3 Truths of China’s Wearable Device Market
- March 3rd, 2015
- in Marketing
Despite best efforts, Google Glass, Oculus Rift, and other wearable devices have yet to sway the public in significant numbers from their ‘hand machines’ (a literal translation of mobile phone, 手机，in Mandarin.)
In spite of that fact, wearable devices continue to grow as a consumer tech segment, nowhere more so than in China. These three truths about China’s wearable device market are meant to shed light on both the opportunities and challenges awaiting.
1. It’s Big
China’s wearable device market was worth $68m in 2012, should reach $160m this year, and is projected to reach $800m in 2017. Experts are obviously factoring in an inflection point as yet unquantified.
That inflection point will most likely appear in either the health or gaming segments of China’s wearables industry. China has over 173m hardcore gamers, eagerly awaiting affordable gear that makes the game experience more engaging.
As to health, China is facing a full-blown crisis as a surging middle class demands developed world services and accessibility that just isn’t in adequate supply. Accessibility and inefficiency are key issues, both of which health wearables address. Med-tech group Transpacific IP is sanguine enough about this segment to project a $4.7b market in 2017.
The fitness segment is on the fast track as well, with YoY growth of 129% expected, as well as some 43m wearable units to ship, 28m smart brands, 15m basic. This can be viewed as a logical, rather than ironic phenomenon attendant on China’ slew of health and environmental issues.
2. It’s Fragmented
Predictable big players, namely Baidu, Xiaomi, and Tencent, are positioning for dominance in the market through proprietary ecosystems that will lock in share and lock out smaller players.
This is particularly lamentable in the case of Tencent, whose WeChat application is currently China’s go-to social media platform. At a recent Technode event in Beijing , the most vociferous meet-up involved various wearable device makers lamenting the innumerable flaws in WeChat’s API, the resultant difficulty of using the platform for device interaction, and WeChat’s complete indifference to the problem. The recent launch of its own fitness tracking app could explain that indifference.
But it would be wrong to conceive of China’s wearable device market as domestically hidebound as its search and ecommerce markets. As far as the private sector is concerned, wearable is global. The Shenzhen accelerator focuses on smart gadgets, many wearable, and is incubating techpreneurs from around the globe, mostly from North America and Europe. Meanwhile, Xiaomi recently invested $40m in wearables startup Misfit, while Intel has doled out some $28m to five Chinese wearables enterprises, part of a $100m fund for IoT (Internet of Things) companies.
Hopefully, consumer demand for quality products will hamper a predictable government move to lock out international companies in favor of domestic. This is less optimistic than it may sound, as hardware has proven less prone to gerrymandering than software.
Don’t discount Chinese privacy concerns as another variable to a winning wearable equation. Although historically less resistant to sharing personal data online, the prospect of having not only one’s own but her loved ones’ intimate health and financial information in databases open to snooping and commercialization has engendered a slew of op-eds in tech sections of China’s large news portals.
3. It Needs Real Innovation
ZTE has its Bluewatch, for communicating with Android devices. Lenovo has its wannabe Google glass, as did Baidu. But none of these flagship China tech brands have managed to wow audiences at home or abroad.
Smaller companies are making their forays into China’s wearable device market with a pragmatic, but wholly uninspired array of rings, pendants, spy ties and hats, the most interesting of which can be viewed here. Otherwise, a scroll thorugh Chinavision’s wearable device section gives a good idea of the hodgepodge of imitative crap products available.
What will be the iPhone of wearable devices? Who can say? From whence will it come? Even we China tech boosters (“Alibaba 加油!”) are forced to concede that it will most likely come from the West, albeit with any number of ethnically Chinese team members contributing to programming, design, and testing.
This is good news for western companies dreaming up, or better yet beta testing the wearable devices they’re sure can change the world. 加 油(Jia you! “Add oil!” Go for it!) If you’re on to something good, rest assured there is a big Chinese tech fund ready to take you the rest of the way to glory. For those without Mark Zuckerberg’s credentials or Intermediate Mandarin, that’s the best way to go.