginald Warlop, Global Head of Wealth Digital Product Management, HSBC

For businesses everywhere, keeping an eye on new mobile technology trends in the leisure and media industries is important. And for a growing number, it will be key to future growth.


 

 

 

 

 

 

 

 

 

 

Whether they are booking a holiday, downloading a film or tracking how far they’ve run, consumers expect the smartphone apps and websites they use in their spare time to be easy-to-use, accessible and interactive.

Travel, film, dating and gaming companies have led the way in developing simple and intuitive mobile sites and apps that help making buying and using goods and services online simpler. Now other businesses online are taking their cue from leisure and media companies.

How a company presents itself online matters. Getting online navigation right is essential: for example, people like to be able to swipe to the next screen rather than hunt around for a ‘next’ button. Social networking and sharing features are also increasingly important. And many of the most user-friendly mobile sites note a customer’s buying preferences, make suggestions based on what others have bought and feature online forums or live chat services to provide more help.

Adopting these features can help consumer-facing companies to understand what motivates – and what prevents – customers buying online. Developing mobile sites and apps that not only look good but that minimise the number of taps that customers need to make to purchase goods, or that recognise users, can help a business stand out.

Mobile technology that until recently was used primarily for leisure purposes is also being used to improve other business services. Some banks, for example, are helping customers pay their utility bills more easily using their smartphone’s camera. The customer takes a photograph of the bill and a mobile payment app extracts all the information required.

New applications are also being found for wearable devices. Passengers on London’s Underground network can now pay for their Tube journey by tapping their smartwatch on a reader at the ticket gate. Some insurers invite customers to wear fitness trackers as a way for the company to monitor their health and potentially offer them lower life insurance premiums.

Consumers’ behaviour online continues to evolve. In the future, internet-enabled virtual reality devices – which so far have largely been seen in the movie and gaming industry – could have a range of commercial applications. Virtual reality devices could, for example, help people go on a virtual tour of a house, attend a meeting in a virtual office or stroll along a virtual street to do some window-shopping.

The increasing use of mobile devices has led companies to adapt the technology they use to verify customer details and protect people against cyberattacks, fraud and data misuse. Advanced computer algorithms are now able to crunch large amounts of social and credit data, helping companies to speed up online services. Banks such as HSBC are rolling out smart keys, enhanced password protection, touch ID and voice recognition software to safeguard customer data and accounts. In the future verifying a customer’s identity by analysing their face, their irises or even their pulse could become commonplace.

For businesses everywhere, keeping an eye on new mobile technology trends in the leisure and media industries is important. And for a growing number, it will be key to future growth.

The digitising of everything - from traditional retailing to cyberspace

18 April 2016

The digitizing of everything - from traditional retailing to cyberspace
South China Morning Post Tech News Team

In a rapidly digitising world where consumers are increasingly turning to purchasing online products and services, a growing number of Hong Kong’s innovative small to medium size retail enterprises (SME’s) are expanding into e-commerce concepts that provide them with the potential to widen their marketplace and develop new business opportunities.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As Hong Kong's retail sector faces downward pressure, many SMEs are responding to the growing influence of e-commerce by offering specialised products and distinctive concepts, particularly to China's fast growing legions of online consumers. As Hong Kong companies have accumulated years of experience in cooperating with international traders, they are knowledgeable about a wide range of products and also have a good understanding of the demand from mainland consumers.

In its company profiles and tracking of local business enterprise developments, the Hong Kong Trade Development Council (HKTDC) spotlights a diverse range of Hong Kong companies across widely different industry sectors that have expanded their traditional retailing activities to include e-commerce activities. In addition to Hong Kong household business names including Mannings, Chow Tai Fook and Lane Crawford, SME enterprises including  as Baobae, which connects boutique retailers and local designers to offer gifts from the age range of newborns to 10 years and up, iDecorateweddings.com a one-stop e-platform that simplifies the wedding planning process and design and niche brand focus, and BeCandle, which produces its  own  designs and collaborates with well-know prestigious brands are utilizing e-commerce portals  to expanding their business operations.

Meanwhile, as the Chinese economy adjusts from an investment-led model to a consumption-led era, cross-border ecommerce is booming. According to estimates from the China E-Commerce Research Center (CECRC), the number of consumers making online purchases outside of the mainland will rise from 18 million in 2014 to more than 35 million in 2018, while the value of overseas online shopping transactions will jump from Rmb150 billion to Rmb1,000 billion. E-commerce market watchers say the trend of online consumption growth looks set to continue fueled by a new generation of freer-spending increasingly sophisticated consumers, the rise of China's upper-middle-class and affluent households looking for luxury products.

A good example of a Hong Kong company that has invigorated its traditional business to embrace e-commerce is Lexington Limited, which began life in the 1980s as a silicone products trading and production enterprise before the firm began developing its own silicone products and more recently establishing its own home ware, gifts, children, pets and travel brands under the Lexnfant, Lexliving and Lexngo trade names. 

Lexington set up its first e-commerce TryMeZone.com platform two years ago to provide business customers with regular new product updates and sample details. Products are designed by the company's in-house design team and manufactured in the company-owned factory. "We were showcasing our new products three or four times a year at trade shows in Hong Kong and overseas and noticed a growing demand for samples," says Yimi Cheung, the company's design director. "Instead of presenting our new products at tradeshows in the traditional way, we now introduce our latest products to our business to business (B2B) clients through our own online platform," adds Cheung. Customers also receive bi-monthly email direct marketing (eDM's) information.  

Although the amount of visitors attending trade shows in Lexington's business sector has shrunk, Cheung says the company now benefits from a more tailored and closer client relationship through the data base information collected through TryMeZone. When customer places an order or requests a sample, Lexington is also able collect useful customer data, which creates new ways to connect with them more efficiently through different digital channels. For certain, says Cheung, e-commerce has allowed the company to connect with customers more effectively and more directly. "There are no geophysical barriers so customers can reach us from anywhere and at anytime," Cheung says. "Whether clients are interested in a few product samples or want to place an order for 100,000 pieces, their enquiry can be arranged more efficiently online," she says.

Building on the success of the B2B platform, Lexington also operates a business to customer (B2C) platform. To reach the mainland's vast potential customer base, the company markets its full range of products on VIPSHOP (VIP.COM), one of China's largest online platforms,  recognised for  offering mainly high quality, genuine brands at discounted prices during limited sales periods. " We are able to reach more than 100 million people on the mainland through the VIPSHOP platform," says Cheung who highlights the majority of the online platform users are young, white collar individuals, which is the ideal target market for Lexington to expand into.

Lexington's expansion into the world of e-commerce has also generated tangible “online retailing to offline retailing,” O2O benefits targeting the local Hong Kong market. By setting up a one-stop gift shop, LexZop (lexzop.com), offering a wide range of carefully selected products including the complete Lexnfant, Lexliving and Lexngo product range, Lexington is in direct contact with consumers and able to retrieve important feedback from their brand and product experiences. "LexZop functions as a showroom and shop, and gives our customers the chance to see, feel and experience our products physically," she adds. "Our customers  can easily shop online 24/7, have their purchases delivered at home or pick it up at our LexZop Tin Hau shop and office," says Cheung emphasising how e-commerce has created the opportunity to reach customers in different market segments.

However, Cheung is quick to dispel any myths that building and operating B2B or B2C online portal is a simple matter of launching a digital site where the customers point, click and buy, and the business collects the profit. "For a Company that's used to a more traditional business model, we had (and still have) to be constantly open and flexible to deal with all the unexpected surprises and changes that emerge from the e-commerce business," explains Cheung. This new way of doing business and the increased workload it generates requires staff with expertise in new technologies that many SMEs will not necessarily have. Facing this challenge, Cheung says while the company is looking for new individuals to support its digital marketing and design needs, for Lexington employees multitasking has become a must. "The impact of e-commerce is huge and will only rise in the future so we have no choice but to be flexible and adapt to all the changes," observes Cheung.

© 2016 South China Morning Post Publishers Limited. All rights reserved.

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