Frank Desvignes AXA Lab Asia

The Internet of Things Made in China

Future of insurance
Oct 5, 2016

Several months after our initial article on China, we got back in touch with AXA Lab Asia Founder Frank Desvignes to find out more about his team’s progress and how IoT in China is reshaping the world, online and off.

In 2015, I moved to Asia and began setting up a Lab in Shanghai. The goal was to identify the most promising startups in the area with whom to set up cooperation agreements, and scan the market for emerging tech and trends, as well as track exceptional entrepreneurial talent.

First and mobile-first.

China is definitely a mobile-first country, with over 574 million smartphone users in total (more than the US, Russia, India, Brazil and France combined) and 88% of internet usage occurring via mobile.

I’m still impressed by the constant usage of mobile by the entire population: it’s happening everywhere, all the time, for everyone (seniors included; it’s not just about millennials here).

Internet-connected things at HuaQiangBei Electronic Market, Shenzhen. Guangdong province, China. September 2015
HuaQiangBei Electronic Market: the mega market with every electronic device

What’s also impressive is how mobile payment has exploded: PayPal’s 190 million users worldwide are now being dwarfed by Chinese AliPay’s 900 million users (racking up a staggering 926 transactions per second). And, in terms of e-commerce, Chinese firm AliBaba’s galaxy of websites manages more e-commerce transactions than the entire US economy.

But mobile isn’t the only tech craze sweeping the nation.

The Internet of Things and WeChat

By 2020, there’ll be 200 billion IoT connected devices worldwide, with 95% of these manufactured in one place: China.

Inevitably, the country’s startups are starting to work with every type of connected device imaginable (one of my favorites is a living room mirror showing open chats and info such as weather, calendar events, etc.).

Many of these new IoT devices can now be managed via another Chinese tech wonder: meta-app WeChat.

A full platform ecosystem, WeChat includes control for IoT devices like home lighting systems, security cameras, door locks and so on, but is so much more. It comes with messaging features so you can add friends, see their posts, photos, videos, wall and so on. And it also has Skype-like features like chatting or texting, and voice-messaging (in China, most people chat by speaking into their phones to send and reply to short voice messages) and you can create Groups like in WhatsApp, adding video conferences or group video conferences as well.

But, and this is where it gets interesting, you can also pay with WeChat Wallet, buy insurance, make an investment, or take out a loan, all in the app. And you don’t need to download anything further. Simply “follow” the account of a brand, organization or company to gain access to their features, products and services. For example, ICBC AXA, one of our joint ventures in China, currently provides a simple claims process for health products right in WeChat when a customer follows the account. This has made it so quick and easy to set up a claim, the team won the China Insurance News Innovation Award for their efforts.

First Asia, then the world.

A key event for technology in Asia - and indeed the world - is Shanghai’s CES (Consumer Electronics Show), with the most recent edition having taken place in May. Bringing together IoT, mobile, fintech, e-commerce and more, this year’s three-day edition at the Shanghai New International Expo Centre featured 375 exhibitors from 23 different countries. Two times bigger than last year’s inaugural edition (I had the privilege of being one of the attendees), it featured 32,000 square metres of exhibits and attracted over 30,000 people.

Frank at the CES 2016 in Shanghai...
... exploring new tech trends

Most significantly, in terms of tech and IoT, Chinese companies are beginning to use CES Asia as a platform to enter the global market for the first time. For example, Baidu uses the event as a first approach to markets in other countries for its sales of screens and connected objects for cars, while WeChat just announced its impending launch outside China with a demo system slated for 20 countries around the world (an initial effort was activated in South Africa just months ago). And, surprisingly, Twitter was present at CES Asia (use of the social media platform is not allowed in China) to propose its platform as a great way for Chinese companies to promote themselves outside the country.

From IoT to IoV.

In terms of IoV (Internet of Vehicles), we saw a lot of interactivity with cars as well. We were shown how we could text our car (by chatbot) simply by adding it as a friend on WeChat, asking it things like how many kilometres we traveled yesterday, where that great restaurant we stopped at was, or how much time until the car’s next tune-up. This tech is the run-up to fully autonomous cars: connected vehicles we no longer need to worry about but can simply use as another piece of communication tech, as we’re sped to our next destination.

BMW, Volvo and others uncovered plans to launch autonomous cars at this year’s CES Asia, competing directly with Tesla and Chinese electric car company, BYD. And, as autonomous cars will one day become taxis, taxi apps are becoming more and more powerful. Apple’s announcement of its investment of US $1 billion in Didi Chuxing, the Chinese ride-hailing app that has already attracted the investment of Chinese bigs Tencent and Alibaba, is no coincidence.

New trends reshaping the customer journey

The business side of IoT in China.

Of course, cultural specificities are incredibly important when doing business in China. Discussions tend to be pragmatic and personal, and finding the right balance between personal and professional becomes vital for a sustainable relationship. It is paramount to share a common vision at the beginning of any meeting or workshop and we were often surprised at just how strategic and far-reaching these can be.

In fact, large Chinese tech companies have a great vision for the future of IoT, tech and China itself. For example, Baidu and Alibaba work alongside the Chinese government via a common five-year strategic plan that stretches across different areas, including how to implement new tools in health care prevention and treatment, and how to build infrastructure and create an ecosystem that allows the government, and the entire country, to solve tech-related challenges in IoT and beyond.

There is much closer collaboration between private and public sectors than places like the US or Europe. Every year, China turns out the same number of engineers as France has in total. And, in places like France, you might have engineers in government duplicating functions of those in the private sector. Here you feel everyone is working together for the new “Made in China”, characterized by quality services, products and solutions.

Great opportunites for the insurtech market

The Insurance of Things

Last year, my view on the key challenge facing services (like insurance), was similar to this year’s: Essentially, how do we successfully combine our business model with tech trends such as IoT, IoV and so on?

Well, this year we’ve noticed progress on combining IoT and insurance with these new business models and partnerships, including efforts such as those undertaken by ICBC AXA. And with WeChat’s ecosystem growing exponentially, and the expansion of Chinese companies into operations around the world, services and tech are slowly coming together everywhere: a trend we predict will only accelerate in the coming years.

Stay tuned to this space for more exciting news from AXA Lab in Asia.