五个主题十个关键的投资者问题

1、Global Research11 August 2020ThematicChinaFive themes, ten key investor questionsFive themes, 10 key questions investors are askingIn July we published our inaugural five-part report series: New decade, new drivers, new disruptions. Leveraging findings from our on-the-ground interviews with more tha

2、n 60 industry contacts across the retail, education, payments, restaurant and tech sectors, conversations with scores of consumers, as well as proprietary data from UBS Evidence Lab, the reports took a deep dive into five key trends that are accelerating in China. Over the past few weeks, we have di

3、scussed the report findings with over 150 investors around the world. Here are some of the key questions weve been getting.What are the key changes to the RT-Mart format since Alibaba integration?Which new retail model could prevail?What is the timeline for the full implementation of the unified QR

4、code?What is the impact of a unified QR standard on Ant Financial and Tencent beyond the payments business?Which verticals could monetize 5G, AI and the IoT the earliest?Which parts of the tech supply chain will benefit from data centre expansion?Whats the scale of New Infrastructure investment in A

5、I, 5G and the IoT?Whats the online K12 AST penetration rate in China?Whats the major competitive landscape in the K12 AST space?Which companies make the core components for restaurant robots in China? HYPERLINK /investmentresearch /investmentresearchNatalie CadeAnalyst HYPERLINK mailto:natalie.cade

6、natalie.cade+86-105-832 8966Sharon DingAnalyst HYPERLINK mailto:sharon.ding sharon.ding+852-2971 6284Dawei Wang, PhDAnalyst S1460120020002 HYPERLINK mailto:dawei-za.wang dawei-za.wang+86-105-832-8180Jiadeng Huang Associate Analyst S1460120060001 HYPERLINK mailto:jiadeng.huang jiadeng.huang+86-105-83

7、2 8042This report has been prepared by UBS Securities Asia Limited. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 21. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest

8、that could affect the objectivity of this report. Investors should consider this What is China 360?China 360 is a thematic research offering that provides a direct window into one of the worlds most dynamic economies, connecting the dots across macro and industry themes to help you navigate a rapidl

9、y-evolving landscape. Our team of experienced analysts deliver differentiated evidence-based thematic research that leverages the power of UBS Evidence Lab and UBSs market- leading research franchise. We also offer our clients access to local China knowledge and insights from established and emergin

10、g players, experts, entrepreneurs and everyday consumers to help them make better investment decisions.The China 360 TeamNatalie CadeHead of China 360Jiang ZhangSharon DingDawei WangQi XiaoXue HuangContents HYPERLINK l _TOC_250009 A quick recap of the five themes 3 HYPERLINK l _TOC_250008 Q1. What h

11、ave been the key changes to the RT-Mart store format since integration with Alibaba? 5 HYPERLINK l _TOC_250007 Q2. Which new retail model could prevail? 6 HYPERLINK l _TOC_250006 Q3. What is the timeline for implementation of a unified QR code and is COVID-19 impacting this? 8 HYPERLINK l _TOC_25000

12、5 Q4. What is the potential impact of a unified QR code on Ant and Tencent beyond payments? 9Q5. Which verticals could monetize 5G, AI and the IoT faster than others? 10 HYPERLINK l _TOC_250004 Q6. Which parts of the tech supply chain will benefit from the rapid expansion of data centres? 12 HYPERLI

13、NK l _TOC_250003 Q7. What is the scale of Chinas investment in AI, 5G and IoT under the New Infrastructure initiative? 13 HYPERLINK l _TOC_250002 Q8. Whats the K12 AST online penetration ratio? 14 HYPERLINK l _TOC_250001 Q9. Whats the competitive landscape in the K12 AST space? 16 HYPERLINK l _TOC_2

14、50000 Q10. Which companies make the core components for restaurant robots deployed in China today? 18We would like to acknowledge the contribution of Jiang Zhang, Grace Li and Xin Li to this research.A quick recap of the five themesTheme 1: New retailChinas new retail revolutionCOVID-19 is accelerat

15、ing the pace at which this decade could see a new retail revolution in China. The pandemic has presented an opportunity for new retail leaders to not only strengthen the stickiness of their existing base but to attract new users, including older shoppers for whom COVID-19 has delivered a much- neede

16、d digital IQ boost. We are still early into the new retail theme: penetration in tier 1-2 cities is less than 3% of all retail stores. We also expect long-term upside from small cities and ongoing digitisation of Chinas 6m+ mom-and-pop shops via B2B digital solutions, like Alibabas Lingshoutong (LST

17、), which can connect brands, stores and distributors in traditionally hard-to-reach areas.See also: China Internet. New retail evolution post Covid-19See also: Chinese Food Retail. New Retail fueling market consolidation; which is best positioned?Theme 2: Biometric paymentsCashless China: Entering a

18、 new phaseThis decade could see the proliferation of biometric payments in China amid potential macro and regulatory headwinds. Chinas digital payment landscape is maturing while the planned introduction of a unified QR code in 2021E could make way for new entrants. This could spur the leaders, Tenc

19、ent and Ant Financial (combined market share of over 90% at the end of 2019), to speed up the rollout. Biometric payment technology, specifically facial recognition, could boost offline transactions and mitigate the near-term regulatory risks. Ultimately, it could also be critical for the success of

20、 the internet giants fintech offerings. While the COVID-19 outbreak has put a temporary halt on the tech rollout, it is also a reminder of the hygiene benefits of automation and digitisation. This could aid adoption when the rollout resumes.See also: China Internet. Standardization of fintech could

21、invite competition against Tencent and AntTheme 3: Tech convergenceA smart decadeIn the past decade, 4G created substantial opportunities for new internet ecosystems in China, including shared mobility, online food delivery, mobile payment, video/live streaming and mobile games. In the new decade, a

22、rtificial intelligence (AI), 5G and the Internet of Things (IoT) will likely be the three main technological drivers, in our view. More importantly, we think the three technologies will likely converge to drive new applications from smart education to smart cities. China has the largest amount of AI

23、 data globally and roughly 7bn IoT connections, according to CAICT and Machina Research. This, and the potential to be among the first countries to complete 5G deployment, makes China well-placed for this convergence, in our view. This increases the likelihood of China being the first country in the

24、 world to develop new business models and applications. Beijings New Infrastructure plan is set to deliver an additional technology push by our estimates, some 40-50% of related investments are for 5G, AI and IoT-related projects.See also: APAC Strategy. Innovation and the launch of UBS China 360See

25、 also: Global Technology. China Tech Convergence: The road aheadTheme 4: Smart educationReshaping Chinas classroomsOnline after-school tutoring (AST) in the K12 segment in China could have an addressable market of US$100bn by 2025 (UBS-S estimates). While COVID-19 triggered a recent spike in new dem

26、and, overall users are now back to pre- pandemic levels amid persistent parental concerns about the online teaching format. Another key challenge for the sector is how to balance quality and profitabilitythe mainstream big class offers lower tuition fees but less interaction; the one-on-one model de

27、livers quality but is costly. For online education to really take off this decade, we believe wider adoption of AI- powered teaching tools, classes and adaptive learning will be key.See also: China Education. Embrace smart education: Readying infrastructure, technology, and consumersTheme 5: Restaur

28、ant automationThe changing face of diningAutomated restaurants remain largely a concept today, with only a few operational venues globally. However, signs of automation are increasingly evident in China, led by early frontrunners Haidilao, Country Garden, Alibaba and JD.com. The recent opening of Co

29、untry Gardens Foodom in Shunde is another sign of this themes growing momentum. We believe China is nearing an inflection point where rising wages, a growing need for greater efficiency and productivity, and technology advancements are set to drive the restaurant industry to seriously explore automa

30、tion this decade. Moreover, COVID-19 could act as a powerful accelerant of this burgeoning trend.See also Q series report: Is The Kitchen Dead?UBS Evidence Lab datasets inside the China 360 reportsAPAC Online Retail Migration Consumer SurveyChina After-School Education Consumer SurveyChina COVID-19

31、Impact Consumer PulseCheck SurveyChina Education Mobile App MonitorChina Grocery Delivery App Usage MonitorGlobal Handset Demand and Service Provider Intentions Consumer SurveyGlobal Markets Takeaway Consumer SurveyQ1. What have been the key changes to the RT- Mart store format since integration wit

32、h Alibaba?Before Alibabas investment, Sun Art operated like a traditional supermarket known for inexpensive products and a large selection of categories, including fresh and dry goods, FMCG, apparel, electronics and home appliances. But rising competition from ecommerce has made the broad category a

33、pproach less optimal for traditional retailers in terms of return on investment (ROI) and same-store-sales growth (SSSG). A more rational approach was to focus on fewer core product categories, such as fresh grocery, dry goods and FMCG, which could better utilise Sun Arts geographic footprint, cold

34、chain logistics, and supply chain strength. As such, Sun Art scaled down its categories and delegated non-strategic categories such as home appliances and electronics to Suning (another partner of Alibaba) given its expertise in this category.A new feel in new retail: As part of its new retail trans

35、formation, Sun Art initiated a facelift of its RT-Mart stores to give consumers a modern, technology- led feel similar to Alibabas Hema. For example, an overhead conveyor belt ferries delivery bags to the on-site warehousenot a common sight in a traditional supermarket.Digital integration and delive

36、ry: A key highlight of RT-Mart is its close integration with many of Alibabas technology and digital elements, such as new retail digital solution Taoxianda, delivery service Ele.me, and online traffic from Tmall Supermarket. More importantly, RT-Mart has implemented an enterprise resource planning

37、(ERP) system used by Hema to more effectively manage digital orders, supply chain, procurement, logistics and delivery. Because of the robust tech platform, RT-Mart is able to handle more digital orders, which UBS consumer analyst Christine Peng sees as a key driver for Sun Arts improving economics

38、as the rising online contribution could be more profitable due to lower operating costs. Additionally, by leveraging its offline assets, Sun Art could improve its store- level economics as online orders continue to climb.Technological improvements have also allowed RT-Mart to expand its delivery rad

39、ius to 5km (from 2km) for both its business and the consumer-end, which greatly improves the user experience and stickiness. On the to-consumer (2C) side, the number of consumers using RT-Marts 1-Hour Fresh Grocery delivery service hit 33m, with active consumers accounting for around a third at the

40、end of 2019. Daily orders for the one-hour service reached 640 per store with an average ticket size of about Rmb65 at end-2019. Compared with 2018, pre-revamp, orders more than doubled in 2019. On the to-business (2B) side, the number of business customers surpassed 550k at the end of 2019, with th

41、e active customer ratio exceeding 50% and an average ticket size of Rmb1k.In the foreseeable future, we expect further upside in both consumer and business utilisation due to a shared logistics initiative in collaboration with Tmall that started last May. In essence, tighter logistics integration wi

42、th Tmall could further expand RT-Marts delivery radius from 5km to 20km, which would see customers within the 5km radium enjoying one-hour delivery while those within the 20km radius enjoying same-day delivery, according to RT-Mart.Theme 1: New RetailWe spoke to a customer who frequents the first up

43、graded RT-Mart in Shanghai to get a feel for what consumers think of the new RT-Mart:Attractive store format and spacing. Given fewer product categories, aisle and shelf spacing are much wider. When coupled with new LED lighting, the overall in-store setup commands a modern look that is both refresh

44、ing and satisfying, according to the customer.Organised display of fresh groceries and meat. Unlike Hema, which uses fresh seafood as its selling point, RT-Mart has a wide selection of pork, beef and chicken, and some seafood, on display in organised cold aisles for consumers to choose from. The veg

45、etable and fruit sections are neatly displayed for easy identification. The in-store setup mirrors that of any modern food retailer in developed markets.Keeping consumers informed. RT-Mart includes a newly added Suning Appliance Zone (as mentioned, Sun Art delegated appliance sales to Suning after i

46、ts business model revamp), Taobao Xinxuan Zone focusing on Alibabas private labels, and Tmall Selection Zone highlighting best-selling FMCG products on Tmall. China 360 view: by adding an online presence in-store, this creates brand awareness in offline settings that could result in incremental onli

47、ne purchases.Cashier-less checkout becoming a standard. The only way to check out of the store is via a self-checkout kiosk, which largely mirrors the process at Hema. The purpose of this is to add a high-tech feel to the retail experience while achieving labour cost-savings as well as potentially g

48、athering biometric data (each checkout kiosk has a facial recognition camera) from consumers. China 360 view: by gathering more data, RT-Mart could further enhance the stickiness of its membership programme and drive higher repeat offline traffic.We spoke to a customer who frequents the first upgrad

49、ed RT- Mart in ShanghaiQ2. Which new retail model could prevail?There are ongoing debates around the business and revenue models of new retail. It remains to be seen which approach is more sustainable.We do not believe Chinas internet companies have an interest in expanding their business into low-m

50、argin offline retail and investing in the retail supply chain, which is highly capital-intensive and requires decades of experience in refinement.Ultimately, we believe they would prefer the low-capex new retail-enabling strategy already adopted by Tencent and Alibabas Taoxianda concept. This strate

51、gy not only allows them to cover a broader geographic footprint by leveraging existing bricks-and-mortar infrastructure and offline retailers expansive supply chain, but also generates significantly more consumer insights with minimal capex and upfront investments.UBS analyst Christine Peng therefor

52、e believes traditional retailers under the 3P model will expand faster given little upfront investment needed in online traffic acquisitions, although commissions of online transactions are charged by BABA on leveraging its data capabilities. In addition to Taoxianda, which provides online traffic,

53、Hema and T-Mall can create synergies with bricks-and-mortar retailers by further integrating supply chains, including merchandising and logistics facilities.Figure 1: Main new retail brands of leading companies Internet disrupters Conventional retail Alibaba & partners Tencent JD Meituan Yonghui Sun

54、 ArtBrandsHemaHexiaomaLingshoutongTaoxianda(Sun Art)Smart Retail7Fresh SupermarketMeituan VeggieSelf-owned & Super SpeciesRT-MartNew retail modelCompetitive advantageOffline store Front warehouse B2CPrivate labelsFirst-mover advantage and superior consumer experienceoffline store front warehouse B2C

55、private labelsSmaller Hema format; Ideal for lower tier citieseRTMMom & pop B2BEasy to set up; customisable service; AI / big data1.3mB2Bexisting offline retailersTaobaos traffic support800 storesO2O B2BTencents WeChat ecosystem2 citiesOffline store Front warehouse B2CPrivate labelsJD-owned and oper

56、ated, focuses on quality and logistic efficiency20 stores in 7Delivery-driven Front warehouse B2BLeverage delivery data to understand consumer demand4 cities (Beijing,Offline store Front warehouse B2CPrivate labelsTencent support and a strong supply chainOffline store Front warehouse B2CPrivate labe

57、lsExpansive offline footprint, coupled with traffic and tech support from AlibabaGeographic reach200 stores20 storesmerchants20 provincesacross 278 cities(Shenzhen, Fuzhou)cities (9 stores in Beijing)Shanghai, Shenzhen, Wuhan)900 stores in500 cities400 stores in200 citiesSKU breadth 5,000 - 7,0008,0

58、0010,000Varies bybrandVaries by brand5,000 - 8,0001,500 - 2,00010,000 - 15,00010,000 - 13,000Delivery30-minute1-hour deliveryefficiencySource: UBSVaries / uses Cainiao logistics1-hour deliveryVaries by30-minute30-minute30-minute1-hour delivery brandJoin us for our back-to-back China A-Share and Tele

59、com, Media & Internet (TMI) conferences from your location, via our live streaming and on-demand virtual platform.Our China TMI conference on 3-4 September will feature 40+ companies, visionaries, industry leaders and experts, pushing the innovation agenda across the TMI sector.Join China 360 on Thu

60、rsday, 03 Sept at HKT 16:00-16:50 for a discussion on:Chinas digital battleground in a post-COVID-19 worldJeffrey Towson, Professor of Investment, Peking University; specializing in digital China and the latest tech trendsModerator: Natalie Cade, Head of China 360, UBS Register hereQ3. What is the t