Connecting cars in China is a priority. Noted as the fastest-growing automotive market in the world, it shouldn’t be surprising to see a great deal of innovation occurring in that market – innovation by operators, automotive OEMs and some unlikely players such as Alibaba and Baidu.
Touching on a few of the operator announcements, I’ll start with last fall’s partnership between Deutsche Telekom and China Mobile to develop a joint venture specific to connected cars. China Mobile will provide the LTE coverage and DT brings the telematics expertise and connected car platform. Each partner will hold a 50% stake. The goal of this venture is to provide 4G-based vehicle information services within a comfortable, convenient and safe driving experience to drivers in China. Experts say that in 2018 there will be about 68 million connected cars in China.
In April, China Mobile further discussed its vision for the “Internet of Vehicles” and the goal to equip 500,000 of them with 4G this year alone. China Unicom is publicly partnering with Tesla, but has also said that they have signed agreements with 20 OEMs and have a target to equip 3 million vehicles with their LTE service. China Telecom is already well established in the “Internet of Things” space and highlights the connected car market as their next logical step.
But it’s not all just about the telcos.
In March, Alibaba and SAIC Motor announced that they would jointly invest $160 million in connected cars. The fund focuses on the launch of the first “car on the Internet” in 2016, and Alibaba will integrate its communications, entertainment, map and cloud computing services. Wang Jian, Alibaba’s CTO, said “Internet cars will improve people-to-car communication and gradually expand their functions to the areas of car-to-car, car-to-road and car-to-infrastructure communication. Four-dimensional interaction among people, cars, roads and infrastructure is a big trend which will lay a foundation for improving self-driving car technologies.”
And in the spirit of Apple and Google, Baidu – China’s largest search engine – has announced its intention to develop an autonomous vehicle.
RCR Wireless News had the opportunity to discuss the China connected car market with Sachin Lawande, EVP and president, infotainment division, of Harman. One topic I wondered about was if there are differences in the Chinese market related to the requirements for the connected car space. Lawande shared what has been learned from Harman’s corporate research to date. Our research tells us that there are two China realities – the first being a demand for the most sophisticated, luxurious amenities and technologies that can be offered in-vehicle to make the user’s daily life easier, with features like front- and rear-seat entertainment, premium audio solutions and high-speed networking to allow executives to be more productive in the back seat. The second is a demand for solutions that assist in smart navigation and efficient vehicle use, such as eliminating time spent in traffic or reduced gas use through efficient routing features. These users are also looking for connectivity options that allow for more in-car sharing through infotainment systems and can adapt to many different users and situations. There are, of course, many other facets, considering the unique population challenges and urban density, but also a wide divide in income, meaning there isn’t a “one-size-fits-all” solution for this market. As many Chinese consumers are first-time car buyers, they are extremely open to new technologies offered in vehicles and may well lead the market in the adoption of what might be considered disruptive applications ahead of other countries.
In summary, it seems there are two discrete markets at play in China with a wide appetite for new services and features. Although I would agree with the split in other markets, I think the difference is that China will approach both from the start where we see other Western markets developing for luxury and then a resulting trickle-down to the lower-cost models. Just my observations.
I also wondered if Harman had a different way of working in this market. Lawande explained that Harman has a large footprint in China. With approximately 3,000 employees in the country, spanning across design, engineering, manufacturing and research and development, partnerships are still a key requirement. Partnering with Chinese specific institutions, such as the Connected Car Institute of Tsinghua University, on topics related to the advancement of infotainment helps to provide local insight to requirements.
Harman also recently announced its strategic partnership with Baidu to integrate the CarLife project into Harman infotainment platforms. The CarLife project is a similar venture to Apple CarPlay and Android Auto, with features and functionality for seamless smartphone integration and is platform-agnostic, i.e. supports both iOS and Android applications. This unique approach is a first-of-its-kind to the industry. Combined with Baidu’s ability to integrate POI, commerce and media on this platform, it could be a disruptive force in the market.
Without a doubt China is an exciting market when it comes to these topics with fast-paced growth, consumers open to new experiences – many of whom will be purchasing their first car ever – and disruptive ideas to integrate e-commerce into the car. I project the Western world will stay tuned with some key lessons learned from this market to come.
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Claudia Bacco, Managing Director – EMEA for RCR Wireless News, has spent her entire career in telecom, IT and security. Having experience as an operator, software and hardware vendor and as a well-known industry analyst, she has many opinions on the market. She’ll be sharing those opinions along with ongoing trend analysis for RCR Wireless News.
