What lessons can Southeast Asia learn from China’s digital revolution?

As China continues to make digital waves, are there any lessons countries in Southeast Asia can learn from its successes?

It’s no secret that Asia is one of the most digitally engaged parts of the world. In China alone, there are over 751 million active users of the internet and social media penetration has reached 65%.

And while the figure is still relatively low compared to its G20 counterparts, it’s still way above the global average of 42% and impressive when you take population and country size into consideration.

Comparatively, the ASEAN bloc isn’t lagging too far behind, with 58% of the population having access to the internet and 55% regularly using social media. However, when you take a closer look at the individual countries that make up the region, many are already boasting statistics above and beyond China.

Singapore has 84% internet penetration rate and 83% social media; Malaysia has 79% and 74% respectively and Brunei has a staggering 95% for each. However, it’s countries such as Laos, Myanmar and Cambodia that have large rural communities and poor infrastructure that are still struggling to meet the digital needs of their citizens.

Digital penetration is still low in rural China however, over recent years, steps have been taken to help boost the connectivity rates of those living in some of the most remote parts of the country. 

So, what lessons can Southeast Asia draw learn their continental neighbours about improving digitisation throughout the region?

The biggest digital problems facing Southeast Asia

All key digital indicators in Southeast Asia witnessed growth over the last 12 months. There were 80 million new internet users in the region, compared to 2016, proving that things are starting to move in the right direction. However, given the vast cultural and economic diversity on display across the region, it’s not surprising that digital connectivity follows this same pattern.

In the countries with low digital penetration rates, one of the biggest roadblocks to progress is a lack of infrastructure.

Broadband connectivity outside the densely populated, urban areas is often sporadic and for a long time, computers, mobile devices and internet subscriptions were often out of the grasp for low income families living in rural communities with high rates of poverty.

As digital technologies have become less of a luxury and more of an affordable necessity, this gap has started to narrow however, the rural-urban divide is still one of the biggest digital challenges facing countries throughout Southeast Asia, and indeed the world.

In addition to all the talk about how many millions of people are now using social media, the reality of digital transformation has now become much more wide-spread.

While countries like Singapore and Malaysia that have long been promoting a culture of innovation are thriving in today’s digital landscape; places like Laos, Cambodia and Myanmar that are still heavily reliant on more traditional industries need to walk the fine line between digitisation and the protection of jobs.

Automation is one of the biggest front runners of the digital transformation movement, helping to streamline everything from customer support to the supply chain and banking.

Therefore, in countries that are still economically dependent on manufacturing, the potential advancements bought about by automation has led to very real concerns about the reshoring of manufacturing and more generally, premature deindustrialisation.

What Chinese successes can ASEAN build upon?

One of the biggest lessons that can be taken from China is not to underestimate the importance of mobile penetration rates. 79% of the Chinese population uses a mobile phone and as the cost of smart or internet enabled phones and sim cards continues to decrease, the more accessible they become to both urban and rural populations.

Mobile growth in China has exploded over recent years and this is a trend mimicked throughout the ASEAN region. Mobiles are by far the most popular communication devices in Southeast Asia, with the number of active mobile connections across the region exceeding total population by a third.

It’s this pervasive mobile culture that has undoubtedly led to the significant uptake in internet users throughout Southeast Asia in the last two years.

However, due to the fact that most of those who remain digitally isolated in the region live in rural areas, it’s predicted that going forward, most new internet users will not just be mobile-first but mobile-only.

Taking note of this new digital normal, three years ago, branches of the Chinese government pledged more money for the development of mobile telecommunications infrastructure throughout areas of rural China.

They noted the need for more support from local policies and capital, more telecom construction and maintenance, more public-private partnerships, as well as stricter supervision of subsidies.

By 2020, 50,000 more villages will get access to broadband and 30 million rural households will enjoy upgraded services. While the end date has not yet been reached, the investment has already led to a boost in digitalisation throughout rural China.

It’s been reported that 60% of China’s rural internet users regularly indulge in online shopping and 47% of them are now using mobile payments – proving that it is possible to help those that have been left behind by the digital revolution to catch up.

This is the sort of policy, investment and long-term vision that is necessary for Southeast Asia to adopt if countries like Laos and Cambodia can ever hope to provide digital services to more than the third of their populations who currently have access.

When it comes to jobs, unfortunately the region has little choice but to embrace Industry 4.0 otherwise they won’t see benefits automation can bring amount in terms of productivity, flexibility and economic growth.

However, without the right legislation in place to ensure these changes take place for the benefit of the entire region, the low-level distrust of digital technologies and capabilities that already exists in some parts on the region will spread.

Collaboration is key throughout Southeast Asia. While every country in the bloc is unique, economic and technological prosperity in the region would not exist without the interconnected nature of the Association.

ASEAN leaders have already proven the value of coming together to develop region-wide regulations – seen in their collaborative commitment towards the fight against cybercrime.

The same needs to be replicated across the bloc to help those countries still largely dependent on legacy technologies to close the gap between the promise of Industry 4.0 and the reality of the current landscape.

China has worked to try and close the digital poverty gap which has been so pervasive throughout a number of its provinces – its information and communications technologies development index (IDI) value dropped from 5.60 to 5.17 between 2016-17.

While Southeast Asia already has a number of countries operating with strong digital economies, it’s important for those with legislative power to put forward a plan to help bring those who don’t in line with neighbours.

When it comes to digitisation, China still has a long way to go to tackle digital inequality. However, there is no denying that the country has undergone a significant digital revolution over the last decade.

Southeast Asia has a number of strong digital players within the bloc who should be acknowledged.

For those who are struggling to keep pace however, there are undoubtedly lessons they can take from the successes China have gained off the back of global digital transformation efforts.