China moves slowly on smart speakers
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China moves slowly on smart speakers

The U.S. is awash with smart speakers as big tech companies like Amazon and Google compete to become the organizer of their customers’ lives. But China, quick to adopt Ecommerce and with its own booming tech sector, does not seem to be following suit. The country has developed its own answer to Google (Baidu), its own big streaming video on demand platform (iQiyi), its own Ecommerce titan (Alibaba), and its own mobile games kingpin (Tencent). So wy the dearth of connected home speakers?

This year, 14 million smart speakers will be shipped in the U.S. According to Counterpoint research, that will dwarf the comparable figure in China, which will be around 2 million. The reasons behind this disparity are partly cultural, partly technological, and partly driven by a host of lifestyle factors.

Firstly, there is a problem with Chinese language voice recognition. Tracy Tsai, a Gartner Inc. analyst, said: “the overall understanding and response for Chinese natural language in a conversational way is still not mature.”

To get English-speaking artificial intelligences, companies like Google went to great lengths, recording hundreds of millions of hours of natural conversations in “smart apartments” and more, and feeding it all into their programs. To do the same for Chinese is a huge task. As it stands, audio recognition on some devices is poor, and Tsai thinks that’s part of the reason they’re not being adopted in China the same way as they are in English-speaking countries.

But there are other reasons for the lack of interest – one of which might be how much time Chinese consumers spend at home. Kai Yu, CEO of Horizon Robotics and founder of the Institute of Deep Learning at Baidu Inc. thinks that work-life balance might be a key factor in explaining widespread antipathy to smart speakers. He said:

“If you look at the popularity of the food delivery business, it shows people don’t have much time; young people spend most of their time either at work, or going to work. There’s still some speculation on whether smart speakers will be popular in China.”

Yu’s theory is backed up by other data. Chinese consumers overwhelmingly use their smartphones to make purchases, suggesting that they spend a lot of their browsing time outside of the house. According to data from Baidu’s streaming service iQiyi, almost 70% of users accessed the platform via smartphones or tablets in early 2016. In the same year, Netflix’s predominantly western audience spent most of its viewing time at home on a TV or computer.

None of this means that Chinese companies aren’t interested in smart speakers – Alibaba, Tencent and Baidu all do (or will) offer a smart speaker. Online retailer JD.com is currently the biggest brand to do so, and Counterpoint predicts that it will sell 1 million units this year up to 22 million by 2022.

But it might be that the connected home trend in China misses out smart speakers for the most part. Last year, Chinese consumers alone accounted for 65% of the world’s smart appliances – fridges and freezers that can connect to the internet. It may be that the Internet of Things proceeds at such a pace in the country that the smart speaker is simply not needed.

Disclosure

Dominion holds Tencent, Baidu, JD.com and Alibaba in its Global Trends Ecommerce and Managed Funds. 


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