3 digital industries that China is dominating (Promotional Feature by UBS)

China is one of the foremost nations embracing a fully connected society. In many major Chinese cities, sensor-filled machines that accept digital payments and support public data-collection are commonplace. Such technologies are found in supermarkets, malls, and even on sidewalks — Chinese panhandlers have notably used the WeChat platform to collect donations from passersby. Already, China’s mobile payments market is nearly 50 times that of the U.S.’s.

China represents a significant investment opportunity for breakthrough innovations in digital industries. Data from late 2017 suggests that increased digitization may lead to a shift of 10 to 45 percent of industry revenue pools in China by 2030. This shift has particular implications for key sectors like consumer and retail, automotive and mobility, health care, and freight and logistics.

China, which already has one of the world’s most globally competitive economies, may experience explosive economic boosts from emerging digital innovations. For example, China currently accounts for 42 percent of the global e-commerce market. The country is also home to one-third of the world’s most successful tech startups. 

Investors who back such ventures may reap benefits in the long-term. Below are three industries in which China is currently displaying dominance.

Robotics

In 2017, the International Federation of Robotics reported China to be the strongest marketplace in the world for the robotics industry. The group found that China boasts the most operational industrial robots on the planet. That total number is predicted to be around 950,300 units by 2020. 

Industrial robotics systems are considered foundational to the rise of “smart factories,” which may further cement China’s status as a global Mecca for manufacturing. On a smaller scale, robots are becoming common sights in public spaces in China including on streets — fully robotic parking garages, for instance — and even in dining establishments. Alibaba recently deployed a futuristic restaurant concept, Robot.He dinners, with robot waiters in place of human servers.

Artificial intelligence

The emerging field of artificial intelligence (AI) nicely complements innovations happening in the robotics arena. Today, some of China’s most prominent technology companies are investing heavily in R&D for AI. Three of China’s major tech companies — Baidu, Alibaba, and Tencent (BAT) — have announced huge and ongoing commitments to AI innovation. Some of the most impressive advancements are occurring in the promising field of deep learning.

Major international players are also turning their attention to China for further development of AI. In late 2017, for instance, Google announced plans to open an AI center in Beijing. 

Two of the foundational technologies behind advanced AI include image and voice-recognition software. According to the Ministry of Industry and Information Technology, China is now competitive with other global leaders in voice- and image-recognition technologies. These systems increasingly underpin platforms such as ride-sharing apps, security systems, and “social credit” schemes.

AI holds promise for the Chinese economy as a whole. McKinsey data estimates that AI technology stemming from China could add up to 1.4 percentage points to the country’s annual GDP growth.

Automated services

In addition to an impressive mobile payments market, China is making major advancements in automation.

In the autonomous vehicle space, China is spearheading projects such as Baidu’s fleet of 100 automated buses in Beijing and Shenzhen. These self-driving buses are set to hit international streets in Japan as soon as early 2019. Chinese company Tencent is also reportedly experimenting with self-driving consumer cars in overseas markets such as Silicon Valley.

Part of the reason the autonomous vehicle industry is flourishing in China is that its citizens are prone to early adoption: One survey found that 60 percent of Chinese respondents would be willing to switch car manufacturers for improved connectivity features. That number in Germany, by contrast, was just 20 percent.

It’s not just the transportation industry that will see digital revolution due to automation. Cargo and package delivery — and by association, the e-commerce industry at large — is seeing an uptick in automation technologies. Drone delivery has already received go-ahead for testing from the Chinese government in rural areas of the country.

Companies seeking to capitalize on automation tech may take a page out of the book of successful drone companies like DJI. DJI, a Shenzhen-based startup known for its popular consumer drones like the Phantom and the Mavic series, today controls close to 75 percent of the consumer drone market. In March of 2018, DJI was reportedly valued at close to $15 billion, nearly double its valuation from just three years ago. 

With impressive advancements in robotics, AI, and automation on the horizon, China is proving a global force for innovation — and an increasingly attractive market for investors.

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