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1、Citi is one of the worlds largest financial institutions,operating in all major established and emerging markets.Across these world markets,our employees conduct an ongoing multi-disciplinary conversation accessing information,analyzing data,developing insights,and formulating advice.As our premier
2、thought leadership product,Citi GPS is designed to help our readers navigate the global economys most demanding challenges and to anticipate future themes and trends in a fast-changing and interconnected world.Citi GPS accesses the best elements of our global conversation and harvests the thought le
3、adership of a wide range of senior professionals across our firm.This is not a research report and does not constitute advice on investments or a solicitations to buy or sell any financial instruments.For more information on Citi GPS,please visit our website at GPS:Global Perspectives&Solutions May
4、2023ASIA AS A TIME MACHINE TO THE FUTURESeven Areas Where Asia Gives Interesting Insights Into the Future Citi GPS:Citi GPS:Global Perspectives&Solutions May 2023 Authors Jan Metzger Managing Director Head of Asia Pacific Banking,Capital Markets and Advisory +852 2501 2806| Matthew ONeill Managing D
5、irector Chief Operating Officer Asia Pacific Banking,Capital Markets and Advisory +852 2868 8374| Ho-Yin Lee Managing Director Co-Head of Asia Technology Investment Banking +852 2501 2035| James Perry Managing Director Co-Head of Asia Technology Investment Banking +65 6657 8777| Karen Chen Director
6、Asia Pacific Technology Investment Banking +852 2501 2126| Leon Bezverkhni Vice President Asia Pacific Technology Investment Banking +852 2501 7685| Ethan Gao Vice President Asia Pacific Technology Investment Banking +852 2501 7684| Lijo J.Mathen Vice President Asia Pacific Banking,Capital Markets a
7、nd Advisory +91 98 1947 0321| Jude Yoon Vice President Asia Pacific Technology Investment Banking +852 2501 2511| Featuring commentary from Lawrence H.Summers Charles W.Eliot University Professor and President Emeritus Harvard University Contributors Freya Fu Senior Analyst Asia Pacific Technology I
8、nvestment Banking Zonghao Gao Senior Analyst Asia Pacific Technology Investment Banking Marcus Li Senior Analyst Asia Pacific Technology Investment Banking Jesse Tian Senior Analyst Asia Pacific Technology Investment Banking Casper Zhang Senior Analyst Asia Pacific Technology Investment Banking Luyi
9、 Zhang Senior Analyst Asia Pacific Technology Investment Banking Nancy Jia Analyst Asia Pacific Technology Investment Banking Kwon Kim Analyst Asia Pacific Technology Investment Banking Maxim Kim Analyst Asia Pacific Technology Investment Banking Eric Li Analyst Asia Pacific Technology Investment Ba
10、nking May 2023 Citi GPS:Citi GPS:Global Perspectives&Solutions 2023 Citigroup 3 ASIA AS A TIME MACHINE TO THE FUTURE Seven Areas Where Asia Gives Interesting Insights Into the Future We estimate Asia adopts new technologies 8-12 years ahead of the West,making it much like a time machine to the futur
11、e.While its infrastructure has historically been underdeveloped relative to the Wests,Asias high internet connectivity,young and increasingly affluent and urban demographics,and entrepreneurial spirit have driven the region to adopt many technologies at a faster pace.In doing so,Asia provides a glim
12、pse of what the future could look like in more developed,Western economies.In the report that follows,we explore how Asia acts as a time machine that can transport other regions into a new world of commerce,entertainment,and healthcare.We look specifically at seven areas super apps,mobile payment,so
13、cial commerce,short-form videos,eSports,webtoons,and digital health that are currently essential elements in the Asia marketplace.We hope the report provides fresh insights on current differences in technological adoption between Asia and the West as well as a potential path for how these same techn
14、ologies will shape markets in the West in the future.69%29%202144%10%202172%33%2025E56%15%2025ELOOK TO ASIA FOR THE FUTUREEarly adoption of mobile technologies has enabled Asia to explore and develop new forms of digital commerce before other regions.Super apps mobile apps that integrate multiple fu
15、nctions under one umbrella have developed in Asia at a scale unseen in other regions.Asia is also ahead of the curve in an emerging area known as“social commerce.”TRANSFORMING COMMERCESuper AppsSocial CommerceTop five super apps in Asia have overRevenue of Indonesias top super app was equivalent too
16、f the countrys GDP in 2020.2.8 billion1.3 billion usersSocial Commerce Formats1 in 20 people2%aggregate active users.Top Chinese super app recordedin SE Asia eat,ride,or pay with the regions top super app monthly.with 25%in China spending more than 4 hours daily on the app.Includes livestreaming e-c
17、ommerce,gamification,team purchase,community purchase,and shoppable content.Asia U.S.Number of Users 1.1bn 100mnAdoption 50%30%Market Size$400bn$40bnMobile PaymentsAsia is a leader in using digital/mobile wallets for e-commerce and point-of-sale(POS)payment,with North America still expected to lag i
18、n 2025.Entertainment Driven Livestreaming e-commerce GamificationNetwork Driven Team purchase Community purchaseContent Driven Shoppable ContentDigital/Mobile Wallets as%of E-Commerce PaymentsDigital/Mobile Wallets as%of POS PaymentsSource:FIS Note:E-commerce includes online purchases;POS includes t
19、ransactions at physical points-of-sale.Asia-Pacific North America Asia-Pacific North AmericaSource:Statista,Live Mint,Campaign Asia,WEF,EIU,Insider Intelligence,Straits Research,TinuitiNote:Data is as of 2021 or 2022 depending on the source.APAC data used to calculate Asia adoption and market size.S
20、PURRING NEW FORMS OF DIGITAL ENTERTAINMENTAsias mobile-first focus,combined with its strong youth culture,has opened new pathways for digital entertainment through short-form videos,eSports,and webtoons.These innovations are ushering new monetization opportunities,increasingly influencing how the re
21、st of the world consumes media.A shortage of medical resources to serve Asias large population has contributed to fast adoption of digital healthcare,especially in developing Asia,as well as the development of a comprehensive digital healthcare ecosystem.SCALING DIGITAL HEALTHCARE 2023 CitigroupShor
22、t-Form VideoEsportsYears to Reach 1 Billion Monthly Active UsersPhysician densityPre-COVID-19Hospital bed densityPost-COVID-19Number of eSports Viewers Watching Content More Than Once a Month(millions of people)5.18.57.78.78.1Total Physician and Hospital Bed Density per 1,000 PeopleWebtoonsKey Reven
23、ue SourcesSource:AxiosSource:Newzoo 2016 2019Source:World BankSource:Bain,EY,Digital AdoptionNote:Pre-and post-COVID-19 figures for developing Asia are as of 2019 and 2021,respectively.U.S.data is as of a 2020 study asking about the likelihood of using digital healthcare in the future.APAC821152124N
24、AMEUR31 32Dev.AsiaDev.AsiaDev.AsiaDev.Asia(60%)(40%)U.S.U.S.U.S.U.S.TikTokWhatsAppInstagramFacebookYouTubeBanner/Display adsProduct placementPaid contentLicensing revenue1.81.02.62.912%26%47%18%Digital Healthcare Adoption Before and After COVID-19 Citi GPS:Citi GPS:Global Perspectives&Solutions May
25、2023 2023 Citigroup 6 Contents A Conversation With Lawrence H.Summers 7 Asia as a Time Machine to the Future 10 Key Drivers Behind Asias Faster Adoption of Technology.10 Super Apps 13 Key Drivers Behind the Rise of Asian Super Apps.15 How Super Apps in Asia Are Unique.16 Asia as a Time Machine to th
26、e Future of Super Apps.17 Mobile Payment 19 Asia Is the Region With the Highest Mobile Payment Penetration.20 Brief History and Latest Trends.22 Key Drivers Behind the High Mobile Payment Adoption in Asia.23 Asia as a Time Machine to the Future of Mobile Payments.26 Social Commerce 27 Asias Social C
27、ommerce Is Massive.29 The Diversified Formats of Asias Social Commerce.30 Key Drivers Behind the Growth of Social Commerce in Asia.35 Asia as a Time Machine to the Future of Social Commerce.36 Short-Form Videos 38 Key Drivers Behind the Rise of Short-Form Videos in Asia.39 Asia as a Time Machine to
28、the Future of Short-Form Videos.41 eSports 42 eSports in Asia.43 Key Drivers Behind the Rise of eSports in Asia.45 Asia as a Time Machine to the Future of eSports.48 Webtoons 49 Webtoons:A New Form of Entertainment.50 Key Drivers Behind the Rise of Webtoons.51 The Current Webtoon Market:Overview by
29、Region.52 Asia as a Time Machine to the Future of Webtoon Entertainment.55 Digital Healthcare 58 Key Drivers Behind the Rise of Digital Healthcare Adoption in Asia.59 A Closer Look at Asias Digital Healthcare Ecosystem.62 Global Trends in Digital Healthcare.63 Asia as a Time Machine to the Future of
30、 Digital Healthcare.64 Epilogue 66 May 2023 Citi GPS:Citi GPS:Global Perspectives&Solutions 2023 Citigroup 7 A Conversation With Lawrence H.Summers Q:To kick things off,we wanted to know what your thoughts and personal observations are on Asias tendency to leapfrog technologies.Lawrence:What has hap
31、pened in Asia over the last 50 years is,by far,the greatest economic story in the history of mankind.For the first time in human history,standards of living changed by a visible amount within a single human lifespan.In China,growth has occurred at a rate close to 6%-7%per year on average for 40 year
32、s.We know from mathematics,at a 6%rate,a quantity doubles every 12 years.That means living standards have increased by about tenfold over 40 years.Even if one assumes that there is a substantial slowing in growth over the next period,it is reasonable to think that for those born around 1980,living s
33、tandards over their lifetime will have increased close to fiftyfold in a single human lifespan.When historians look back at our times from the perspective of several hundred years from now,I think the dramatic increase in economic strength in Asia centered on China will be the biggest story.What has
34、 enabled this kind of profound change?I think there are two things:Firstly,it is the application of technology,and secondly,it is the centrality of mechanisms that allow incentives,which allow and motivate people to do things in new ways with ever greater efficiency.Of course,those things are going
35、to operate more strongly for places that are not at the frontier of knowledge.When you have to import ideas and when you can pick and choose what innovations you are going to emulate,you get a variety of advantages as a second mover.You get advantages because you can see what worked well and what wo
36、rked poorly the first time.You get the advantage of seeing the cost of developing the original innovation.Emulation is much cheaper than discovery,and sometimes by doing it the new way rather than the old way,you are able to avoid what would otherwise be a very substantial cost.Alexander Gerschenkro
37、n,who was a great Harvard historian of the third quarter of the 20th century,in his heyday,famously spoke of a term that at first seems ironic:the economic advantage of backwardness.But his point was a very powerful one about leapfrogging.This is a very pervasive phenomenon in an economic light that
38、 I suspect many of us have seen.Those of us who live cosmopolitan existences and travel a great deal probably have seen hotels in Asia turn out to be vastly nicer than hotels in New York or Chicago,even though New York and Chicago are richer cities than most Asian cities.Why is that?Its because the
39、hotels in New York or Chicago are often built to an earlier specification and given that the capacity exists,it is not economical to build new hotels,but it is also certainly not economical to destroy the existing hotels for a substantial interval for the process of renovation.So as a consequence of
40、 being behind and being motivated,you can end up well ahead.It is interesting to look around at different sectors.There are a variety of them where you can see this phenomenon of economic leapfrogging,and while there are many,many problems ahead for Chinese economy and Asian economies generally,that
41、 capacity to leapfrog certainly has to rank as an advantage.Lawrence H.Summers is the Charles W.Eliot University Professor and President Emeritus of Harvard University.During the past three decades,he has served in a series of senior policy positions in Washington,D.C.,including the 71st Secretary o
42、f the Treasury for President Clinton,Director of the National Economic Council for President Obama,and Vice President of Development Economics and Chief Economist of the World Bank.He received a bachelor of science degree from the Massachusetts Institute of Technology in 1975 and was awarded a Ph.D.
43、from Harvard in 1982.In 1983,he became one of the youngest individuals in recent history to be named as a tenured member of the Harvard University faculty.In 1987,Mr.Summers became the first social scientist ever to receive the annual Alan T.Waterman Award of the National Science Foundation(NSF),and
44、 in 1993 he was awarded the John Bates Clark Medal,given every two years to the outstanding American economist under the age of 40.He is currently the Charles W.Eliot University Professor at Harvard University and the Weil Director of the Mossavar-Rahmani Center for Business&Government at Harvards K
45、ennedy School.He and his wife Elisa New,a professor of English at Harvard,reside in Brookline and have six children.Citi GPS:Citi GPS:Global Perspectives&Solutions May 2023 2023 Citigroup 8 Q:One of the things that you mentioned is that second movers have a cheaper way of driving something forward.S
46、ome of these activities have led to changes in culture such as texting as a primary mode of communications over calls.Another interesting example is eSports,as competitive gaming is very well established in Asia and is now spreading around the world.Could we gauge your thoughts on the interplay betw
47、een economics and culture?Lawrence:In some ways,I suspect that both may be shaped by natural resources or the lack thereof and may be shaped by deeper aspects of culture.For example,perhaps the popularity of eSports has something to do with the fact that there is much less room for fields on which r
48、egular sports can be played.And the urge to compete as a part of human nature,to practice and to triumph therefore gets channeled into eSports.So in a way,being ahead in the future and the cultural aspects may come together in that respect.I dont know or feel like I precisely understand the differen
49、ces in telecommunications habits,though I do look forward to reading about technology in Citi TMT Content Sunday each week.To use a very simple metric,when I visit Asia,I am struck that pretty much everyone I meet seems to be carrying multiple smart devices or phones with them at all times.I am not
50、sure exactly why that is,but it may be a case where we are going to see our future by looking at Asia we may all be doing that here.It may be driven by different preferences.In general,density in Asia is high and when density is higher,people are living in less space;therefore,one may prefer not to
51、use a landline or a desktop computer because of the room they consume,relative to carrying a smart device.Q:Flipping topics,we are about to see artificial intelligence further explode opportunities around the world.Do you think Asia would have a data advantage in the AI race?Lawrence:I suspect there
52、 are two different parts to that.I would be surprised if the greater population conferred an enormous data advantage.It would confer some data advantage,but I think its a general mathematical property that the benefit of data rises as the square root of its quantity.So if you have 4x the data,its 2x
53、 as good.Well,thats a significant difference,but it is not a monumental one.I think there is often less of an assertion of privacy rights in Asia,and that lack of privacy may facilitate the collection on very different scales of various kinds of data than they are collected in the West.That could be
54、 a quite powerful source of advantage.Q:In your view,is there a difference in the entrepreneurial spirit in the U.S.vs.Europe vs.Asia?Lawrence:I dont know the answer to that,and I dont know how much of it is cultural,how much of it is formed by the way the economy is formed,but I am certainly struck
55、 by the extent of entrepreneurship and hustle whenever I visit Asia.I think its a profound question on why there is so much entrepreneurial spirit.May 2023 Citi GPS:Citi GPS:Global Perspectives&Solutions 2023 Citigroup 9 Q:In Asia,there seems to be a trend called Super Apps one app that can be used
56、to communicate,make payments,play games,book restaurants,etc.,whereas the West has a more pointed solution,an app that has one function.Any thoughts on that,or if Asia will revert to more point solutions?Lawrence:I wonder whether this is another example of leapfrogging and the economic advantage of
57、backwardness,or whether its a fact that some of these apps or activities may have come a bit late to Asia and people werent accustomed to using apps for different purposes.So therefore,when one came that could do everything,it was easier for it to take over the field than it would have been in a pla
58、ce where people had to become habituated to using several different apps for several different purposes.Q:Are there any final thoughts youd like to share with our readers?Lawrence:My first visit to Shanghai was in the summer of 1979.At that time,it was impossible to get a Coca Cola,it was impossible
59、 to make a phone call to the U.S.,and it was the case that walking in the city was like walking in Boston during a blizzard.You could walk right down the middle of the street undisturbed by vehicular traffic.Walking to the curb,a single vehicle came along only every couple of minutes.The profound tr
60、ansformation of that city in 40 years is one of the great miracles of human history.Citi GPS:Citi GPS:Global Perspectives&Solutions May 2023 2023 Citigroup 10 Asia as a Time Machine to the Future We estimate Asia adopts new technologies 8-12 years ahead of the West,making it much like a time machine
61、 to the future.While its infrastructure has historically been underdeveloped relative to the Wests,Asias high internet connectivity,young and increasingly affluent and urban demographics,and entrepreneurial spirit have driven the region to adopt many technologies at a faster pace.In doing so,Asia pr
62、ovides a glimpse of what the future could look like in more developed,Western economies.This report explores how Asia acts as a time machine that can transport other regions into a new world of commerce,entertainment,and healthcare.1 Key Drivers Behind Asias Faster Adoption of Technology 1.Underdeve
63、loped Infrastructure Asias rapid technology adoption has been propelled by underdeveloped infrastructure in retail,banking,and healthcare,to name a few areas relative to the regions outsized population.As demand for services grows and puts a strain on limited resources,people across Asia are turning
64、 to digital solutions.Some examples include:Retail infrastructure:Asia has fewer than 5 square feet of retail space per person,compared with the U.S.at 24 square feet.2 The e-commerce sector has evolved especially fast in Asia to mitigate the lack of physical retail space and to satisfy growing cons
65、umer demand.Moreover,as we discuss later in the report,new forms of e-commerce have emerged from Asia,such as livestream broadcasts by influencers and integrated“super app”shopping.Banking infrastructure:Asias number of commercial bank branches per adult is less than half that of the U.S.,while the
66、number of credit cards per adult is nearly one-tenth.3 With limited access to traditional physical bank branches and banking services like credit cards,the unbanked and underbanked population in Asia has gone straight to fintech solutions for payments and wealth management.This has empowered the gro
67、wth of mobile payments,including through digital/mobile wallets,which account for a larger share of transactions at both e-commerce and physical points-of-sale than in Western markets.1 We largely discuss Asia excluding the Pacific region but have made best efforts to indicate where the broader regi
68、on(Asia-Pacific or“APAC,”including Asia and Oceania)applies.As Asia is highly diverse,we also indicate when we refer to countries grouped by economic development(e.g.,developing Asia)or subregion(e.g.,Southeast Asia).2 Mark Cooper,“Asia Moves Ahead of the Retail Curve,”PERE,July 10,2019;Statista,“Re
69、tail Space Per Capita in Selected Countries Worldwide in 2018,”accessed January 30,2023.3 IMF,“Financial Access Survey,”accessed January 30,2023;Money Transfers,“24 Eye-Opening Credit Card Statistics for 2022,”updated November 21,2022.May 2023 Citi GPS:Citi GPS:Global Perspectives&Solutions 2023 Cit
70、igroup 11 Healthcare infrastructure:The numbers of physicians and hospital beds per person in Asia are approximately 39%and 40%lower than the global average figures,respectively.4 With limited capacity to deliver in-person care,the region has been quick to adopt telemedicine and digital healthcare s
71、ervices.As discussed in this report,Asia is at the forefront in developing digital healthcare ecosystems.Paradoxically,limited pre-existing infrastructure has served as a catalyst for technology adoption across Asia.2.High Internet Penetration Asia is home to half of the worlds total internet users
72、and leads in the adoption of various digital and mobile technologies.Nearly two-thirds of Asias population are online through either fixed or mobile networks.5 South Korea,Singapore,and Malaysia have among the highest internet penetration rates in the world,with each at least at 97%,higher than in t
73、he U.S.and Germany(each at 92%).6 South Korea,due to decades of investment in broadband and mobile infrastructure,stands out as having one of the fastest average mobile internet connection speeds globally.7 Indeed,connectivity is a key driver behind Asias adoption of new technologies.Many in the reg
74、ion leapfrogged from traditional landline telecommunication directly to mobile connectivity,instilling a mobile-first or mobile-only mentality and enabling the development of mobile services such as digital payments at a scale unlike that in other regions.This rate of adoption is further exacerbated
75、 by the continued reduction in costs of mobile devices and data.High internet penetration and early mobile adoption coupled with a young,digital-savvy population have enabled faster uptake of digital services,which in turn fosters more digital innovation and transformation across the region.3.Young
76、Digital Natives Asia is home to 1.1 billion people in the 15-29 age group,who tend to be most adept at using mobile and digital technologies.In Asia,the sheer size of this population segment has enabled youth-driven industries such as eSports and webtoons to flourish.In addition,Asias youths have di
77、srupted the social media industry through their use of short-form videos and social commerce both of which are also gaining traction globally,compelling Western tech giants to enter these fields.Furthermore,the young population in Asia stands out for its skills in science,technology,engineering,and
78、mathematics(STEM),with the region producing 76%of the worlds STEM graduates from 2016 to 2018.8 4 World Bank,“Physicians(per 1,000 people),”January 30,2023;World Bank,“Hospital beds(per 1,000 people),”January 30,2023.5 Refers to the Asia-Pacific region.International Telecommunication Union,“Asia&Pac
79、ific:Individuals Using the Internet,”accessed February 16,2023.6 Ibid.7 Isla Mcketta,“Despite All Odds,Global Internet Speeds Continue Impressive Increase,”Ookla,September 8,2021.8 McKinsey&Company,“The Asian Century,Two Years on:Whats Changed and Whats Next,”October 18,2021.Citi GPS:Citi GPS:Global
80、 Perspectives&Solutions May 2023 2023 Citigroup 12 With a young demographic that is both highly skilled in STEM and large enough to influence global consumer preferences,Asia is well-positioned to expand its digital economy and further develop technology-driven industries.4.Urbanization and a Rising
81、 Middle Class People are moving from rural areas to cities at a faster pace than ever,especially in Asia,which represents more than half of the worlds urban population and is expected to add 1.2 billion new city residents by 2050.9 In addition,the think tank Brookings cites data from World Data Lab
82、projecting that by 2024,over half the population of Asia will be middle class or rich.With this continued rise in wealth comes higher demand for goods and services.The region will then reach a“consumer tipping point”when the consumer class will outnumber the poor and vulnerable for the first time in
83、 the regions history.10 This rise in affluence is not expected to subside anytime soon,as Asia is predicted to contribute nearly 90%of the next 1 billion consumers globally.11 This will continue to increase pressure on existing infrastructure and hence,create a greater need for innovative solutions.
84、5.Entrepreneurial Spirit Asia is home to a vibrant start-up community that is driving innovation and digital adoption.The region accounts for 40%of global unicorns(i.e.,start-up companies valued at$1 billion or more)with a combined valuation of more than$1 trillion,56%of the worlds small and medium-
85、sized enterprises(SMEs),and 68%of global patent applications.12 Coupled with its talent,capacity for innovation,and ability to leapfrog technology,Asia has displayed a strong willingness to experiment and find alternatives to traditional solutions.Throughout this report,we discuss Asias ability to i
86、nnovate(e.g.,super apps),build on earlier innovations(e.g.,social commerce),and scale up advancements with more cost-effective solutions(e.g.,digital healthcare).Investors are increasingly taking notice of Asias advantages in entrepreneurship.The region represented 36%of global private equity deals
87、in 2021.This made it the top region by deal count,surpassing the U.S.for the first time in seven years of available tracking data from CB Insights.13 9 UN Habitat,“Asia and the Pacific Region,”accessed January 30,2023.10 Wolfgang Fengler,Homi Kharas,and Juan Caballero,“Asias Tipping Point in the Con
88、sumer Class,”Brookings,June 2,2022.11 Homi Kharas,“The Unprecedented Expansion of the Global Middle Class,”Brookings,February 28,2017.12 SMEs are defined as having fewer than 250 employees.Statista,“Number of Unicorns in Selected Countries in the Asia-Pacific Region as of 2021,”released December 202
89、1;Takuro Hosoda,Tomoko Wakasugi And Ryosuke Hanada,“Tighter Monetary Conditions Rein in Asian Unicorns,”Nikkei Asia,August 19,2022;WIPO(World Intellectual Property Organization),World Intellectual Property Indicators 2022,2022;Statista,“Estimated Number of Small And Medium Sized Enterprises(SMEs)Wor
90、ldwide From 2000 to 2021,by Region,”accessed February 10,2023.13 CB Insights,State of Venture 2021,2022.May 2023 Citi GPS:Citi GPS:Global Perspectives&Solutions 2023 Citigroup 13 Super Apps A super app is“an application that provides end users with a set of core features plus access to independently
91、 created mini apps,”according to Gartner.14 As opposed to a single-purpose app,the all-in-one super app offers a one-stop,comprehensive ecosystem of different apps,together providing an extensive suite of services.Super apps are largely unique to Asia,yet they are ubiquitous across the region.Driven
92、 by younger demographics and high digital adoption,Asian users are immersed in super apps and enjoy the convenience,ease of use,and multitude of services they provide.The products and services offered by super apps are closely tied to the everyday life of a consumer.From instant messaging and e-comm
93、erce to food delivery and ride-hailing,a super apps suite of services is devoted to enhancing every minute of the users day.Figure 1.An Example of a Super App Source:Citi GPS Key drivers behind the rise of super apps are as follows:Mobile-first internet users:The majority of internet users in Asia h
94、ave come in contact with the internet first via mobile or only through mobile.As a result,Asias internet culture is largely centered around smartphones.Wide distribution of cost-efficient mobile phones:Relatively more affordable brands such as Oppo and Vivo that have lower memory storage occupy cons
95、iderable market shares across Asia.Trust,brand,and scale:Super apps in Asia often entail mature ecosystems comprised of affiliated apps or mini programs,each with expertise within a specific vertical.In Asia,the top five super apps which we define as offering services across at least three verticals
96、 have more than 2.8 billion aggregate active users(prior to accounting for overlaps).14 Lori Perri,“What Is a Superapp?”Gartner,September 28,2022.Citi GPS:Citi GPS:Global Perspectives&Solutions May 2023 2023 Citigroup 14 Figure 2.Asian Super Apps Spanning Across Three or More Verticals(millions of u
97、sers)Note:Number of users are based on monthly average users(MAUs)as of 2022,unless indicated otherwise.Figures for Meituan,Shopee,Line,GoTo,and Zalo are as of dates in 2021.User numbers for Shopee are based on monthly web visits;those for Paytm and Grab reflect monthly transacting users.Source:Comp
98、any Information,Wallstreet Research,Statista,BusinessofApps,Webretailer,Citi GPS The top super app in Asia is Tencents WeChat,which recorded 1.3 billion monthly active users(MAUs)as of the end of 2022 this means approximately 92%of Chinas population and 17%of the worlds population regularly visit th
99、e app.15 In fact,there are more WeChat users than there are active iPhone users in the world.16 WeChat is the dominant leader in instant messaging within China,but it is also a major player in online games,music,and mobile payments.Alipay and Meituan are two other leading super apps that originated
100、in China.Outside of China,regional and local champions are powering rapid adoption of super apps.KakaoTalk is not only South Koreas dominant instant messaging app,but also the platform to the nations most-used taxi-hailing app,leading mobile banking app,and music streaming service.17 Likewise,Line i
101、s the leader in instant messaging and various other services in Japan.In Southeast Asia,the Indonesian giant GoTo offers a multitude of services including e-commerce,ride-hailing,and food delivery,as well as payments and logistics.To provide a sense of scale and importance to the local economy,GoTos
102、 revenue was equivalent to approximately 2%of Indonesias GDP in 2020,whereas revenues at Meta and Twitter were equivalent to 0.5%and 0.02%,respectively,of U.S.GDP in 2021.18 15 Company reports.16 SortaTechy,“How Many iPhone Users Are There?”accessed January 30,2023.17 Businesswatch website(Korean la
103、nguage),accessed January 30,2023.18 Gojek Tech,“Gojek and Tokopedia Combine to Form Goto,the Largest Technology Group in Indonesia and the Go To Ecosystem for Daily Life,”May 17,2021;Meta,May 2023 Citi GPS:Citi GPS:Global Perspectives&Solutions 2023 Citigroup 15 The other major super app of Southeas
104、t Asia,Grab,boasted regional market shares of 71%and 51%in the ride-hailing and the food delivery verticals,respectively,in 2021.19 In fact,1 in 20 people in Southeast Asia eat,ride,or pay with Grab monthly.20 Such figures unimaginable in the West are key features of super apps in Asia.Key Drivers B
105、ehind the Rise of Asian Super Apps Mobile-first internet users:The majority of internet users in Asia,especially in developing Asia,came in contact with the internet first via mobile or only through mobile;this helped create an internet culture largely centered around smartphones.Strong demand from
106、Asian consumers seeking to access online services via their mobile phones has further encouraged companies to provide more services via mobile apps.Wide distribution of cost-efficient mobile phones:In a mobile-first culture,access to smartphones is critical not only for communication,but also for ov
107、erall daily activities.As such,more affordable brands of smartphones,such as Oppo and Vivo,have quickly gained market share across Asia.These devices are designed to have lower memory storage due to their focus on cost efficiency.Hence,super apps,which occupy the memory space of a single app while p
108、erforming the functions of many,have become widely popular relative to single-purpose apps.Figure 3.Top Five Mobile Phone Manufacturers Market Share by Region(October 2022)Source:Statcounter Trust,brand,and scale:By offering a variety of services shaped around consumers everyday needs on a single pl
109、atform,super apps in Asia have developed into mature ecosystems of affiliated apps or mini programs(also known as mini apps),each with expertise within a specific vertical.As a super app secures a large user base,the platform is able to attract more mini programs,thereby establishing a virtuous cycl
110、e of adding more functionality and users based on reliable brand power.As super apps grow,they benefit further from economies of scale and customer stickiness.“Meta Reports Fourth Quarter and Full Year 2021 Results,”February 2,2022;company reports;GDP data from the World Bank.19 Grab,“Q4 Earnings Ca
111、ll,”presentation,March 2022.20 Grab,“Investor Day 2022,”presentation,September 2022.Citi GPS:Citi GPS:Global Perspectives&Solutions May 2023 2023 Citigroup 16 How Super Apps in Asia Are Unique Integration Into Consumers Daily Life The strength of Asian super apps is in their deep integration into us
112、ers daily lives by offering convenient services that can be used multiple times a day.As an example,in a typical day,a super app user could transfer money to a friend,hail a ride to a restaurant for lunch,order groceries for delivery to make dinner,and look at their investment portfolio before going
113、 to bed all in one app.As we illustrate in Figure 4,users in Asia consume services offered by super apps throughout the day across numerous verticals.This is why 25%of WeChat users in China spend more than four hours on the app each day and why users visit South Koreas KakaoTalk an average of 72 tim
114、es a day.21 Figure 4.Super Apps Are Ingrained in Consumers Daily Life Source:Citi GPS 21 Statista,“Average Amount of Time Spent on WeChat Per Day in China as of July 2021,”released July 2021.May 2023 Citi GPS:Citi GPS:Global Perspectives&Solutions 2023 Citigroup 17 Incorporation of a Mobile Payment
115、Function Most Asian super apps offer an in-house mobile payment function,which enables customers to complete a transaction without ever leaving the app.This feature provides several benefits:a seamless customer experience,customer stickiness,greater monetization of services(e.g.,in-app purchasing),a
116、nd valuable insights on consumer behavior that can be used to enhance the super apps value proposition.Third-Party Mini Programs What makes Asian super apps truly unique is their integration of millions of lightweight mini programs developed by third-party companies such as a weather widget or GPS-p
117、owered navigation app.These miniature“apps within an app”can be used directly within a super app without additional downloads or installations.By enabling third-party companies to develop their own mini apps and integrating them into a super apps interface,super apps can offer more services without
118、having to develop their own business verticals,while enhancing user stickiness.22 Third-party development is beneficial for the developers as well,as they can immediately gain access to millions of users through the super apps platform.Mini apps are found primarily in Chinese super apps like WeChat,
119、Alipay,and Meituan,but the concept is being adopted elsewhere.In 2021,the 3.5 million mini programs integrated within WeChat transacted approximately$400 billion.23 Likewise,Alipay had 3 million mini programs on its platform that year.24 True Omni-Channel Experience Merging Online and Offline Realms
120、 Super apps in Asia are not limited to online channels;instead,they are“phygital”incorporating both physical and digital elements and are actively used in offline activities through online-to-offline(O2O)business models.One example is the ubiquitous,physical QR codes on retailers counters,which cust
121、omers can scan with their mobile phones to pay for their purchases via the payment function in the super app.Asia as a Time Machine to the Future of Super Apps Asian super apps are continuously looking to expand into more geographies to capture a larger addressable market and user base.However,with
122、each new market comes different,local regulations and customer dynamics.Super apps are learning to become flexible another benefit of integrating mini programs to adapt to local market needs.Increasing Global Appetite for Super App Services Although Asia has a commanding lead in super apps,the rest
123、of the world is hungry for similar multi-function products of its own.According to a 2022 survey of nearly 10,000 people conducted by PYMNTS and PayPal,7 out of 10 respondents in the U.S.,the UK,Germany,and Australia reported an interest in super apps.25 22 Julber Osio,“Mobile Payments,Mini-Programs
124、 Are Key Features of Chinese Super Apps,”S&P Global Market Intelligence,October 20,2020.23 Mansoor Iqbal,“WeChat Revenue and Usage Statistics(2022),”Business of Apps,updated September 6,2022.24 Oceanpayment,“Alipay Mini-Program Introduction,”October 15,2021.25 PYMNTS,“72%of Global Consumers Are Inte
125、rested in a Super App,”July 22,2022.Citi GPS:Citi GPS:Global Perspectives&Solutions May 2023 2023 Citigroup 18 Moreover,Gartner expects more than 50%of the global population to be daily active users of multiple super apps by 2027.26 After seeing the huge success of super apps in Asia,many Western co
126、mpanies have recently expressed an interest in following suit one of the most notable examples is PayPal.Dan Schulman,the companys CEO has expressed his aspiration to create a seamless experience through a“mega app”that encompasses a range of digital payment offerings,both online and offline,and inc
127、ludes“not just any financial institution,credit card,debit card,or ACH(Automated Clearing House),but also rewards points redemption,utilizing cryptocurrency as a funding instrument,utilizing central bank issued digital currencies.”27 Essentially,he seeks to combine all financial services that can be
128、 offered via mobile into one super app.Another emerging super app player,Argentinas Mercado Libre,is an e-commerce marketplace that also offers financial services such as online and offline payments,bill payments,and investments.While Mercado Libre primarily focuses on e-commerce and fintech,it plan
129、s to expand into other verticals such as credit services and logistics,among other functions.All considered,adoption of super apps in the West is not without some reservations.According to a Forbes piece,Americans do not want a single portal for financial services or shopping.The article notes:“The
130、walled garden approach is too limiting to most U.S.consumers.”28 There have been concerns over a single app having too much information about a persons interests or online activity,as well as questions raised about antitrust regulation.Despite these concerns,it seems inevitable that both companies a
131、nd consumers in the West will continue to understand the benefits of a one-stop platform,although no Western platform has yet succeeded in achieving a comparable scale of adoption and offering a similar scope of services as super apps in Asia.26 Gartner,Top Strategic Technology Trends 2023,2022.27 T
132、omio Geron,“PayPal Wants to Be an All-in-One Super App.It has Its Work Cut Out,”Protocol,February 11,2021.28 Ron Shevlin,“Super Apps Arent Going to Make It in America,”Forbes,August 1,2022.May 2023 Citi GPS:Citi GPS:Global Perspectives&Solutions 2023 Citigroup 19 Mobile Payment With the advent of nu
133、merous mobile fintech solutions,including mobile banking,mobile internet payment,embedded finance,direct carrier billing,and perhaps most notably,mobile wallets,Asia leads in mobile payment adoption.These features,coupled with the high prevalence of QR code purchasing and point-of-sale(POS)systems a
134、cross Asia,mean consumers can instantly pay for almost everything through their mobile devices.Mobile payments have become an integral part of Asian consumers daily lives.Several drivers have helped support the meaningful development and growth of mobile payment in Asia:Less access to traditional fi
135、nancial services:Asia has a relatively larger underbanked and unbanked population combined with lower bank branch penetration than the West,leading to higher demand for fintech solutions such as mobile payment.Growth of e-commerce:E-commerce has been rapidly growing in Asia,and a significant portion
136、 of the payments for e-commerce transactions are made through mobile devices.Super app/Fintech ecosystem:Large ecosystem players in Asia have been integrating mobile payment functions into their own super apps.This has facilitated mobile payment adoption by users as well as merchants.Lower transacti
137、on fees for higher merchant adoption:Asian super apps and fintech players generally charge lower transaction fees than alternatives such as credit cards,thereby encouraging more merchants to accept mobile payment as a payment method.Favorable regulatory environment:Regulators in Asia have generally
138、been more welcoming toward fintech companies than regulators in other regions,as well as more open to the changes brought by mobile payment technology.Meanwhile,Western players have been actively trying to catch up to Asian players by updating their mobile wallets,diversifying mobile payment offerin
139、gs,and increasing QR code usage to better serve both merchants and users,as discussed further in this chapter.Citi GPS:Citi GPS:Global Perspectives&Solutions May 2023 2023 Citigroup 20 Asia Is the Region With the Highest Mobile Payment Penetration Asia clearly leads the rest of the world in both onl
140、ine and offline mobile payment penetration,as shown in Figure 5 below.According to FIS,in 2021,digital/mobile wallets accounted for nearly 70%of the e-commerce transaction value in Asia,more than double the share in North America or Europe.Likewise,for purchases at physical POS,nearly half(44%)of tr
141、ansactions in Asia were done via digital/mobile wallets,a share 4-5x larger than in the West.29 According to Statista,mobile POS purchases in Asia totaled an estimated$1.5 trillion,more than North America and Europe combined,as shown in Figure 6.30 Figure 5.Digital/Mobile Wallet Adoption(2021,%of Re
142、gional Spending by Transaction Type)Figure 6.Mobile POS Payment Transaction Value(2021,$trillions)Note:Based on Asia-Pacific(APAC).According to FIS,e-commerce includes online purchases of goods and services such as those made on e-commerce websites,while POS refers to transactions made at the physic
143、al point of sale.Source:FIS,Citi GPS Source:Statista,Citi GPS By 2025,FIS expects digital/mobile wallets to account for 72%of the e-commerce transaction value in Asia,as shown in Figure 7.In North America,the use of digital/mobile wallets could surpass that of credit and charge cards to account for
144、one-third of e-commerce transactions,as shown in Figure 8.31 29 According to FIS,“Digital and mobile wallets allow consumers to securely store payment credentials to pay for purchases virtually everywhere commerce takes place:online,in-app or in-store.Wallets can be funded directly via cash,cards,ba
145、nk transfer or other methods like cryptocurrencies,or wallets act as pass-through mechanism and are linked to cards or bank accounts.”FIS,The Global Payments Report,2022.30 Statista,“Mobile POS Payments Worldwide,”accessed January 31,2023.31 FIS,The Global Payments Report,2022.May 2023 Citi GPS:Citi
146、 GPS:Global Perspectives&Solutions 2023 Citigroup 21 Figure 7.2025 E-commerce Payment Methods:Asia Figure 8.2025 E-commerce Payment Methods:North America Note:APAC represented.E-commerce includes all digital payments transacted through a mobile device.Note:E-commerce includes all digital payments tr
147、ansacted through a mobile device.Source:FIS,Citi GPS Source:FIS,Citi GPS At physical POS,FIS expects digital/mobile wallets to account for more than half(56%)of transaction value in Asia by 2025,as shown in Figure 9.This is almost 4x the share estimated for North America(15%),where FIS expects credi
148、t cards and debit cards to remain the dominant methods for offline POS payments,per Figure 10.32 Figure 9.2025 POS Payment Methods:Asia Figure 10.2025 POS Payment Methods:North America Note:APAC represented.Source:FIS,Citi GPS Source:FIS,Citi GPS The U.S.and Canada have higher levels of both persona
149、l disposable income per person and POS mobile payment transaction value per user.However,when taking both metrics together,the typical person in China spent the equivalent of over half their disposable income through mobile payment transactions in 2022.This was over triple the share spent by the typ
150、ical American or Canadian,a gap that has persisted for several years,as shown in Figure 11.33 32 Ibid.33 Calculated using data from the Economist Intelligence Unit(EIU).Statista,“Mobile POS Payments Worldwide,”accessed January 31,2023.Citi GPS:Citi GPS:Global Perspectives&Solutions May 2023 2023 Cit
151、igroup 22 Figure 11.Proportion of Mobile Payment Transaction Value as a Share of Disposable Income Note:Calculated as the estimated mobile POS payment transaction value per user in U.S.dollars divided by the personal disposable income per head in U.S.dollars.According to Statista,mobile POS payments
152、 include POS transactions processed through mobile wallets and excludes payments made through physical credit or debit cards at contactless terminals and mobile POS systems.Source:Economist Intelligence Unit,Statista,Citi GPS Brief History and Latest Trends In 1997,when Coca Cola first let customers
153、 purchase drinks from the companys vending machines in Helsinki,Finland through mobile text messages,it was hard to imagine how widespread mobile payments would become.34 It was not until around two years later that PayPal launched its electronic payment system.In the same year,Ericsson developed a
154、technology that enabled paying for movie tickets through mobile phones in Norway.35 While mobile payment was first developed by companies in North America and Europe,Asia has already surpassed the West in terms of mobile payment scale,adoption,and usage frequency.Asian mobile payment platforms have
155、grown into comprehensive financial service platforms for both users and merchants,offering insurance,credit,and wealth management services on top of traditional mobile payment functionality.In this way,users can easily link their bank accounts to their mobile payment apps to manage their personal we
156、alth.Asian mobile payment apps have also been developing mini programs for users to purchase bus and train tickets,rent a bike,buy groceries,and pay bills,among other things.In addition to helping with users personal finances and day-to-day purchases,these fintech ecosystems have enabled merchants t
157、o grow further through the provision of lending solutions.They have also developed cutting-edge blockchain-based solutions such as traceability services for merchants to improve visibility of their products and authentication throughout the supply chain process,while also preventing fraud.36 Lastly,
158、these fintech ecosystems have been enabling merchants to access a massive user base through targeted marketing.These initiatives have allowed fintech ecosystems to amass a large user base with high usage frequency and strong customer loyalty.34 Prime Indexes,“Mobile Payments Industry Overview,”PDF,a
159、ccessed February 2,2022.35“Telenor and Ericsson Launch the Mobile Wallet,”March 18,1999.36TaaS,”accessed February 2,2023.May 2023 Citi GPS:Citi GPS:Global Perspectives&Solutions 2023 Citigroup 23 Key Drivers Behind the High Mobile Payment Adoption in Asia Less Access to Traditional Financial Service
160、s In Asia,low levels of access to traditional financial services have played an important role in the development of fintech solutions such as mobile payment.Asia has historically had a large underbanked and unbanked population.Bank account ownership levels are lower in Asia than in North America an
161、d are much lower in certain Southeast Asian countries in particular,according to the World Bank(see Figure 12 below).37 For example,whereas bank account ownership is nearly universal in the U.S.and Canada,only one-third of people in Cambodia have an account.Furthermore,as shown in Figure 13,Asian ma
162、rkets generally have weaker banking infrastructure and fewer commercial bank branches available relative to the population than in North America.In fact,in 2021,the U.S.had more than triple the number of commercial bank branches per 100,000 people as China.38 Figure 12.Banked Population by Market Ac
163、count Ownership,%of Adults with an Account(2021)Source:World Bank Figure 13.Bank Branch Penetration by Market Number of Commercial Bank Branches per 100,000 Adults(2021)Source:Citi GPS,IMF,Citi GPS 37 World Bank,“The Global Findex Database 2021:Financial Inclusion,Digital Payments,and Resilience in
164、the Age of COVID-19,”accessed January 31,2023.38 IMF,“Financial Access Survey,”accessed January 31,2023.Citi GPS:Citi GPS:Global Perspectives&Solutions May 2023 2023 Citigroup 24 At the same time,Asian markets also tend to have lower credit card penetration rates,averaging 13%in 2021.Japan has the h
165、ighest rate in the region at 68%,although this is still lower than the U.S.at 84%.39 Lower penetration of traditional payment methods(e.g.,credit cards)in Asia enabled alternative digital payment solutions to gain a strong foothold in the region.Growth of E-commerce The global mobile payment market
166、grew exponentially in conjunction with the development of global e-commerce,and the world is moving away from traditional payment methods.According to FIS,mobile e-commerce surpassed desktop e-commerce in 2021,accounting for over half of the global e-commerce transactions.40 As a result,traditional
167、payment methods including credit and debit card purchasing lost share to mobile solutions.In Asia,the adoption of mobile payments for e-commerce transactions is even more profound.FIS expects 75%of the e-commerce transaction value in China in 2025 to take place on mobile devices,up from 69%in 2021.W
168、hile the U.S.is also expected to make gains in mobile commerce,42%of its e-commerce transactions are estimated to be made via mobile in 2025,up from 37%in 2021.41 Super App/Fintech Ecosystem Super apps are another reason for Asias lead in mobile payments.The apps broad range of function enables them
169、 to act as a one-stop platform for multiple services,helping attract a wide array of users with different needs.As noted earlier,the majority of Asian super apps have integrated mobile payment functionality within their ecosystems.This negates the need to download a standalone mobile payment app;ins
170、tead,users can easily tap the“pay”function in their super app for mobile payment.In China,more than 90%of mobile payments are made through the two major super apps,Alipay and WeChat Pay.42 Super apps have also helped expand mobile payment adoption rates and transaction volume.While China leads in su
171、per app usage,there are rising platforms in Japan,South Korea,India,and Southeast Asia that are expanding and dominating in their respective markets.Additionally,Asian social platforms are able to effectively leverage their“social”element in promoting broader mobile payment adoption.For example,in 2
172、014,WeChat Pay initiated a“red packet”campaign during Chinas annual Spring Festival in a nod to the Chinese gift-giving tradition.The company quickly seized market share and become a major mobile payment player in the country.43 Mobile payment is mostly associated with relatively small transactions
173、in offline payment scenarios,making it very compatible with social platforms(see the chapter“Super Apps”earlier in the report for more detail).39 Statista,“Credit Card Penetration in the Asia-Pacific Region in 2021,by Country or Region,”released November 2021;Money Transfers,“24 Eye-Opening Credit C
174、ard Statistics for 2022,”updated November 21,2022.40 FIS,The Global Payments Report,2022.41 Ibid.42 Coco Feng,“Alipay Test of Money Transfers via WeChat Seen as First Breach of Mobile Payments Walled Garden,”South China Morning Post,October 17,2022.43 Tencent,“Old Traditions Meet New Technology:The
175、Spring Festival Celebration Goes Virtual,”February 26,2021.May 2023 Citi GPS:Citi GPS:Global Perspectives&Solutions 2023 Citigroup 25 Lower Transaction Fees for Higher Merchant Adoption Lower transaction fees have encouraged merchants in Asia,especially small-scale businesses,to accept mobile paymen
176、ts over alternatives such as credit cards.As a result,mobile payments are more commonly accepted than credit cards in the region,which in turn has helped create more opportunities for consumers to use mobile payments.In Asia,mobile payment processing fees are usually priced at 1.0%or lower.44 This i
177、s much lower than the fees charged by U.S.credit card providers,which range from 1.5%to 3.5%.45 Looking only at physical POS transactions,digital/mobile wallets were the leading form of payment in China in 2021(making up 54%of POS transaction value vs.11%in the U.S.),but credit cards were the top pa
178、yment method in the U.S.(40%vs.14%in China).46 Favorable Regulatory Environment Relatively favorable government support also plays an important role in mobile payments development in Asia.Initially,the rapid development of the mobile payment market had outpaced Asias regulatory frameworks,thus offer
179、ing a wide range of options and opportunities for third-party mobile payment providers.In 2011,Chinas central bank,the Peoples Bank of China(PBOC),issued the first batch of electronic payment licenses to 27 qualified third-party online payment platforms,including Alipay long after the apps initial l
180、aunch in 2004.47 Similarly,a decade ago,Singapore was advanced in smartphone adoption but not mobile payments;however,Singapores Sandbox framework,issued in 2016 and updated in 2022,has enabled fintech players to experiment with innovative financial products and services to increase mobile payment a
181、doption.48 Other Asian governments have also been showing strong support for mobile payments to drive digitalization.For instance,Taiwan is aiming for 90%mobile payment penetration by 2025,and the Philippines is targeting 50%of transactions to be digital by 2023.49 Moreover,Asian governments are iss
182、uing official digital currencies that could help further drive mobile payment adoption.In China,the PBOC has partnered with mobile payment players to promote the official digital currency,e-CNY.50 In addition,Cambodias central bank-issued digital currency has reached almost half of its population.51
183、 44 Oceanpayment,“WeChat Pay/Alipay Fees for Merchants,”September 9,2021.45 Billie Anne Grigg and Whitney Vandiver,“How Much Are Credit Card Processing Fees?”NerdWallet,September 20,2022.46 FIS,The Global Payments Report,2022.47 Xinhua,“China Issues New Rule on Online Third-Party Payment,”China Dail
184、y,May 28,2011.48 Tarik Husain,“Is Singapore Next on the List of Mobile Payments Leadership?”Singapore Business Review,accessed January 31,2023.49 Executive Yuan,“Mobile Payment Platform Targets 90%Penetration by 2025,”December 6,2018;International Trade Administration,“The Philippine Digital Payment
185、s Sector,”accessed January 31,2023 50 Bloomberg,“China to Make Digital Yuan and Payment Apps More Connected,”accessed January 31,2023.51 Kentaro Iwamoto,“Cambodias digital Currency Reaches Nearly Half the Population,”Nikkei Asia,January 4,2022.Citi GPS:Citi GPS:Global Perspectives&Solutions May 2023
186、 2023 Citigroup 26 Asia as a Time Machine to the Future of Mobile Payments We believe Asia will continue to be a leader in mobile payments driven by continuous innovation in business models and technologies.To illustrate the extent of Asias lead,we take the example of China,which is estimated to be
187、at least eight years ahead of the U.S.in terms of mobile payment penetration.52 Nearly 46%of Chinas population had used mobile payments in 2018,a level the U.S.could come close to reaching by 2026.Players in North America have been actively catching up to Asian players by increasingly adopting innov
188、ative business models in the mobile payments space,especially mobile wallets and QR code applications.As an example,the ride-sharing company Uber has its own mobile wallet for drivers to review account balances and make necessary payments.53 Other tech giants such as Google have also been launching
189、or updating their mobile wallet apps to provide a more convenient and comprehensive mobile payment experience for users.54 Additionally,PayPal has been expanding its service offerings beyond simple mobile payments to help merchants from little boutiques to big brands manage risk with fraud monitorin
190、g and streamline their operations.55 The COVID-19 pandemic helped to accelerate the adoption of some technologies in the West,such as QR codes,which have been prevalent in Asia for many years.In a September 2020 survey,nearly 20%of U.S.and UK users strongly agreed that they had noticed an increase i
191、n QR code usage since pandemic-related lockdowns began earlier that March.56 Contactless payments overall,including QR code-enabled payment methods,increased by 150%in the U.S.between March 2019 and March 2021,according to PYMNTS.57 Existing and growing fintech ecosystems are also allowing new forms
192、 of offerings and services to thrive,making both users and merchants mobile payment experiences more convenient,efficient,and comprehensive.These benefits have been well noted across Asia for several years,and we thus expect to see a continued increase in the adoption of mobile payment ecosystems in
193、 the West.52 Estimated using data from Insider Intelligence.53 Uber,“What Is Uber Wallet?”accessed January 31,2023.54 PYMNTS,“Google Wallet Launches as Google Pay Sidekick,”July 19,2022.55 PayPal website,accessed January 31,2023.56 Statista,“Increase of QR Codes Usage Since Shelter-in-Place Began Ac
194、cording to Consumers in the United States and United Kingdom as of September 2020,”accessed February 1,2023.57 PYMNTS,“QR Code Technology Finds New Digital-First Use Cases,”March 26,2021.May 2023 Citi GPS:Citi GPS:Global Perspectives&Solutions 2023 Citigroup 27 Social Commerce Social commerce is a s
195、ubset of e-commerce that offers consumers an integrated platform with social features,providing a more immersive and interactive shopping experience.It captures the offline experience of going to a mall with friends,for example,where customers can interact,try out products,and encourage one another
196、to make purchases.Yahoo!first introduced the concept of social commerce in 2005 when it enabled users to share and discuss items from its online shopping catalog.58 Since then,social commerce has evolved into a more mature business model that encompasses multiple formats:Livestreaming e-commerce:Pro
197、duct promotions are broadcast on e-commerce platforms,allowing consumers to shop,interact with livestreaming hosts,and place orders in real time.Gamification:Games,such as competitions that offer rewards,are integrated into e-commerce platforms to attract and retain customers,as well as to activate
198、users by delivering value and deepening engagement.Team purchase:Consumers team up with friends within their social networks to obtain discounts from e-commerce platforms once the number of consumers buying a product reaches a certain threshold.Community purchase:E-commerce platforms deliver the pro
199、ducts to“heads”or representatives of each community,who then distribute the products to consumers who have placed orders in their community.Shoppable content:Online content including posts,pictures,and videos directs consumers to products found online.Asia was the first region to introduce several o
200、f these formats,such as livestreaming e-commerce,helping it to become the undisputed“time machine”for social commerce globally.According to Insider Intelligence(formerly known as eMarketer),the U.S.is expected to reach Chinas 2018 level of social commerce penetration in 2026,indicating that China is
201、 roughly at least eight years ahead in social commerce.Figure 14 below broadly compares the state of social commerce between Asia and the U.S.58 Kadi Arula,“The Evolution of Social Commerce:What,When,How,and Why?”Insights For Professionals,December 1,2011.Citi GPS:Citi GPS:Global Perspectives&Soluti
202、ons May 2023 2023 Citigroup 28 Figure 14.Asia Leads in Social Commerce Note:Data is as of 2021 or 2022 depending on the source.User data based on China,India,and Southeast Asia.Adoption,market size,and penetration data for Asia refer to APAC.Adoption is based on social commerce users as a share of c
203、onsumers;for the U.S.,population serves as a proxy for consumers.Penetration is based on the social commerce market as a share of the overall e-commerce market size.Source:Statista,Live Mint,Campaign Asia,Insider Intelligence,WEF,EIU,Straits Research,Tinuiti,Citi GPS Multiple drivers underpin the gr
204、owth of social commerce:Better user engagement:With more transparent,real-time interactions and more tailored recommendations,social commerce creates a closer relationship between buyers and sellers.Immersive shopping experience:Technologies such as livestreaming,augmented reality(AR),and virtual re
205、ality(VR)in social commerce enable merchants to enhance product demos and real-time customer service.Better price offerings:Merchants are able to aggregate order volume to obtain more bargaining power against suppliers,and consequently pass along better consumer prices through the community and team
206、 purchase models.Lower customer acquisition cost:“Word of mouth”referrals from within social networks lead to improved customer conversion rates and lower marketing spend.Outside of Asia,social commerce is still at an early stage.For example,U.S.social commerce is expected to grow to around$100 bill
207、ion in 2025,while Asia already reached over$400 billion in 2021.59 Major tech players in the West,such as Instagram,Snapchat,and YouTube,are beginning to roll out features like livestreaming and AR filters to capture the growth opportunities in this field,further reshaping the e-commerce industry wo
208、rldwide.59 Refers to market size of Asia-Pacific,according to Straits Research.Citi GPS,Disruptive Innovations IX:Ten More Things to Stop and Think About,December 2022;GlobeNewswire,“Social Commerce Market Size Is Projected to Reach USD 6191 Billion by 2030,Growing at a CAGR of 30.2%:Straits Researc
209、h,”September 27,2022.May 2023 Citi GPS:Citi GPS:Global Perspectives&Solutions 2023 Citigroup 29 Asias Social Commerce Is Massive E-commerce has become an integral part of consumers daily lives across the world,but no region has seen the sheer size of adoption and promotion that Asia has.This has ena
210、bled the region to launch different types of promotional campaigns that are further amplified through social commerce.For example,“Singles Day”(or“Double 11”or 11/11)an online social shopping event created by Chinas Alibaba that is akin to Black Friday or Cyber Monday and heavily promoted on social
211、media garnered a record$14 billion in average daily Gross Merchandise Value(GMV)in 2022,despite the looming economic downturn.60 This figure is more than 50%greater than the Black Friday promotion achieved just a few weeks later in the U.S.and equates to enough parcels to wrap around the globe 42 ti
212、mes if stacked side by side.61 Such campaigns are not unique to China;in India,a similar commercial holiday resulted in$9.3 billion of sales in 2022.62 Beyond promotional periods or“shopping carnivals,”Asia represents more than half of the worlds e-commerce market.By 2026,e-commerce in Asia is expec
213、ted to reach$4.9 trillion,representing a compound annual growth rate(CAGR)of 8.8%in 2022-26.63 Meanwhile,technological advancements in logistics have enabled faster delivery,shorter inventory cycles,and more efficient cost management in e-commerce.64 The relatively cheaper labor costs in Asia and ad
214、vanced logistics infrastructure in the top-tier cities across the region have enabled exponential growth in on-demand and last-mile delivery services.Such growth and innovation in e-commerce in Asia has paved the way for new shopping channels and experiences,like social commerce.Straits Research est
215、imates the size of the global social commerce market was$576 billion in 2021 and forecasts it to grow to$6.2 trillion by 2030,implying a growth rate of over 30%per year.65 Asia represents a staggering 70%of this market,and within Asia,China represents most of the regional share.66 Within China,socia
216、l commerce accounted for 14%of overall e-commerce in the country in 2021,based on Insider Intelligence data.Livestreaming e-commerce,in particular,first took hold in China when Alibaba introduced Taobao Live in 2016.The business model is undergoing global expansion,with major overseas players Amazon
217、 and Facebook entering the space in 2019 and 2020,respectively.67 60 Weixin website(Chinese language),accessed January 31,2023.61 Assuming average length of 0.4 meters per parcel.Mike Snider,“$9.12 Billion Spent in a Day:New Black Friday Online Spending Record Set in 2022,Report Says,”USA Today,Nove
218、mber 26,2022;Chinese government website(Chinese language),accessed January 31,2023.62 Peerzada Abrar,“2022 E-Commerce Festival Sales Almost 2x of 2019:Redseer Report,”Business Standard,November 17,2022.63 The$4.9 trillion refers to the market size of Asia-Pacific,according to Insider Intelligence.In
219、sider Intelligence,“Retail&Ecommerce Sales,Asia-Pacific,”accessed January 31,2023.64 BEST Inc.,“Amendment No.6 to Form F-1,”accessed January 31,2023.65 GlobeNewswire,“Social Commerce Market Size Is Projected to Reach USD 6191 Billion by 2030,Growing at a CAGR of 30.2%:Straits Research,”September 27,
220、2022.66 Refers to the market size of Asia-Pacific,according to Straits Research.Chinas regional share is based on Insider Intelligence data.67 McKinsey Digital,“Its Showtime!How Live Commerce Is Transforming the Shopping Experience,”July 1,2021;McKinsey&Company,“Social Commerce:The Future of How Con
221、sumers Interact With Brands,”October 19,2022;Arghanshu Bose,“Explained:Citi GPS:Citi GPS:Global Perspectives&Solutions May 2023 2023 Citigroup 30 We are witnessing a paradigm shift in shopping models,both in China and more broadly across Asia,that may hint at what we can expect to see in other parts
222、 of the world in the future.The Diversified Formats of Asias Social Commerce Social commerce has evolved into multiple formats,which fall under three non-mutually exclusive categories:entertainment-driven,network-driven,and content-driven each of which are growing rapidly in Asia.Figure 15.Major For
223、mats Within Social Commerce Source:Accenture,Citi GPS Livestreaming E-Commerce Since Alibaba first launched Taobao Live in 2016,livestreaming e-commerce has become a vital component of e-commerce in Asia.Chinas livestreaming e-commerce grew from$18 billion in 2019 to an estimated$203 billion in 2022
224、,representing triple-digit growth per year.68 This compares to about$20 billion in the U.S.in 2022,according to Coresight Research.69 Under the model of livestreaming e-commerce,Key Opinion Leaders(KOLs,also known as influencers)can leverage livestreaming broadcasts to promote merchandise and intera
225、ct with their audiences to answer questions and provide real-time discounts.Platforms receive commissions based on a certain percentage of GMV,as well as payment for user traffic from merchants,KOLs,and Multi-Channel Networks(MCNs,or professional agencies that connect KOLs with brands and platforms
226、and provide services for KOLs such as marketing and training).Figure 16 below outlines the key participants in livestreaming e-commerce.What Is Facebooks Live Shopping Feature and Why Is It Shutting Down,”Times of India,August 5,2022.68 McKinsey&Company,“Social Commerce:The Future of How Consumers I
227、nteract With Brands,”October 19,2022.69 Cristina Criddle and Hannah Murphy,“Social Medias Big Bet:The Shopping Revolution Will Be Livestreamed,”Financial Times,August 11,2022.May 2023 Citi GPS:Citi GPS:Global Perspectives&Solutions 2023 Citigroup 31 Figure 16.Livestreaming E-commerce Value Chain Sou
228、rce:Citi GPS Gamification Gamification refers to a strategy that leverages game features to attract,retain,and engage with users.The strategy is widely used in Asia,with the most famous example being Alibabas Ant Forest,a carbon-saving and tree-planting game that has accumulated over 600 million use
229、rs.70 Although the concept of gamification has been around for a long time,it has been increasingly adopted in the e-commerce sector,where platforms may add certain casual,simplified gaming features within their app or website such as a farm or an orchard that allow users to earn discounts or points
230、 after completing certain objectives,including placing orders and inviting friends to those platforms.Users might also interact with each other in the games,enhancing the experience.With those appealing features,the games have become an important tool for e-commerce platforms to improve user engagem
231、ent and retention levels.Figure 17 below provides an illustration of this gamification model,taking the example of Pinduoduo.70 Bloomberg,“Over 600 Million People Planted More Than 326 Million Trees via Alipay Ant Forest in Five Years,”August 25,2021.Citi GPS:Citi GPS:Global Perspectives&Solutions M
232、ay 2023 2023 Citigroup 32 Figure 17.Illustration of Gamification Source:Company reports,PDD app,Citi GPS Team Purchase The concept of“group buying”a business model that offers products at a discount if a predefined number of customers place an order has existed for a long time.However,recent innovat
233、ions of“team purchase”in Asia,such as allowing consumers to team up with others in their social network to obtain bargains provided by platforms,have significantly increased group buyings popularity.Thanks to the large user base of team purchase platforms,merchants receive orders in high volume,whic
234、h lowers inventory costs and allows the merchants to offer attractive pricing to customers.As the minimum purchasing threshold must be met to obtain discounted pricing,users are incentivized to invite friends to the team purchase,which helps promote products through referrals,encouraging further pur
235、chasing and in turn attracting more merchants.As an example,Pinduoduo incorporated team purchase with mini games and interactive referral mechanisms,which gained popularity in a relatively short time frame.The company reported a 3.5x increase in active users and 17x increase in GMV from 2017 to 2021
236、,driven largely by team purchase features like recommendations and referrals.May 2023 Citi GPS:Citi GPS:Global Perspectives&Solutions 2023 Citigroup 33 Figure 18 below provides an illustration of the team purchase model.Figure 18.Illustration of Team Purchase Source:Company Reports,Citi GPS Communit
237、y Purchase With its dense population,Asia has been an early innovator of community purchase.In the community purchase model,consumers in the same community place orders online,and e-commerce platforms deliver the products to“heads”or representatives of each community,who then distribute the products
238、 to those who placed the order.These heads are usually residents or mom-and-pop stores within a community who take the role of last-mile delivery and storage.Figure 19 below outlines the key participants in the community purchase value chain.Figure 19.Community Purchase Value Chain Source:iResearch,
239、Citi GPS Citi GPS:Citi GPS:Global Perspectives&Solutions May 2023 2023 Citigroup 34 A successful example in the community purchase space is Xingsheng Youxuan,a grocery shopping platform in China that offers customers the convenience of picking up orders at nearby locations.It can also provide a wide
240、r range of offerings than brick-and-mortar grocers,thus creating a better shopping experience at a lower operating cost.Community purchase offerings have been a key contributor to Xingsheng Youxuans 1,400 x growth in GMV since 2017.71 Shoppable Content Shoppable content including posts,pictures,and
241、videos directs consumers to products found online.Typically produced by brands and KOLs,shoppable content generates commission and advertising revenue for the platforms(usually social media-based)on which it is featured.Some social media platforms might also build their own e-commerce platforms to f
242、urther monetize their traffic.Figure 20 below illustrates the key participants in the shoppable content value chain.Figure 20.Shoppable Content Value Chain Source:Citi GPS After years of development,platforms in Asia have accumulated a prolific and diversified base of high-quality content,which incr
243、eases their credibility and makes these communities the go-to place for consumers looking to shop online.A survey from BCG in 2021 notes that 87%of searches on a leading content platform in China are directly related to shopping,suggesting that users do not merely kill time on these content platform
244、s,but also often view them as channels for finding or discovering products.72 71 Xingsheng Youxuan website(Chinese language),accessed February 1,2023.72 100EC website(Chinese language),accessed February 1,2023.May 2023 Citi GPS:Citi GPS:Global Perspectives&Solutions 2023 Citigroup 35 Key Drivers Beh
245、ind the Growth of Social Commerce in Asia Better user engagement Social commerce deepens engagement with users by improving transparency,enhancing real-time interaction,and providing more tailored recommendations,thereby creating a closer relationship between buyers and sellers.In Asia,internet user
246、s spend on average 39.7%of their online time using social media,compared to the global average of 38.0%.73 The time spent on social commerce in turn helps raise the likelihood of purchasing,as well as building trust and improving customer stickiness.In Asia,KOLs do not need to be celebrities any ind
247、ividual can become a content provider for others to buy products on the commerce platform.According to iiMedia Research,61.7%of Chinese livestreaming users gain satisfaction from such interactive media platforms,which could result in increased spending,customer retention,and referrals.74 Likewise,me
248、rchants can receive immediate feedback and adjust their customer acquisition,merchandising,or marketing strategies simultaneously.Immersive shopping experience Consumers want a more immersive experience like they can get from physically going to a store,but with the convenience and accessibility of
249、being virtual.Technologies such as livestreaming and AR/VR in social commerce enable merchants to enhance their product demos and real-time customer service.For instance,Alibaba utilizes“Fashion AI”technology with over 500,000 pieces of data on fashion tips from stylists to create curated and person
250、alized recommendations.Rising Asian brands such as Lotte Home Shopping,Gentle Monster,and POP MART have gained popularity around the world using trendy digital art,AR,and VR.Based on a consumer survey conducted by the Korea Federation of Textile Industries,1 out of 4 Korean consumers has used either
251、 an AR or VR-based fitting services to virtually“try-on”clothes using their mobile phone.Better price offerings Merchants can aggregate order volume and gain bargaining power against suppliers,resulting in better prices being passed along to consumers through community and team purchase models.Also,
252、in the team purchase model,users can share links to the products they wish to purchase within their social networks and form teams with other users.As long as the formed team surpasses a certain number of team members and they purchase together,they can enjoy a significant discount on those products
253、.73 Refers to India,Indonesia,the Philippines,Vietnam,China,and Malaysia.Datareportal,“Digital 2023 Deep-Dive:How Much Time Do We Spend On Social Media?,”January 26,2023.74 Sohu website(Chinese language),accessed February 1,2023.Citi GPS:Citi GPS:Global Perspectives&Solutions May 2023 2023 Citigroup
254、 36 Lower customer acquisition costs Social commerce models can provide improved customer conversion rates and lower marketing spend.For example,Chinas Pinduoduo uses gamification strategies for customer referrals,producing customer acquisition costs of$89 per user in 2022.This is much lower than ma
255、ny traditional e-commerce companies in the West,such as Amazon($160)and eBay($180).75 In addition,the rise of super apps in Asia accelerates organic growth within the spending ecosystem,which helps the marginal decrease of customer acquisition costs.Asia as a Time Machine to the Future of Social Com
256、merce With over 1.1 billion users,high market penetration,and multiple innovative formats,Asia is currently the undisputed leader in social commerce.76 However,we do expect adoption to continue to grow in the West.Insider Intelligence anticipates that social commerce adoption will reach roughly one-
257、third of the population in the U.S.and one-quarter in the UK by 2025.77 This global growth will be driven by active participation by each party in the value chain,including consumers,brands,and platforms:Large base of young,tech-savvy users:In a 2019 McKinsey survey,adult-age Gen Z respondents ranke
258、d social media as having the most influence on product or brand recommendations.78 A 2022 survey by the same company noted that 75%of U.S.consumers who have previously live-shopped want to attend more live-shopping shows going forward.79 More attention from brands and retailers:Nearly 40%of fashion
259、executives ranked social commerce among the top three themes expected to have an impact on their business in 2022.80 Mega-retailers are also launching more initiatives in livestreaming e-commerce for example,Walmart held a livestreaming e-commerce event in 2020 that expanded its TikTok follower base
260、 by 25%.81 Tech giants catching up:Various U.S.tech giants including leaders of social media,traditional e-commerce,and content platforms have been rolling out social commerce capabilities since 2019.82 75 CE.cn website(Chinese language),accessed April 3,2023;HuntClub website,accessed April 3,2023.7
261、6 Social commerce penetration is defined as retail social commerce sales as a share of retail e-commerce sales.77 Sara Lebow,“Social Commerce to Surpass 100 Million US Buyers,”Insider Intelligence,October 5,2022;Carina Perkins,“UK Social Commerce 2022,”Insider Intelligence,November 3,2022.78 McKinse
262、y Digital,“Its Showtime!How Live Commerce Is Transforming the Shopping Experience,”July 1,2021.79 McKinsey&Company,“Social Commerce:The Future of How Consumers Interact With Brands,”October 19,2022.80 McKinsey&Company,“A Better Way to Build a Brand:The Community Flywheel,”September 28,2021.81 McKins
263、ey Digital,“Its Showtime!How Live Commerce Is Transforming the Shopping Experience,”July 1,2021.82 McKinsey&Company,“Social Commerce:The Future of How Consumers Interact With Brands,”October 19,2022.May 2023 Citi GPS:Citi GPS:Global Perspectives&Solutions 2023 Citigroup 37 Nevertheless,early social
264、commerce endeavors in the U.S.and Europe have had mixed results the model is still nascent in these geographies relative to Asia,and experimentation is still underway.Whereas Asia stands out for its well-developed ecosystem supporting social commerce,the West may face the following challenges in dev
265、eloping its own social commerce markets:Consumers still exploring,but not necessarily purchasing:Consumers in Western markets may not be fully ready to adopt social commerce models like livestreaming commerce,though staying indoors during the pandemic may have made them more curious and open to expl
266、oration.83 Even so,the move from discovery to purchasing through social platforms appears somewhat slow,at least in the U.S.A June 2022 survey found that only 38%of U.S.social media users had placed an order on social media in the past 12 months.84 Another 2022 survey found that 71%of U.S.social com
267、merce consumers prefer to make purchases on brand websites after discovering products on social networks,while only 13%prefer to buy directly on social media platforms.85 Brands facing challenges over having less direct interaction with consumers:Under the new paradigm of social commerce,as consumer
268、s stay within social platforms,influencers will play a bigger role in interacting with consumers,while brands might have less control over consumer traffic.This could pose a potential challenge for Western brands.Platforms equipped with limited ecosystem infrastructure:Unlike in Asia,social commerce
269、 in the rest of the world is not always supported by a well-developed ecosystem that includes multiple service providers,ranging from influencer agencies(such as MCNs)to well-trained content creators,as well as infrastructure that supports payments and logistics networks for merchandise delivery.86
270、Insider Intelligence predicts social commerce in the U.S.will reach an 8.1%share of e-commerce sales by 2026 a figure that China achieved in 2018.While Asia may be several years ahead of the West eight years based on the Insider Intelligence statistic in social commerce,the consumer-centric and high
271、ly-engaging qualities of social commerce should continue to draw wider interest globally.Once again,the social commerce model suggests how the trends that we see in Asia today are what we can expect to prevail in other regions in the future.83 Rimma Kats,“How Livestreaming Commerce Can Be a Phenomen
272、on in the US,Like It Is in China,”Insider Intelligence,February 2,2022.84 Jasmine Enberg,“Social Commerce and the Path to Purchase,”Insider Intelligence,October 26,2022.85 SimplicityDX,“The State of Social Commerce 2022,”PDF,accessed February 1,2023.86 Cristina Criddle and Hannah Murphy,“Social Medi
273、as Big Bet:The Shopping Revolution Will Be Livestreamed,”Financial Times,August 11,2022.Citi GPS:Citi GPS:Global Perspectives&Solutions May 2023 2023 Citigroup 38 Short-Form Videos Short-form videos have revolutionized the way people consume and creators develop video content.Typically shorter than
274、60 seconds(and frequently just 10-15 seconds long),short-form videos are shaping the future of modern entertainment,advertising models,and social engagement.Short-form videos are credited to several different origins,including ad clips that preceded traditional,long-form videos.However,the commercia
275、lization of short-form videos really took off with the launches of the Kuaishou and Douyin platforms in China in 2011 and 2016,respectively.In 2017,Douyins parent company ByteDance launched its international version,TikTok,ultimately surpassing G as the most visited domain globally for a period in 2
276、021.87 In the same year,TikTok reached 1 billion monthly active users(MAUs)reaching that milestone several years faster than Facebook,WhatsApp,YouTube,or Instagram,as shown in Figure 20 below.88 Figure 21.Number of Years It Took for Select Social Media Services to Reach 1 Billion MAUs Source:Axios,C
277、iti GPS Over the past decade,Chinas short-form video platforms have taken the world by storm.There are several drivers underpinning this extraordinary rise:Underdeveloped media and entertainment in China in the early 2010s:Chinas media and entertainment industry was relatively underdeveloped a decad
278、e ago,and people had less access to options like movie theaters and streaming services.Short-form videos which require little-to-no production resources and are easily accessible via mobile phones have helped fill this entertainment void.Ease of creating content:Short-form video platforms have drast
279、ically democratized the content creation process,offering simple video editing tools.Virtuous cycle that empowers content creators and brands:Chinese short-form video platforms empower creators and brands with tools to monetize their content.This incentivizes the production of more content,which att
280、racts more viewers and more sponsorship,in a virtuous cycle.87 Joao Tome and Sofia Cardita,“In 2021,the Internet Went for TikTok,Space and Beyond,”Cloudflare,December 20,2021.88 Sara Fischer,“TikTok Hits 1 Billion Users,”Axios,September 28,2021.May 2023 Citi GPS:Citi GPS:Global Perspectives&Solution
281、s 2023 Citigroup 39 Appealing format for younger generations:Similar to webtoons discussed later in this report,short-form videos complement the“snack culture”trend among younger audiences,who prefer to consume entertainment in brief periods and/or in quick forms,typically during short and idle time
282、 in between activities.89 Thanks to the mesmerizing appeal of endless,“snackable,”and algorithmically-tailored content,billions of users around the world have gravitated toward this new form of media.Taking note of the success in China,Western tech giants,such as Meta and Alphabet,have been racing t
283、o create their own products with similar features,as the competition for users and advertising budgets intensifies.Key Drivers Behind the Rise of Short-Form Videos in Asia Underdeveloped Media and Entertainment in China in the Early 2010s Chinas underdeveloped media and entertainment industry a deca
284、de ago was an important driver behind the rise of short-form videos in the country.In 2010,there were only five movie screens per 1 million people in China,compared to 128 screens per 1 million people in the U.S.90 Similarly for over-the-top television(OTT)services,or online television,the number of
285、 Internet Protocol Television(IPTV)subscriptions in China in early 2010 was only 5.8 million,lower than the 6.1 million subscriber base in the U.S.despite China having more than quadruple the population.91 Against this backdrop,coupled with the advancement and increased affordability of smartphones,
286、short-form videos emerged in China as a highly accessible entertainment option,not to mention an easy-to-use creative outlet,which we turn to next.Ease of Creating Content Short-form video apps have made it extremely easy for ordinary users to create videos by offering editing tools such as extensiv
287、e libraries of free music clips,special effects,and AR filters in an easy-to-use interface.Another tool includes a built-in“green screen”feature,allowing users to superimpose themselves over a dynamic image or background(for example,mimicking a TV news report).With such tools,the entire content crea
288、tion process has been dramatically democratized anyone with a smartphone and internet access can produce videos in the palms of their hands without relying on professional equipment or video editing skills.Likewise,the apps provide a social platform for sharing videos with family and friends,or even
289、 to a broader audience with the hope of the content going viral.89“Snack culture”is a social term used to describe the tendency to consume various forms of entertainment in brief periods and/or in quick forms,typically during short and idle time in between activities.90 Calculated using population d
290、ata from the World Bank,and theater data from:EntGroup,China Film Industry Report 2012-2013(In Brief),2013;National Association of Theatre Owners,“Number of U.S.Movie Screens,”accessed February 1,2023.91 Digital TV News,“Global IPTV Subscribers Grow 8%in Q1 2010,”June 16,2010.Citi GPS:Citi GPS:Globa
291、l Perspectives&Solutions May 2023 2023 Citigroup 40 Figure 22.Douyins(left)and Kuaishous(right)Video Creation Interfaces Source:Douyin app,Kuaishou app,Citi GPS Virtuous Cycle That Empowers Content Creators and Brands The popularity of short-form videos and the accessibility of editing tools have le
292、d to a huge influx of content creators,both professional and amateur,on content platforms.Coupled with advertising tools on short-form video platforms,notably in China,content creators and brands can easily monetize their production.This has resulted in an ever-growing and diversifying supply of con
293、tent that,in turn,attracts more viewers to join and more brands looking for marketing opportunities spurring a virtuous cycle of content creation,viewer engagement,and brand sponsorship on the platforms.This contrasts with the trajectory of Vine,a U.S.company that is widely viewed as the first to la
294、unch short-form video services but was shut down in 2017 due to insufficient monetization opportunities for content creators,a lack of advertising tools for brands,and rising competition.92 Appealing Format for Younger Generations Short-form videos are,by definition,short and therefore quick to cons
295、ume.Users can watch the content on the go or in between other activities,making it highly convenient and in many cases,preferred.This snackable content is widely popular among younger audiences,who are the largest users on social media platforms and are accustomed to a mobile-only culture.92 Viktor
296、Hendelmann,“What Happened to Vine?Why the One-Popular App Shut Down,”Productmint,accessed February 1,2023.May 2023 Citi GPS:Citi GPS:Global Perspectives&Solutions 2023 Citigroup 41 Asia as a Time Machine to the Future of Short-Form Videos With Chinese short-form video platforms gaining significant t
297、raction in the social media space,traditional internet companies are facing increasingly fierce competition.Aside from their enormous popularity among users and content creators,short-form videos are becoming a key marketing tool that brands can hardly afford to ignore.One recent survey indicated th
298、at 30%of social media marketers planned on investing in short-form video above all other mediums,and suggested it provides the highest return on investment(ROI)of any social media marketing strategy.93 As an example,technology research firm Omdia expects TikToks advertising revenue to exceed that of
299、 Meta and YouTube combined by 2027.94 Meanwhile,the Western tech giants,who rely heavily on advertising revenue,have started to follow suit.Meta introduced Reels on its Instagram platform in 2020,Snapchat added Spotlight in 2020,and Alphabet launched YouTube Shorts in 2021 all of which share similar
300、 features with their Chinese rivals developed five to ten years earlier.From Chinese short-form video platforms early success in the domestic market to their global leadership today,Asia has been the time machine to the future of short-form videos.93 Martina Bretous,“6 Short-Form Video Trends Market
301、ers Should Watch in 2022 New Data,”HubSpot,July 18,2022.94 Patricia Nilsson,“Advertisers Binge on Online Video,”Financial Times,November 23,2022.Citi GPS:Citi GPS:Global Perspectives&Solutions May 2023 2023 Citigroup 42 eSports eSports,or multi-player video game competitions,is one of the fastest gr
302、owing industries worldwide.The global market size was estimated to be nearly$1.4 billion in 2022,and is projected to grow at more than 10%per year through 2025;nowhere has adoption been greater over the past two decades than in Asia.95 Viewership of eSports tournaments such as the 2018 League of Leg
303、ends World Championship in South Korea with approximately 100 million unique online viewers has even surpassed some of the worlds largest traditional sporting events like the NFLs Super Bowl as shown in Figure 23.96 Figure 23.Viewership of 2018 League of Legends World Championship vs.2018 NFL Super
304、Bowl Source:CNBC,Citi GPS Although South Korea was not the first country to develop eSports,it is widely regarded as the“home of eSports”due to its role in popularizing it around the world.This began with the release of StarCraft by Blizzard in 1998;already a massive hit worldwide,South Korea took t
305、he game to the next level.97 The popular game was not only ubiquitous across South Korea,but StarCraft competitions were also broadcast on national television through dedicated channels viewed by millions of fans.98 As early as 2000,the South Korean government formed the Korea e-Sports Association(K
306、eSPA)to formally promote eSports,turning it into a new entertainment format and leading the world in the standardization of eSports as a professional sport.99 In 2001,South Korea hosted the worlds first World Cyber Games,often dubbed the Olympics of eSports.100 For each of the first ten years of the
307、 event,South Korean players took home the gold medal for StarCraft:Brood War.101 95 Newzoo,“Newzoos Global Esports&Live Streaming Market Report 2022|Free Version”,April 19,2022.96 Austen Goslin,“The League of Legends World Finals Had Nearly 100 Million Viewers,”Rift Herald,December 11,2018;The Game
308、Haus,“Top 5 Biggest eSports Tournaments,”May 12,2022.97 Kevin Hovdestad,“The Rise and Fall of StarCraft II as an eSport,”IGN,March 22,2016.98 Dal Yong Jin,“Historiography of Korean Esports:Perspectives on Spectatorship,”International Journal of Communication,Vol.14,2020.99 Jae Chang,“Esports Rises a
309、s a Viable Career Field for Young South Koreans,”Korea Economic Institute,September 2,2022.100 Seth Suncho,“An Exhaustive Guide on World Cyber Games:WCG History,Hall of Fame&Winners,”eSports Lane,accessed January 30,2023.101 Based on a compilation of tournament winners.May 2023 Citi GPS:Citi GPS:Glo
310、bal Perspectives&Solutions 2023 Citigroup 43 The eSports boom in South Korea quickly spread to other Asian countries,making the region the worlds hub of competitive gaming in terms of viewership,as well as producing top-rated eSports teams and pro gamers and developing a highly lucrative ecosystem a
311、round the industry.In 2021,Asia represented 57%of the global market by revenue,as well as roughly half of the world gaming population,by number of gamers and spectators.102 There are several drivers that have helped fuel the boom of eSports in Asia:Developed internet infrastructure and fast connecti
312、on speeds:As early as 2000,South Korea was the first country in the world to widely adopt the fastest broadband infrastructure available at the time.103 Vibrant gaming culture:Asias internet users spend more time gaming than those in other regions.Government support to professionalize eSports:Many A
313、sian governments have supported the recognition of eSports as a professional sport,standardizing the industry and positioning it for long-term growth.Track record of innovative entertainment formats:As noted in other sections of this report,such as the discussions of short-form videos and webtoons,A
314、sia has a track record of being a global innovator in new entertainment formats,enabling the popularization and commercialization of eSports.eSports in Asia An eSports Ecosystem With StarCraft,South Korea effectively developed the first complete eSports ecosystem,which consists of four key component
315、s:(1)tournament organizers,which were originally TV channels but have since become game developers or publishers;(2)content distributors,which were also once largely TV channels but are now various streaming platforms;(3)professional teams that participate to win prize money;and(4)brands that sponso
316、r the tournaments or partner with teams as a way to advertise.This eSports ecosystem presents lucrative opportunities for all four parties.In the meantime,Asia continues to innovate in the eSports value chain.South Korea has a unique edge in talent development and team management that has given rise
317、 to many legendary players.In addition,eSports is regarded as a legitimate career option in the country.According to a survey from South Koreas Education Ministry in 2020,eSports was the fifth-most popular career option among South Korean students.104 South Korean eSports organizations have also est
318、ablished academies to systematically train gamers under strict schedules just like professional athletes.105 102 Niko Partners,“eSports in Asia,”accessed January 30,2023;Asia Sports Tech,“What Makes Asia an eSports Powerhouse,”accessed May 4,2023.Data from the latter source refers to the Asia-Pacifi
319、c region.103 Dong-Hee Shin and Sang Hee Kweon,“Evaluation of Korean Information Infrastructure Policy 20002010:Focusing on Broadband Ecosystem Change,”Government Information Quarterly,Vol.28,No.3,July 2011.104 Choe Sang-Hun,“Inside the Deadly Serious World of E-Sports in South Korea,”New York Times,
320、June 19,2021.105 Ibid.Citi GPS:Citi GPS:Global Perspectives&Solutions May 2023 2023 Citigroup 44 Organizations are equipped with nutritionists,doctors,and coaches,providing a comprehensive and sustainable development environment for professional gamers.eSports education in South Korea also extends t
321、o team management,as high schools and universities have launched curriculums on the inner workings of the eSports industry.106 The advanced level of training is developing world-leading eSports gamers as well as highly mature eSports management teams,with South Korean players and coaches being highl
322、y sought after by Western eSports teams.Mobile eSports Driven by high mobile penetration and a large mobile-first culture,Asia has widely popularized mobile eSports,launching mobile events at a scale and viewership unseen in the West.The success of mobile eSports is largely linked to the high penetr
323、ation of the broader mobile gaming market in Asia.Globally,more than 80%of gamers play on mobile,and approximately half of mobile gamers are in Asia.107 Mobile gaming is also the highest-grossing gaming segment globally.108 According to Sensor Tower,four out of the eight highest revenue-generating m
324、obile games in 2021 were from Asia.109 The attractive economics of mobile games benefiting from relatively low distribution and development costs,virality of content,and convenience has led to significant investment across the full eSports value chain of advertising,merchandising,sponsorships,and me
325、dia rights,among others.In 2022,Malaysias Minister of Youth and Sports made an appearance at the Mobile Legends:Bang Bang Southeast Asia Cup eSports tournament to speak on the impact that hosting such tournaments has had in the country.110 In Japan,the Call of the Abyss tournament the highest level
326、of competition for the widely popular mobile game Identity V by NetEase,reached 22 million views in 2021 becoming the“most influential”eSports competition on YouTube in the country.111 Beyond Gaming:Entertainment Hubs Asias eSports industry is unique in its ambition to expand beyond tournaments towa
327、rd monetization through a larger eSports ecosystem.eSports teams are expanding their businesses into themed eSports hubs,which are usually comprised of spaces such as shopping malls or amusement parks that can attract huge numbers of visitors.For example,the founder of Edward Gaming,a team that won
328、the League of Legends World Championship title in 2021,invested RMB15 billion(approximately$2.2 billion)in Shanghai to build a one-stop platform combining social interaction and entertainment for the young generation of eSports fans and gamers,as well as offering workspace.112 106 Im Eun-byel,“Hansh
329、in University Offers Advanced Education in eSports,”Korea Herald,October 13,2022.107 TransPerfect Gaming Solutions,“Esports in 2022 and What It Means for Developers,”May 24,2022.108 Ibid.109 Mobile games with revenue over$1 billion.Sensor Tower,“Record-Breaking Eight Mobile Games Surpass$1 Billion i
330、n Global Player Spending During 2021,”accessed May 5,2023.110 Tom Daniels,“Mobile Miracles:The Rise and Reign of Mobile eSports in Southeast Asia,”eSports Insider,July 7,2022.111 Ibid.112 Currency conversions as of May 5,2023.May 2023 Citi GPS:Citi GPS:Global Perspectives&Solutions 2023 Citigroup 45
331、 In Malaysia,the worlds first mobile game-themed eSports hub is under talks to launch in the near future.113 Supported by the popularity of Mobile Legends:Bang Bang in Southeast Asia,the game developer Moonton announced a partnership with the real estate developer Hatten Land in August 2022 to launc
332、h an eSports hub with a five-star eSports hotel and a Mobile Legends-themed mall in Melaka,Malaysia.The partners plan to run eSports events using an existing 1,200-capacity eSports arena.114 The expansion of eSports tournaments into eSports hubs not only serves as a way to monetize increased traffic
333、,but also turns eSports into a bigger entertainment format,enabling more people to participate in it while creating more value for all members of the eSports value chain.Key Drivers Behind the Rise of eSports in Asia Developed Internet Infrastructure and Fast Connection Speeds South Korea has been a leader in the adoption of high-speed internet since 2000,with the development of broadband infrastr