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Meituan - AI in Retail - Blockchain Tech - Preview 11.11.19

Meituan - AI in Retail - Blockchain Tech - Preview 11.11.19
By ChinaBriefs Team • Issue #6 • View online
Hello from Beijing & Hamburg,
welcome to the new issue of the ChinaBriefs newsletter!
It has been a while. The time after the summer break - with a trade war, Hong Kong riots and China’s 70th birthday - was a bit busy. The current political situation makes it difficult for foreign companies. Everyone is treading a fine line these days. So much appears to be a question of “for” or “against”. Lets hope those days will resurface soon, where it was easier to assume the other side is well-meaning.
For me it has been China’s third big birthday party after the 50th and 60th birthdays, all celebrated in downtown Beijing. During the two preceding weekends, our kids got up early to watch all the tanks roll by on our neighboring street for the parade rehearsal. So we should have had a front row seat to the big parade. But on October 1st itself nobody was allowed near the windows or on the balconies - such were the heightened security measures during the festivities. 
But all of this didn’t take away from our festive mood. Of course, there are many issues and foreign media was critical in most of its reporting. But we felt that, surely, on its birthday, China had lots of things to be proud of - especially in the last 40 years.
So, belatedly, Happy Birthday China!
Here are the topics for today’s issue:
  1. Meituan - The other Superapp.
  2. How Retailers use AI-driven face recognition.
  3. China goes all-in on Blockchain tech.
  4. 11.11.19 - a little Preview.
  5. The Future Video Ads (or Spam)
  6. Event: China Focus@Europe Hamburg on Nov 10
As always, we are looking forward to any kind of feedback!! So pls send us an email ( or leave a comment on one of our channels on TwitterFacebook and LinkedIn.
Thx & best wishes
B. & M.
P.S.: We also write a regular column for the online issue of the German news magazine FOCUS - this week’s topic: what can we learn from VW’s e-Golf about the strengths & weaknesses of German car manufacturers? (sorry, German only)

Meituan-Dianping’s delivery staff / Photo: Meituan Dianping
Meituan-Dianping’s delivery staff / Photo: Meituan Dianping
1. Meituan - The other Superapp.
By now, almost everybody outside China has heard of Alibaba and its various subsidiaries as they dominate the country’s online retail market for physical goods. But still few people really know the other player who is leading the way in services - Meituan.
Its namesake app is a mix of Delivery Hero, Grubhub, Expedia,, Groupon, and Yelp. The Beijing-based company has 600,000 delivery people serving 400 million customers a year in 2,800 cities.
Why is it important to become familiar with Meituan?
Because this might be the company that joins Alibaba and Tencent to form a new triumvirate of China’s internet to be known as ATM ushering in the end of an era and taking the place of lackluster Baidu in what was formerly known as BAT (Baidu/Alibaba/Tencent). Baidu’s revenue and profitability is steadily falling while Meituan is on the rise with now nearly twice the market cap of China’s once dominant search engine.
How did Meituan become a super-App?
To understand this better, we need to look back to 2010 when Meituan was founded as a Groupon clone by CEO Wang Xing with a strong focus on discounted food and dining. The name Meituan 美团 means “beautiful together”, a nod to the group-buying idea. The next three years were spent in a subsidy battle to dominate the group-buying segment of China’s internet, also known in China as the “1000 Groupon Wars”. By 2013 most competitors, including Groupon’s own China operations had shut down and for lack of a more profitable business model Meituan had started to pivoted from volume discounts for restaurants to direct food delivery. Here Meituan soon had to contend with equally tough competition from two other players in this growing market: Baidu Delivery and In 2015 Meituan merged with Yelp-like Rating site Dianping and Wang Xing became CEO of the combined entity.
In 2017, Meituan launched new services in hotel booking, fresh goods delivery, and ride-hailing – as well as Zhenguo, a home-sharing app similar to Airbnb.
Typical China internet question: Is Meituan in the Alibaba or Tencent camp?
This one is difficult. Wang Xing took money from Alibaba in the early days but was burning it so fast that by 2015 Jack Ma was not willing to further fund the fast expansion and the subsidy wars with Baidu Delivery and As a result, Wang Xing entered secret negotiations with arch rival Tencent for a 1bn USD financing round that Tencent led and Alibaba was given a 12-hour notice to either join or get out. Jack Ma was furious, retreated a Koo nd invested in competitor and has been fighting the rise of Meituan ever since every step of the way. However, Wang Xing is not fazed. With a strong ally like Tencent granting exquisite traffic access within China’s other super-App Wechat, Meituan is seeing strong growth. 
The company listed in Hong Kong in October 2018 without ever having generated a profit. But 2019 has been a bumper year for Meituan with two consecutive quarterly reports showing profits. 
Some interesting stats:
  • An average driver makes 25 deliveries a day on a salary of 15-30 USD per day;
  • Meituan makes 20 Million deliveries daily (US leader Grubhub 500,000 per day)
  • China’s delivery market is huge at an estimated 800bn USD;
  • China has 156 cities with more than 1 Mio people (US has 10);
  • Deliveries in China cost an estimated 1 USD (5 USD in the US);
Meituan Dianping Introduction
Meituan Dianping Introduction
2. How Retailers use AI-driven face recognition.
Interesting retail trend - especially in China, where data protection laws are lax and customers relaxed about their data: combine ubiquitous CCTV cameras with AI-driven face recognition to enhance the retail experience for customers. Here are two examples:
  • Walmart (in the US) is identifying unhappy shoppers by monitoring customers’ facial expressions and movements at check out lines in order to identify varying levels of dissatisfaction.
  • Burberry’s brick and mortar stores are improving the in-store experience: once an identified customer walks in a store, sales representatives can access his entire online purchasing history as well as the social media activity. For example, if Burberry knows that a customer has recently bought a particular coat, assistants may be encouraged to show them a handbag which is popular with other buyers of the coat.
3. China goes all-in on Blockchain Tech.
Blockchain tech will soon get a big boost in China. Xi himself asked Chinese companies to step up efforts in this field and the Chinese central bank is getting ready to launch an official digital currency. If this is of interest to you, check out these stories:
China calls for more research and investment into blockchain technology
China calls for more research and investment into blockchain technology
Xi Jinping said last week that China should accelerate the development of blockchain, in remarks that marked the first time Beijing has thrown its weight behind the widely hyped - but still unproven - technology. (…)
“If China wins the race to have the world’s largest business blockchains actually transacting real-world financial activity, it will be the first-mover and thereby build in all the default features into the platform” (…)
A new app allows members of the Communist Party to pledge their loyalty to the Party by writing down the reasons they joined, and answers will be stored on a permanent distributed ledger using blockchain technology. This way a person’s party loyalty will stay recorded in cyberspace forever. 😳
China is on its way to become the world’s first major country to issue a sovereign digital currency, with top officials from the People’s Bank of China announcing on August 10th 2019 at the latest China Finance 40 Forum that they were “close” to doing so.
Two-tier Prototype Operating System of PBoC’s CBDC
Two-tier Prototype Operating System of PBoC’s CBDC
4. Singles' Day - A little Preview.
One thing is for sure: over the next two weeks expect to hear a lot about Alibaba. Singles’ Day is approaching fast. A time to break records - crazy mind blowing records, that is.
But what exactly is Singles Day and why is it called that way? Singles’ Day got its name from its date, November 11. The date written as 11/11 looks like “bare sticks” standing by themselves, a Chinese expression for the single and unattached. The roots can be traced back to China’s university campusses where single students celebrated the day as sort of an antidote to the societal pressures of being in a relationship. Many of China’s singles began splurging on themselves on Singles Day, which became seen as a type of anti-Valentine’s Day. To cater to these consumers, Alibaba held its first Singles’ Day shopping event in 2009 to serve these consumers.
For any brand involved in China’s ecommerce, it is also the time to make or break its commercial year. It is a double-edged sword, however, because everyone’s gross margin becomes razor thin if not negative. And it has become worse. There is now a pre-Single’s Day sale and then Single’s Day is followed by Double Twelve only a month later.
Another trend dangerous to brands is Alibaba’s growing strength in exploiting big data and developing their own private-label brands and products. Anyway, diversification away from Alibaba will be key for many overseas brands come 2020.
We will give you a solid summary once the party is over, but here are a couple of points to be aware of while we are moving closer to the big shopping festivals:
  • It starts ten days earlier than last year;
  • The shopping festival becomes an even bigger entertainment highlight (btw, Taylor Swift just confirmed her appearance!);
  • The push to go global intensifies with the Alibaba properties Lazada and AliExpress being leveraged in overseas markets;
  • More than 200,000 brands offering more than one million new products will participate;
  • This is the first Singles’ Day without Jack Ma.
By Chris Dawson,
By Chris Dawson,
5. The Future Video Ads (or Spam)
AI not only makes cool deep fakes possible, but maybe also the next big thing in video advertising: putting brand messages in videos retroactively.
Want to know how this could look like? Check out this video!
Matthew Brennan
Wow! Worth watching this. China's largest video platform #Tencentvideo (97M paying China subscribers) will begin inserting extra ads into movies/series that didn't exist in the original. #computervision
6. China Focus @Europe Hamburg on Nov 10.
China Focus @Europe Hamburg will bring together 200+ attendees from around the world to learn about China’s healthcare and pharmaceutical industry. It provides a valuable networking opportunity to meet the decision-makers from established companies, startups and investors.
Register now and save €150! Promo code: ChinaBriefs_Hamburg
Did you enjoy this issue?
ChinaBriefs Team

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