SHANGHAI, December 11, 2011 /PRNewswire-Asia/ -- CEIBS Shanghai Campus - The platform economy (p-economy) is a vital element for the future development of global business, an unavoidable spinoff of increasing globalization, rapidly evolving information technology, and the internet revolution that will be the key drivers behind business innovation in the 21st Century. An impressive slate of business leaders, academics and government officials shared their views on how China will position itself to take full advantage of the p-economy during today's 1st Annual China Financiers Forum. Organised by the China Europe International Business School (CEIBS), Xinhua News Agency's Shanghai Bureau, Xinhua Financial Information Platform's Shanghai Headquarters and online media partner xinhuanet.com, the event's theme was Platform Economy and Third-party E-payment.
The discussions took place within the context of the importance of Chinese enterprises rethinking their approach to business, abandoning outdated paradigms towards dealing with competition, and embracing the revolution brought by the p-economy. Those gathered fully recognized that third-party e-payment is not only a new platform, but a direct route for rapid fund-flows into the booming e-commerce sector.
The day's events got underway with welcome addresses by:
Prof. Zhang Weijiong, who thanked the sponsors which included Mercedes Benz, set the stage for the day's deliberations. The forum, he pointed out, was timely and would hopefully serve as an opportunity for participants to share their views and explore new opportunities as they contribute their expertise.
In his address, Shanghai Bureau Chief & Secretary of the Party Leadership Group, Xinhua News Agency Mr. Shen Haixiong explained the role that the Agency has played over the last eight years in connection with Shanghai's efforts to become an international financial hub. He stressed that Xinhua, cognizant of the changes taking place in the media landscape as a result of technological advances, has adjusted its product offerings to meet customers' needs. As of this year, for example, Xinhua has begun offering micro blogs. He cautioned, however, that efforts should be made to ensure that this and other types of new media are not abused. The platform economy, he said in closing, is the future and opens the door to e-payment. Today's forum, he told the audience, is an excellent opportunity to engage in fruitful discussion.
Vice Chairman, Shanghai Committee of CPPCC and Governor, Pudong New Area of Shanghai Mr. Jiang Liang also drove home the importance of platforms, describing them as a "mega trend" that would not be ignored by savvy businessmen. "First-class companies make platforms, second-class companies make products," he said. He also spoke of the urgent need for China to upgrade to a "new level of innovation" that extended to business models. CEIBS, as Asia's leading b-school, he said, has a major role to play in this regard.
CEIBS Part-time Finance MBA, Research Centres
CEIBS hosts a wide variety of industry forums throughout the year, bringing together stakeholders in fields such as banking, healthcare and the automobile industry to exchange ideas that will help pave the way ahead. These events complement CEIBS programme offerings: MBA, EMBA, Executive Education courses and the Part-time Finance MBA (FMBA). During today's forum, there was a kick-off ceremony for the FMBA with the plaque unveiled by Vice Chairman, Shanghai Committee of CPPCC and Governor, Pudong New Area of Shanghai Mr. Jiang Liang; and CEIBS Executive President Prof. Zhu Xiaoming. This was followed by an inauguration ceremony for the Platform Economy Research Centre, which will operate under the umbrella of the CEIBS Shanghai Pudong Research Centre for Service Economy. For this brief ceremony, a plaque was unveiled by Deputy Secretary General, CPC Shanghai Municipal Committee Mr Wang Zhan and Shanghai Bureau Chief & Secretary of the Party Leadership Group, Xinhua News Agency Mr. Shen Haixiong. CEIBS' various research centres generate vital information that is strongly geared towards practical use. The Third-party E-payment Research Centre (to be operated under the CEIBS Shanghai Pudong Research Centre for Service Economy) was also inaugurated during today's forum. CEIBS Executive President & Professor of Management Zhu Xiaoming and Deputy Director, China Academy of Finance Research, SJTU Prof. Fei Fangyu unveiled the plaque.
The forum's first session got underway with three keynote speeches after a brief presentation ceremony during which CEIBS Vice President & Co-Dean Zhang Weijiong and General Manager & Secretary of the CPC Committee, China Telecom Shanghai Branch Mr. Zhang Weihua presented commemorative books related to e-payment and the platform economy to a number of CEIBS alumni. The first keynote speech addressed the topic of Embracing the Era of the Platform Economy. It was delivered by Deputy Secretary General, CPC Shanghai Municipal Committee Mr. Wang Zhan whose titles also include Director, Research Office of CPC Shanghai Municipal Committee; Director, Shanghai Municipal Policy Advisory Committee (SMPAC) and Deputy to the 11th National People's Congress. He explored the issue of the platform economy from three angles: how it transforms companies' organisational structures, a p-economy city, and the collaboration it requires between the government, enterprises and academia. Mr. Wang explained that for the platform economy city to become a reality, there were specific areas where government input is required: to provide the required infrastructure needed to build smart cities; provide adequate information; provide a platform via which public services are offered; and provide a shared technology platform. The VAT reform, now ongoing in the pilot city of Shanghai, he said, was a move in the right direction as it will promote the development of a modern service industry. Shanghai, and especially Pudong, he added, was uniquely positioned to develop an e-economy over the next two to three years. The road ahead, he stressed, must include MNCs, large Chinese companies as well as SMEs. Like other speakers before him, he also described the p-economy as the wave of the future, an important development which CEIBS faculty and industry players need to keep on their radar.
CEIBS Executive President & Professor of Management Dr. Zhu Xiaoming gave the second keynote speech, covering the topic: Excellent Service Is the Key to Win in the Era of Platform Economy - Development of Platform Economy and Service Economy During Economic Transformation.
Making the point that it was 10 years to the day since China's ascension to the WTO, he told the audience that the service sector was an increasingly important and growing sector which is receiving a strong push from the government. The changes to the VAT, he added, will drive Shanghai's service industry. In a data-filled presentation, Prof. Zhu also used several case studies to make his point, listing Tony's Farm (an organic agricultural venture by CEIBS alumnus Tony Zhang) as an example of Service Oriented Agriculture which uses an IT system to control the entire production process from the farm to consumers' tables. He also cited Dong Chang Group as a company that made a successful transition from being product focused to service focused with the help of a software system that transformed the way it does business. His other examples included Apple's move from being product oriented to service oriented, with a strong design capability; and another alumnus company Bandweaver was mentioned as an excellent example of service in R & D. He warned that enterprises that have failed to make the transition from Web-based Platform Company (WPC) 1.0 -- those that lack information orientation and service orientation -- will be at a disadvantage compared to those at WPC 2.0 who are able to fully leverage the internet to build a competitive advantage. Some companies that do this well, he noted, are 360 Buy.com, 360.cn, Kaixin, Baidu, etc.
Defining the e-payment platform as finance + information technology, Prof. Zhu had three suggestions for the way ahead: the need to move forward as a headquarters economy by changing physical locations to e-platforms; the need to move ahead in terms of building China's e-payment cloud; and the need to take a long-term view that will focus on strategic design and explore the best options possible. "The world is flat, the e-platform is the new trend and we need to maximise services, which is why I titled my new book Service as a Platform," he added. He ended by stressing the roles that need to be played by both the government and businesses as they collaborate to optimise e-platforms and e-payment in the years ahead. "This is a huge opportunity, a long term opportunity," he urged.
Prof. Zhu was followed by a speech on Platform Economics - Use Platform to Drive Innovations and Industry Transformation in Shanghai, presented by Deputy Director, China Academy of Finance Research, SJTU Prof. Fei Fangyu. CEIBS Assistant President, Dr. Snow Zhou moderated this session as well as the welcome speeches. Prof. Fei explored issues such as the importance of the platform economy, deciphering it and learning how it can drive innovation. Pointing out that we live in a world of platforms (used for everything from online games to paying utility bills and booking vacations) he provided reams of data to show how the sector has grown in China: the platform industry has grown by 72%, year on year, with a 47% uptick in e-payment and a 100% growth in mobile internet use, he said. The platform economy, he added, attracts significant attention because it is a dynamic, innovative high-tech enterprise with a structure that is conducive to continuous innovation. Platforms, he added, can be the driving force of economic growth. He cited the significant contribution Microsoft's software platform has had on Washington DC in the US, generating 28.5% of the state's jobs and accounting for 13.6% of its output; Google's economic contribution of USD64 billion and the USD15.2 billion it had helped 288,000 companies and organisations generate; as well as the global impact of Apple and Facebook.
During his speech Prof. Fei also touched on issues such as the definition of platforms, the various types, their features, competition vs. cooperation among platforms, as well as different strategies such as entry, pricing and differentiation.
Learning from Successful International Platforms
The first of the day's three sessions, under the broad theme of Learning from Successful International Platforms, brought together four senior business executives from diverse industries to explore best practices in the sector worldwide. They sought to answer questions such as: How do companies integrate resources and achieve win-win solutions? What are the latest trends in their development? Their comments were phrased within the context that successful platforms can be found in many sectors across the globe, and they are certain to experience even more booming growth in the near future. Moderated by Deputy Director, CEIBS Lujiazui International Finance Research Centre Dr. Gary Liu who also serves as Deputy Director of Case Development Centre, CEIBS, the panellists were:
In his brief opening remarks, IBM's Mr. Qian noted that over the next five years -- as part of the restructuring that will have to take place as a result of the 2008 economic crisis -- there will be a shift from a manufacturing base to one with consumers at its core. The platform economy, he said, will be the driving force behind this transformation. He also spoke of how IBM was positioning itself to be at the forefront of things to come, citing the company's Watson computer which has the capacity to learn.
When he took to the stage, General Manager & Secretary of the CPC Committee, China Telecom Shanghai Branch Mr. Zhang Weihua (a CEIBS alumnus) told the audience that one of the major functions of a telecoms provider is to provide a platform. He outlined the progress his company has made in the innovative product of mobile payment, drawing on data from the Japanese, South Korean and US markets to show how lucrative this sector can be. In Japan, he said, 20% of credit card payments are done by mobile phone; while in South Korea 70% of payments are done by cell phone. If China Telecom could get 15% of its mobile phone users to go that route, he added, that would be a good start. He also told the audience about new collaborations in the US between phone companies and computer giants that are making mobile payments more and more commonplace. Then, pointing to statistics that indicate that there were 960 million mobile phone users in China by the end of October, 110 million of them 3G, and more than 300 million who use their phones to go online, he assured the audience that the China mobile payment market has a solid foundation on which to build. The challenge, he said, was how to achieve a win-win result for all the players.
Mr. Zhang also stressed the need for innovation, interconnectivity, as well as industry standards which will help achieve scale. Regulators, he added, also need to be educated on how to effectively monitor and guide this fast emerging and lucrative sector.
In his brief opening speech, Managing Partner, SAIF Partners Mr. Andrew Y. Yan also stressed the need for increasing innovation. He also spoke about the bottlenecks that hamper the growth of the p-economy: logistics and warehousing, transactions costs for offline activity and some government policies.
The panel was rounded out with comments from President, Entrepreneur Magazine Mr. Niu Wenwen who spoke about the opportunities within the sector, as well as the need for government support and regulation.
China's Best Platforms
China's Best Platforms was the general theme for session two which was moderated by Deputy Director, News Centre of Shanghai Bureau, Xinhua News Agency Ms. Liu Ying. The issues explored during the discussion and ensuing Q&A: The path of those who aspire to succeed in China has to take into account the country's unique characteristics in order to access its unique culture and highly lucrative market. The fact that no global internet giant has achieved major success in China further highlights the necessity of a localized strategy. In recent years, more and more Chinese platforms have emerged, grown, and prospered. What characteristics do these Chinese platforms share? What are the key innovations behind their great success?
The first panellist was CEIBS Associate Professor of Strategy Prof. Chen Weiru who spoke on Innovation Platform of Chinese Enterprises. He began by offering a simple definition of a platform: it needs to be a two-way process and has to provide added value. American electronics powerhouse Best Buy, he said, had failed in China because it used a one-way model while its competitors, local Chinese firms Sunning and Gome used a two-way approach that responded instantly to customers' pricing needs by offering them an opportunity to bargain with suppliers. He cited Taobao as an excellent example of network externality as a way to add value: the more sellers available, the more buyers it will attract. Key success factors for platforms, he said, include the ability to grow rapidly, and a user base that builds network externality that will ensure scalability, which is vital.
Next was Tencent's General Manager of Instant Messaging Department, Mr. Yin Yu who explained Tencent's Road to Opening Up. He agreed with Prof. Chen's definition of a platform, adding that it is a vehicle that has value because it simplifies and addresses supply and demand matching issues. He told the audience that Tencent was well aware that the platform economy is here and it is constantly exploring the best way to optimise this tool. In response to the moderator's question about what makes his company different from its competitors, Mr. Yin explained that Tencent has wider coverage and a large user base, it can provide a very comprehensive slate of services from payments to communications and its years of experience has equipped it with valuable expertise that it can share with partners.
Chairman, E&P International Mr. Liu Yadong who is also Chairman, Shanghai Orient Electronic Payment Co., Ltd. then explored The Philosophy and Practice of Building a Public Service Platform - A Case Study on Shanghai Orient Electronic Payment's Corporate Finance E-commerce Platform Co., Ltd. He told the audience how a government-level platform had been transformed into a vehicle for public information after requests from industry players. After an overview of his company's projects, he ended on an optimistic note, adding that the p-economy has a vibrant future ahead.
New Platform
The day's final session was titled Third-party E-payment: A New Platform, A New Future and saw the participation of:
Mr. Zhou, another CEIBS alumnus, shared his view that the next decade would be "a golden era for e-payment systems" but he cautioned that new rules are needed for the game. The next three to five years, he predicted, will see rapid growth in point of sale (POS) machines and -- though this is a relatively old method of completing transactions -- he expects that there will be more than 10 million in the next five years. Meanwhile, internet payment has seen a 200% growth in recent years, he said, and he anticipates that mobile payment will have "explosive" growth. "The e-payment industry is going to be huge. There will be intense competition so we need new rules for the game," he urged, adding that the POBC's issuing of licenses has boosted interest in the market. With no models in the US or UK to draw upon, he added, China has the opportunity to be a leader in this field.
General Manager, International Payment Solutions (IPS) Mr. Mao Junmin (another CEIBS alumnus) followed with a speech on Trends in the Innovation and Applications of Third-party E-payment. He explored the role that innovation has to play as a driving force behind the third party payment platform, and the future development of the industry. Third party payment had emerged, he noted, because of the need for a more efficient payment vehicle. With the first batch of licenses issued this May, he said, the industry had entered a new chapter and a competitive landscape has begun to emerge. Collaboration between industry players, he said, could enhance efficiency.
Vice General Manager, Shanghai Shengda E-Business Co., Ltd. Ms. Hong Xiaoji was the day's final speaker. She addressed Business Model Innovation in the Third-party E-payment Industry, stressing that third party e-payment must be easy to use, convenient and safe. She drew on examples from her company to show how effective it can be and how it has changed the publishing landscape. By last December, more than 50 writers whose books were sold for two cents each on Shengda had earned revenue of more than RMB10 million, she said, adding that online literature had transformed the way writers write (they are more prolific), changed readers' habits (from paper to online), and changed how books are copyrighted.
The session was moderated by Kevin Li, CEIBS Adjunct Professor of Entrepreneurship & Executive Director of the Centre for Entrepreneurship and Investment who is also Founder of www.Ku6.com. It explored how market leaders can capture the opportunities available and take their companies to the next level, as well as the key industry trends. Comments were made within the context of the critical importance of the year 2011 in the development of the third-party e-payment industry. The issuance of licenses marks the start of a new round of competition in this area. It is clear that only the strongest contenders will be fit enough to excel.
