Using tech for development: What Chinese companies are doing right

You probably know that digital technology can fuel economic growth. But here’s something you might not know: Chinese companies are avoiding one of the main pitfalls that prevents technology from delivering maximum benefits. 

Numerous studies show that information communications technology (ICT) stimulates commerce. It’s linked to better health, education, and public safety. Countries that raise their ranking in Huawei’s Global Connectivity Index, for example, are likely to be more competitive and more productive. 

Unfortunately, most efforts to use ICT for development never make it past the pilot stage. Dependent on funding from philanthropies or governments, they close up shop when the money runs out. 

To avoid this, ICT-for-development programs can adopt a more commercial, more revenue-oriented operating model focused on delivering value, at scale. Chinese companies, from start-ups to large enterprises, are embracing this formula and reaping the benefits. 

Here’s how they do it. 

First, tech-for-development efforts can be made sustainable if they generate enough revenue to cover their operating costs. They can do this by providing services valuable enough that someone will pay for them – an individual, a company, a government body, or an NGO. 

For example, a start-up called Beijing Protection and Ease sells an app that helps the country’s 13 million blind people use mobile phones. Called “You Are My Eyes,” the app converts text into audio, letting visually impaired users navigate with GPS, order goods online, use WeChat, China’s ubiquitous social messaging platform, and request help from sighted volunteers who will assist with tasks such as reading street signs and figuring out the expiry date on food products. 

A basic version of the app is free, while a more advanced version allows users to use swipes and other gestures to control the phone. Priced at about 240 yuan (US$36), the software is sold to China’s Federation of Disabled Persons, a national organization backed by the central government, and to carriers like China Mobile and China Telecom. As of last year, Beijing Protection and Ease generated revenue of 270 million yuan (US$41m). Profits are relatively small, but they’re enough to cover the company’s operating costs. 

Second, self-sustaining digital enablement efforts must be scalable. Unfortunately, many tend to stall out after the pilot stage ends, a pattern so common that some countries have actually banned projects that appear too small. 

One Chinese company that has scaled up successfully is Chunyu Yisheng (“spring rain doctor”), a large provider of medical services. It connects users with doctors by smartphone, allowing them to bypass crowded emergency rooms. Supported by advertising from insurers, the Chunyu app itself is free, as are short phone consultations, with longer talks or doctor visits available for a fee. 

Chunyu is exceptional in that it has attracted nearly US$250m in Chinese and overseas venture capital, an accomplishment that has helped it acquire impressive scale. It has built a network of 40,000 doctors, and grown its user base from 30m customers in late 2014 to more than 190m today. 

Third, and this point is frequently overlooked, connectivity and its benefits must be marketed. Many users don’t really appreciate those benefits unless someone spells them out explicitly. Huawei’s research shows that the world’s most digitally connected countries actively work to stimulate demand for connectivity. 

China Mobile is not a start-up, but when it launched a new agricultural information service in northeastern Jilin Province, it promoted the offering aggressively to make sure farmers understood what the service delivered and why they should sign up for it. The service uses text messages to answer questions about farming, and recommends fertilizers suited to Jilin’s climate and soil conditions. China Mobile’s marketing efforts paid off: as of year-end 2014, more than 80,000 Chinese farmers had subscribed to the service. 

More than almost any other developing country, China has reaped the benefits of digitization. Ecommerce has created 10m jobs and given rise to the world’s biggest online shopping holiday (Singles Day, November 11, which last year generated sales of US $14.3b). 

Governments seeking to invest in digital technologies that drive innovation and growth must take care to make their efforts sustainable by looking at ways to generate value, at scale, for populations that may not yet have embraced the Internet. China provides some useful case studies showing how this can be done successfully.