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China strives to drive connectivity

If you closely follow our activities, you may have heard about a big milestone: Alphabet recently rolled out in China. The mobility industry in China is quite unique. For one, in the course of just a few decades, it’s become home to the world’s largest automobile industry. Further, at a time when carsharing schemes and other alternatives to private car ownership are blossoming in many western countries, many young middle-class Chinese who are tech-affine and have a high disposable income are dreaming of purchasing a car.

Young, mobile, connected

But this group doesn’t want just any car. They want a connected car. One that seamlessly fits into their connected lifestyle. Exactly how important is connectivity? Today’s Chinese consumers are more interested in a car’s technologies than traditional purchasing factors like design or performance.

Not surprisingly, the demand for connected cars in China is high. And currently the country is enjoying a virtuous circle in which connected consumers, the latest technologies and a supportive government (more on that in a second) all feed off each other. The result: China’s automakers are well-positioned pull ahead as the world scurries to build connected cars and autonomous vehicles.

Government intervention

The government in China isn’t just sitting back, watching all this unfold before their very eyes. Instead, they are actively on-board helping shape the domestic connected car market. In the 10-year plan “Made in China 2025”, released in 2015, the Chinese government outlines how it strives to transform China into an innovation hub for multiple sectors including car industry. Moreover, it explicitly aims to assist Chinese companies whose business is connectivity. The government’s ultimate goal: establish these companies as leaders in the industry – both in China and around the world.

Other sectors of the Chinese economy are also likely to benefit from the mushrooming connected car market and from government support. This includes everything from Chinese OEMs, to long-established automotive suppliers, to start-ups, to tech companies. You could say that the positive effects of the connected car could spill over to other parts of the Chinese economy. This, however, could present challenges as tech companies could become direct competitors of traditional OEMs.

Autonomous barriers

Somewhat ironically, while China has made many advances in the realm of the connected car, it lags behind the United States and Europe in the realm of autonomous driving. Currently, the complexity of driving conditions in China – from traffic jams on the roads, to the condition of roads themselves, to driver behaviour – has led the government to ban testing of autonomous cars on public roads. Until this changes, China will struggle to play an active role in progressing self-driving cars domestically.

Rüdiger Ebel, Head of New Markets at Alphabet International, also recognises China’s opportunities and barriers: “On a whole, you could say China has the potential to become a, if not the, global leader in connected and autonomous cars”. Rüdiger Ebel adds that we at Alphabet are excited to see how the mobility sector unfolds and develops in the Far East in the months and years to come.

Learn more about the Chinese market and get the full story on the connected car in ‘The Connected Car Report 2016’

Do you think China will overcome barriers to lead the future of driving? Tell us in the comments!