future watch, china's big data ecosystem update

OTSIKKOALAOTSIKKO, KUUKAUSI VUOSI

CHINA’S DIGITAL LANDSCAPE AND RISING DISRUPTORSMODULE 2.9 BIG DATA

AUTHORS

Dr. Edward TseFounder and CEO

Team Finland Future Watch Report, December 20172

Mr. Bill RussoManaging Director and Auto Practice Lead

Mr. Alan ChanAssociate

BIG DATA AND ANALYTICS

TOPICS


1. WHAT IS BIG DATA?2. CHINA’S BIG DATA INDUSTRY AND INNOVATORS3. FUTURE OPPORTUNITIES AND IMPLICATIONS FOR TEAM FINLAND



WHAT IS BIG DATA: THE 5V’S CHARACTERISTICS OF BIG DATA

Source: Literature research, Gao Feng analysis

BigData

Volume

Value

Veracity Variety

Velocity

The massive amount and growth of data can overtake traditional storage solutions

Data is continuously generated at a unprecedented speed, making it harder to manage and analyze in real-time

Traditional data management fails to handle different types of unstructured and structured data

Data monetization – extracting business insights and revenue from data

Trustworthiness of data in terms of data consistency, completeness, authenticity, availability and accountability



DATA WILL CONTINUE TO GROW EXPONENTIALLY

Note: 1 petabyte = 1 million gigabytes; 1 zetabyte = 1 million petabytesSource: IDC Data Age 2025 Study, Gao Feng analysis

Information Created Worldwide

Zeta

byte

s (Z

B)

Key Drivers

Proliferation of mobile devices and digital sensors

24/7 digital lifestyle Advances in computing

power and data storage capabilities

Data as a new competitive advantage for companies



DATA HAS BECOME ONE OF THE MOST STRATEGIC ASSETS FOR LEADING TECHNOLOGY COMPANIES


Facebook Google

Facebook collects 500 terabytes of data daily, including 2.5 billion pieces of content, 2.7 billion likes and 300 million photos

Google processes over 40,000 search queries every second on average (equivalent to over 3.5 billion searches per day worldwide)

Alibaba 2017 Double 11

Shopping Day

Recorded RMB 168 billion gross merchandise volume (GMV)

Alipay processed 1.5 billion payment transactions during the event (up 41% from 2016)

Personalized newsfeed; Targeted ads

Personalized search results; Targeted ads

Shopping recommendations;

Targeted ads



DIFFERENT TYPES OF DATA REPRESENT DIFFERENT LEVELS OF VALUE CREATION


When

How

What

Who

Where

Breadth of Data

Proprietary response data & transactional data, and individual consumer triggers such as life event

Known purchase behaviors – tags and shopping history

Likelihood to make a purchase, shopping attitudes, personal preferences and mode of consumption

Self-reported hobbies, interests and activities

Home ownership, duration of residence, home, value, purchase amount and date, asset value

Household life-stage segmentation, socio-economic, and household characteristics

Includes age, income, marital status, children, education, net worth, occupation, etc.

Contact information, physical & virtual appearance

Most Predictable

Baseline

DescriptionEnables Answers to

Key Questions:



BIG DATA HAS ENABLED MANY PERSONALIZED CONSUMER SERVICES


Usage-based Insurance:Costs are dependent upon type of vehicle used, measured against time, distance, driving behavior and location

Personalized Newsfeed:Stream of content based on the user’s interests, browsing history, demographics, and friends

Targeted Ads:Ads that are targeted to specific micro-segments

Micro-segmenting

Consumer/User Data

CASE EXAMPLE



BIG DATA IS ALSO RESHAPING THE INDUSTRIAL SECTOR


Mass customization:C2B customer-driven small-patch manufacturing based on customer personality, preference and use cases

Predictive Maintenance:Reduce process flaws, save time and costReal-time fraud detection

Digital Plant:Real-time factory performance analysisReal-time factory reschedulingProduction quality and yield management

Machine-generated Data

CASE EXAMPLE



THE PUBLIC SECTOR IS ALSO EMBRACING THE BIG DATA OPPORTUNITIES


Public health and transports:National database of individual’s health for future healthcare policy planningTransportation data for designing better cities

Public security:Surveillance cameras with face recognition system for public security purposes

Opening up of tax data:Accelerated the credit investigations of local banks and their lending efficiency to small companies

Government institutions Policymakers

City Data

CASE EXAMPLE



IN PARTICULAR, BIG DATA HAS BECOME THE BACKBONE OF SMART CITY


ApplicationsAnalyticsDataConnectivity and Sensors

(IoT)

V2X connectivity

Embedded modem

On-board diagnostics (OBD)/ telematics

GPS sensors

In-car cameras

Temperature/ environmental sensors

LIDARS

Accelerometers

Smart Cities Value Chain

Location

Speed

Origin-destination

Images

Videos

Weather

Precipitation

Pollution

Noise

Charging data

Big data

Data fusion/ amalgamation

Visualization tools (e.g. heatmaps)

Computer vision

Machine learning

Artificial intelligence

Sense-making

Real-time traffic conditions

Congestion prediction and avoidance

Automatic incident/ exceptional event detection

Parking availability

Seamless intermodal public transport

Dynamic pricing

On-demand mobility



FUTURE TRENDS IN BIG DATA


Better Data Analytics

Software

More non-coder-friendly data analytics tools will be developed, such as Microsoft and Salesforce

Demand for real-time streaming insights into data will grow, served by contemporary tools like Kafka and Spark

More artificial intelligence technologies will be built-in to data analytics software to enhance its predicative capabilities

Organizational Readiness

Most of the companies will become data businesses Chief Data Officer will see a rise in prominence Continued shortages of data professionals

From Big Data to “Fast Data” and

“Actionable Data”

Fast data - processing of massive data in real time to gain instant awareness and detect signals of interest on the spot

Actionable Data - predictive analytics and what-if analysis to prescribe recommendations to enable businesses to take actions with feedbacks

Others Data privacy will become a core issue for business ethics Growing threats of biased data for AI applications Further opening up of government data


TOPICS

Team Finland Future Watch Report, November 201713




THE CHINESE GOVERNMENT HAS SET AMBITIOUS GOALS IN BIG DATA INDUSTRY DEVELOPMENT TO FOSTER NEW ECONOMIC DRIVERS


China's 2016-2020 Big Data Industry Development Plan By the Ministry of Industry and Information Technology (MIIT)

as part of the nation's 13th five-year plan

To increase annual sales of China’s big data industry (including related goods and services) to RMB 1 trillion by 2020 from an estimated RMB 280 billion in 2015To target a compound annual growth rate of around 30 percent for the industry's sales in 2016-2020To cultivate 10 world-leading big data companies by 2020 and 500 big data application and service enterprisesTo establish 10-15 experimental zones to speed up the industry's development



GUIZHOU IS ONE OF THE PIONEERING PILOT ZONES POSITIONED AS CHINA’S “BIG DATA VALLEY”


Development of Guiyang as China’s leading big data hub

Guiyang, the capital of Guizhou Province, was typically known for poverty Gui’an New District, a 1,795 sq km suburb area established in 2014, is the strategic heart of Guiyang’s technology aspirationIncentives have attracted companies such as Foxconn, Microsoft, Huawei, Hyundai Motor, Tencent, Qualcomm, Alibaba, Apple, China Mobile, China Unicom and China Telecom28 big data scientific research institutions, and 23 incubators and investment organizations

"The big data industry is a perfect opportunity for Guizhou to develop its economy without introducing polluting industries, while helping its poor population shake off poverty. Big data has also become a magnet for talent, enabling more young people to settle here"

- Jing Yaping, Deputy director of the provincial big data development authority



THE CHINESE GOVERNMENT IS DEVELOPING A REVOLUTIONARY SOCIAL CREDIT SYSTEM TO RATE THE “TRUSTWORTHINESS” OF ITS CITIZENS

Source: Literature research, Wired Magazine, Gao Feng analysis

Plan for a national social credit systemIn June 14, 2014, the State Council of China published an ominous-sounding document called "Planning Outline for the Construction of a Social Credit System“The system is designed to measure and enhance "trust" nationwide and to build a culture of "sincerity"To launch in 2020 and participation is mandatory

Two leading “experiments”- China Rapid Finance, partnering with

Tencent WeChat (850 million active users)- Seasame Credit, run by Ant Financial

Services Group (affiliate of Alibaba)Rewards and "special privileges" are given to those citizens who prove themselves to be "trustworthy" on Sesame Credit, for example:

- Rent a car without leaving a deposit- Faster check-in at hotels - Use of the VIP check-in at Beijing Capital

International Airport- Apply for Singapore travel without

supporting documents such as an employee letter

- Fast-tracked application to a coveted pan-European Schengen visa



SESAME CREDIT COLLECTS A HOLISTIC RANGE OF DEMOGRAPHIC, BEHAVIORAL AND TRANSACTIONAL DATA FROM ALIPAY USERS

Source: Literature research, Wired Magazine, Gao Feng analysis

Individuals on Sesame Credit are measured by a score based on five categories

Credit History Does the citizen pay their electricity or

phone bill on time?

Fulfilment Capacity

What is the user's ability to fulfil his/her contract obligations?

Personal Characteristics

Verifying personal information such as someone's mobile phone number and address

Behavior and Preference

What is the user’s shopping habit? What types of products does the user buy?

Interpersonal Relationships

What does their choice of online friends and their interactions say about the person being assessed?

CASE EXAMPLE



TOUTIAO IS A DISRUPTIVE NEWS PLATFORM PROVIDING HIGHLY PERSONALIZED CONTENT

Source: Toutiao, Financial Times, Literature research, Gao Feng analysis

CASE EXAMPLE

Augmented Reality (AR)Competitive advantages in content generation, distribution and monetization

Toutiao’s exponential growth

Basic facts:By analyzing the features of content, users and users’ interaction with content, Toutiao’s AI-powered algorithm models generate a tailored feed list of content for each individual userNow valued at USD 20Bn (from USD 500M in 2014)Launched in August 2012 based in BeijingFounder: Zhang Yiming100M daily active users in 2017Q1Average daily usage time: 76 minHired Ma Wei-Ying, former assistant managing director of Microsoft Research Asia, to lead its AI Lab

User-generated and professional-generated content in various media forms: text, short videos, Q&As

Provide incubator and media lab services for curated content makers

AI-generated content live feed

Understand user’s emotions and behavioral characteristics through machine learning, analyze and predict user’s profile

Personalized news content – “Thousand people, thousand interfaces”

Technology barrier: Leverage big data to accumulate user understanding overtime

4611

335

107

507

141

2016H22015H2

Total length of read (Billion mins)

Total no. of read (Billion)

No. of articles (Million)

Content Generation

Content Distribution

Content Monetization

Business model: Targeted ads, re-direct traffic to E-commerce sites

Earned USD 869M in 2016 from in-app ads with the goal to reach USD 10Bn by 2020



DAYIMA IS A LEADING FEMALE HEALTH MANAGEMENT MOBILE APP LEVERAGING DATA-DRIVEN INSIGHTS FOR CROSS-SELLING


CASE EXAMPLE

Company Overview User Big Data Analytics

Launched in 2012, most popular female health management app in China

Basic functions: recording and predicting periods

Also offers customized services, E-commerce platform and online communities

Raised Series E funding in 2015 with 130 Million RMB

Properties and Tags Pyramid (PTP) system

Who is she?

Properties Behavior Tags

24 Years Old

Beijing

Period Cycle 34 Days

Preparing for Pregnancy

Read post: Dysmenorrhea Syndrome

Purchased: Black Sugar Tea

Search: Dysmenorrhea

Data Collection and Cleaning

Big Data Analytics

Customize d Product Recom

me ndation

Dayima



ZHOUHEIYA, A SPECIALIZED FAST FOOD CHAIN, SPOTTED A NEW PRODUCT OPPORTUNITY BY LEVERAGING BIG DATA INSIGHTS


CASE EXAMPLE

By using Alibaba’s big data analytics service, Zhouheiya discovered that the keyword “crayfish” is searched most during April to August and its sales peak is between May and June

Zhouheiya found out that the target customer portfolio of crayfish highly overlap with their existing one

Consumption of crayfish usually do not cannibalize the demand of other snacks

Historically, braised duck are sold least in spring and July. The gap could potentially be filled by launching new crayfish products

Sold 20,000 units of crayfish within 10 days with a unit price of 69.9 RMB

A Chinese fast-food chain famous for its spicy braised duck

Expanded the product line to crayfish in May 2017

Zhouheiya (周黑鸭 )

Market insights through big data analytics


TOPICS

Team Finland Future Watch Report, November 201721




FINLAND HAS LEADING ADVANTAGES IN ENERGY, CLIMATE AND TAX TO BECOME THE WORLD’S POWERHOUSE OF DATA CENTER

Source: Invest in Finland, Copenhagen Economics Report: Finland’s economic opportunities from data center investments, Gao Feng analysis

Finland’s leading advantages:Cold weather to chill servers and keep costs down (Invest in Finland indicates that it is easy to save up to 50% on energy costs in Finland compared to other European locations)Over 180,000 lakes in Finland - plenty of water available for renewable energy and cooling needsSpacious country with many potential sites for data center investments (Invest in Finland has identified 36 investment-ready locations )Electricity tax for data centers was reduced to the same level as industrial electricity tax - the most competitive in northern EuropeStrategic location between Asia and EuropeUltra-fast submarine cable

World’s leading tech companies with data centers set up in Finland

According to a Copenhagen Economics report, Finland’s data center industry has the potential to support as many as 32,900 jobs and contribute EURO 2.3 billion a year to the national output by 2025 (3x from now)

Google’s advanced data center in Hamina



THERE ARE ALSO LEADING BIG DATA SOLUTIONS PROVIDERS IN FINLAND


BIGDATAPUMP is a leading analytics company specialized in big data and cloud transformation

Founded in 2012 based in Turku; by ex-Nokia experts in Microsoft Azure and cloud analytics

Over 100 customer cases in Europe, North America, Asia and Middle East

Turnover in 2016: EURO 3.4M Acquired by Affecto (a leading company for data

and business intelligence solutions in Finland) in Dec 2016

Core competencies: Advanced analytics, data visualization and exploitation of big data

Services: Customer analytics, profitability management, and IoT solutions

Founded in 2009 based in Helsinki

CASE EXAMPLE



ALIBABA HAS RECENTLY SET UP A JOINT INNOVATION CENTER IN FINLAND TO PROMOTE LOCAL BIG DATA DEVELOPMENT


CASE EXAMPLE

Alibaba Cloud, a cloud computing company affiliated to Alibaba Group, and Eficode Oy, a leading Finnish digital company based in Finland, jointly opened an innovation center in Helsinki in Dec 2017

Alibaba and Eficode formed strategic partnership in Nov 2017 to bring a comprehensive range of Alibaba Cloud offerings to Northern Europe and Nordic companies in the Chinese market

Goals:- To provide a platform to enhance the

collaboration between Nordic and Chinese businesses, researchers and education institutes

- To provide R&D resources and workspace to the local big data sector and related businesses

- To develop solutions that will help enterprises address the digital challenges in business expansion and digital transformation



POTENTIAL SINO-FINNISH OPPORTUNITIES ON BIG DATA


To attract Chinese tech players to set up data centers in Finland

From China to Finland

Value propositions for Chinese tech companiesFinland’s technical know-how in data centersFinland’s talent pool of data professionalsFinland as a strategic platform supporting the internationalization of Chinese tech companies

Value propositions for FinlandCross-border investmentsJob creationStrengthen Finland’s reputation as the world’s epicenter for data center

From Finland to China

Value propositions for FinlandTo establish Finland’s global technology leadership in big data industryTo form Sino-Finnish cooperation projects and build government connections

Value propositions for ChinaTo benefit from Finland’s best big data technologies and talentsTo accelerate the development of China’s big data industry

Finland’s leading big data companies to establish presence in China’s big data hubs

Remarks: Finnish companies can purchase data from data service providers in China for market intelligence purposes – but China’s cybersecurity law requires foreign technology firms to store certain “important business data” locally, including personal data

future watch, china's big data ecosystem update

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