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群邑：2023年中国广告市场洞察报告（英文版）（16页）.pdf

FEBRUARY 2023A Report From GroupM,WPPs Media Investment GroupCHINA SPOTLIGHTFEBRUARY 2023 CHINA SPOTLIGHT I TABLE OF CONTENTS2MARKET PERSPECTIVEAN ECONOMIC REBOUNDLOOKING AHEAD0405MEDIA&ENTERTAINMENTAUTOMOTIVE SALESLUXURY SALES13TABLE OFCONTENTSMARKETER TAKEAWAYS14070911CONTACT15YEAROF THERABBIT2023FEBRUARY 2023 CHINA SPOTLIGHT I MARKET PERSPECTIVEMARKET PERSPECTIVEGROUPM GREATER CHINA CEO&WPP GREATER CHINA CEOPATRICK XUThe last three years have been some of the most challenging andinspiring of my career.Throughout the successive pandemic-relatedlockdowns and resulting shifts in economic activity and human behavior,GroupM and its clients have adapted and invested to come out strongerand better prepared for the years ahead.This agility and vibrancy have been amazing to watch as our GroupMpeople have rebounded from a very difficult December when manypeople personally experienced the impacts of a large wave of COVID-19infections.In January,I,along with my colleagues and hundreds ofmillions of other Chinese,traveled to celebrate the Chinese New Year(CNY),ushering in a new year of prosperity and revitalization.In a signof how quickly China is returning to life beyond the zero-COVID policy,the Ministry of Culture and Tourism reported that the number of tripsduring 2023 CNY increased by 23.1%over 2022 and revenue fromdomestic tourism increased by 30%.Now back in our offices,we are looking forward to a year of growth.GroupMs advertising forecast for China calls for 6.3%growth in 2023with further 6.4%growth in 2024.Those increases will be especially feltin performance marketing,e-commerce and social,including socialcommerce where we continue to invest in strengthening our talent andcapabilities in service of our clients.Last year we added more than 3,000certificates from partner platforms such as ByteDance,Baidu,Alibabaand Tencent,an increase of 56%over 2021.Expertise in these platformsis pivotal as all four rank among the top 10 global sellers of advertising.More than ever,our work with these partners and our clients revolvesaround data and technology,a capability GroupM has strengthenedthrough the launch of Choreograph in China.The talent and bestpractices available to clients through Choreograph are being put to workfor local and international clients in China,including as part of recentlyrenewed relationships with Nike,Xiaomi,Dyson and Pernod Ricard.I look forward to continuing our work to make advertising better forpeople in 2023.Thank you,Patrick Xu4AN ECONOMIC REBOUNDEmerging from significant uncertainty during the tail end of 2022,the UN and IMFraised expectations for Chinas economy in January.The IMF now predicts Chinas economy will growFEBRUARY 2023 CHINA SPOTLIGHT I AN ECONOMIC REBOUNDSome large international financial institutions have also lifted their estimates on Chinas economic growth in 2023.Morgan Stanley increased its China rating from 5%to 5.7%,while Goldman Sachs Group increased its rating from 4.5%to 5.5%.According to the Securities Times,January achieved a record-breaking$20.8 billion USD net inflowof foreign capital into Chinas A shares,making it both the greatest net inflow month since 2014 and the first monthly net inflow to exceed$14.7 billion USD.In contrast with most markets,consumer expenditure makes up a smaller percentage of total economic activity in China;however,after lower consumption in 2022(0.2cline from 2021)and a solid build-up of household savings(up 80%over 2021 according to the Peoples Bank of China),consumer expenditure will be a key factor in Chinas recovery.5.2%in 2023,reboundingfrom moremuted2.9%growth in 2022.Source:China National Bureau Of StatisticsChina GDP Growth5FEBRUARY 2023 CHINA SPOTLIGHT I AN ECONOMIC REBOUNDBelow we look at the recent and expected performance of a number of product and service categories to parse what 2023 is likely to bring.MEDIA&ENTERTAINMENTAUTOMOTIVESALESLUXURY SALESSource:National Bureau of Statistics,GroupM Includes Automotive sales,Excludes CateringChina Retail and E-commerce Sales6MEDIA&ENTERTAINMENTFEBRUARY 2023 CHINA SPOTLIGHT I AN ECONOMIC REBOUND While successive years of pandemic-related interruptions to film production have yet to play out fully,there are positive signs in the recent performance of the Chinese box office as people return to activities outside the home.The National Film Bureau reported a 2023 CNY box office increase of 11.4%over last years figures.The 2023 performance ranked second only to 2021s holiday performance in terms of box office revenue.For the monthof January,box office receipts exceeded10 billion($1.5 billion)according to the China Film Administration.China 2022 Per CapitaExpenditureSource:National Bureau of StatisticsOther Goods and Services2.4%Food,Tobacco and Liquor30.5%Residence24%Transportation and Telecommunication13%Health Care and Medical Services8.6%Clothing5.6%Household Facilities,Articles and Services5.8ucation,Culture&Recreation10.1%Per capita,Chinese consumers spent 10.1%of total expenditure on education,culture and recreationin 2022,down from 11.7%in 2019 per the National Bureau of Statistics,suggesting there is room for continued recovery.10.1%of total expenditure on education,culture and recreationin 2022,down from Chineseconsumersspent11.7%in 2019.The CNY box office included international hits such as Avatar:The Way of Water,which has surpassed1.4billion($200 million)in total revenue,and the long-awaited Chinese prequel The Wandering Earth II,which has earned more than 3.5billion($500 million)since its launch,including releases in the U.K.and U.S.China Box OfficeSource:Maoyan Piaofang7FEBRUARY 2023 CHINA SPOTLIGHT I AN ECONOMIC REBOUND The Chinese box office is back.Only two months into 2023,IMAX has delivered record-breaking results with its Chinese New Year slate and a strong performance inChina for Avatar:The Way of Water”RICH GELFONDCEO IMAX8AUTOMOTIVE SALESFEBRUARY 2023 CHINA SPOTLIGHT I AN ECONOMIC REBOUNDAuto sales(as well as sales of other big-ticket purchases like property)were hindered by COVID-19 lockdowns during 2020 and 2022.Data for auto sales in December of 2022(as measured in total Yuan)show that sales reached their highest point of the last four years totaling 5.1 billion($762 million),up 8.1%over the 2019 December figure.However,some sales may have been pulled forward into December ahead of expiring tax cuts for combustion vehicles and subsidies for electric vehicle(EV)purchases(which lapsed on the first of January 2023).EV sales in China,which had grown 90%in 2022 according to the China Passenger Car Association(CPCA),fell 6.3%in January of 2023.China Auto SalesSource:National Bureau of StatisticsWhile Tesla is perhaps the best-known maker of EVs outside of China,it faces considerable competition from Chinese EV manufacturers,such as BYD,no doubt a factor in its price discounting strategy in recent months.In 2022,less than a quarter of Teslas 573 billion($81.4 billion)in revenue came from China and fewer than 56,000 vehicles were sold in China in December,according to the CPCA.BYD sold nearly twice that number of pure electric vehicles,111,900,as well as 122,700 plug-in hybrid vehicles.Ford,for whom China is the second largest market after the U.S.,saw a decline in sales in 2022.Total retail sales in China(includingall vehicle types)fell to 0.5 million units from 0.6 million in 2021,representing a 2.1%share of the total Chinese market(per Fords estimates).Ford spoke in a recent earnings call about taking a focused approach to the Chinese market,focusing on the Lincoln brand,and prioritizing a transition to EVs.8.1%over the December 2019 figureDecember auto sales up910FEBRUARY 2023 CHINA SPOTLIGHT I AN ECONOMIC REBOUND10We see Asia as the region with the greatest growth prospects in the medium term.Particularly in China where we will open a new chapter with our Mercedes-Benz heavy-duty truck,made in China for China.”KARL DEPPENPresident&CEO,Daimler TruckChinese domestic brands such as BYD,Geely,Changan and SAIC make up more than 40%of the market according to CPCA,while German and Japanese brands each make up roughly a fifth of the market.BMW sold 199,112 vehicles in China in the fourth quarter of 2022,a 12.7%increase over the previous year.Toyota units sold,across its Toyota and Lexus brands,were down 8.8%in the fourth quarter of 2023,but up modestly at 1.7%for the April to December period.As supply chain issues and chip shortages ease amid the pandemic recovery,automotive sales(and advertising)are widely expected to pick back up throughout 2023.For Chinese auto buyers,who have been shifting to purchase more SUVs rather than sedans,EVs are expected to maintain their appeal.Across all city tiers,households have shown a willingness to spend on automobiles according to recent research from GroupM Knowledge,with households in Tier 7-10 cities spending an average of 16.5 months income on an auto versus an average of 14.7 months those in Tier 4-6 cities and 13.1 months for Tier 1-3 cities.The research also showed a greater willingness among the young to choose more expensive automobiles than middle-aged buyers.LUXURY SALESFEBRUARY 2023 CHINA SPOTLIGHT I AN ECONOMIC REBOUNDChina has long been a source of luxury sales;however,pre-pandemic,many of those sales occurred in France and Europe more broadly as Chinese travelers visited retail stores there.With travel curbed both in China and across many international destinations for luxury shoppers,brands shifted to supplying demand domestically,with many maisons opening retail outlets in Tier 1 cities or local shopping destinations such as Hainan,where Chinese consumers have flocked since the end of the governments zero-COVID policy.Going forward,luxury brands are anticipating a return to European travel(recently buoyed by American buyers taking advantage of a strong U.S.dollar),albeit with an expectation that the Chinese domestic market will remain a larger source of revenue versus pre-pandemic.We have every reason to be optimistic on the Chinese market.”BERNARD ARNAULT,LVMH Chairman&CEOIts an encouraging start of the year in China.”JEAN-MARC DUPLAIX,Kering CFOLVMH spoke in its end of year earnings call about the sharp decline in China in December leading to a surplus of inventory,but also said it saw“green shoots”inChina for the year ahead and would continue investing.Bernard Arnault,LVMHs Chairman and CEO,noted that stores in Macau were quite full and that the company was prepared for the return of customers to stores worldwide,including in France.And while it will take some time for international revenue from Chinese tourists to reach 2019 levels again,the domestic demand is helping bridge the gap with Arnault sayingits Chinese market is bigger now than in 2019.11FEBRUARY 2023 CHINA SPOTLIGHT I AN ECONOMIC REBOUNDHermes,which opened or renovated stores in Zhengzhou,Shanghai Qiantan and Hong Kong in 2022,noted strong second quarter and fourth quarter sales(the latter despite lockdowns across China in November).Part of the experienced and expected growth,according to Hermes CEO Axel Dumas,is the ascendancy of a younger and more affluent Chinese middle class.Finally,Richemont commented in their recent earnings note on a considerable fourth quarter impact(-24%)on sales in Chinaas a result of COVID-19 cases and staff unavailability leading to the temporary closures of some boutiquesat the end of 2022.Richemont,like its peers,has said they are seeing a strong retail rebound early in 2023.Kering noted that lockdowns in China during the fourth quarter contributed to Guccis sales decline of 14%in directly operated stores.Sales for all brands in Asia Pacific were down 30%in the quarter.The company also noted that 2023 fourth quarter tourism in Western Europe was still 20low pre-pandemic levels.However,the company struck a positive note on an earnings call regarding trends emerging from the beginning of 2023,saying that performance has been“better than expected initially,and we clearly observed.a strong rebound of purchases in Greater China”as well as from local destinations open to Chinese tourists.While it is difficult to extrapolate from one month to the rest of the year,the readiness of consumers and government authorities to return to greater levels of luxury consumption is being touted by luxury companies as a reason to be optimistic.Asia Pacific Luxury SalesSource:Company Filings,GroupM1213FEBRUARY 2023 CHINA SPOTLIGHT I LOOKING AHEADThe pandemic has changed the work,personal lives and media behaviors of consumers,as well as the strategic priorities and ways of working for companies.Now,it is crucial that all these changes are incorporated into corporate branding and marketing strategies.Those strategies are shifting from last years mindset of protecting the bottom line to an embrace ofthe economys rejuvenation and an opportunity to take market share.GroupM Knowledge recently conducted a Marketing Confidence survey,the result of which found that over 80%of brands in China will maintainor increase their marketing budget for 2023.LOOKING AHEADBusiness sentiment is taking its cues from a government focused on growth and economic dynamism.China has taken several measures to improve the liquidity of property developers,a sector weighing on consumer confidence over the last year.In addition,the government has signaled an easing of regulatory scrutiny and fines for its homegrown tech giants and a return to granting video game licenses,all signs of increasing economic boosterism.It is important to note that the global economic stage is not unimpacted by ongoing tensions due to the war in Ukraine and U.S./China relations.There are a number of product categories,including semiconductors,telecommunications and aerospace,among others,that will remain challenged.That said,the current environment appears set to foster business growth.China Ad Revenue GrowthSource:GroupM6.3%is expectedin 2023,a sharp acceleration from adecline of Chinese ad revenue growth of-0.6%in 202214Publishers have seen an influxof investment from local brands lookingto reconnect with their local audiences.International brands should be equally proactive if they dont want to besqueezed out.INTRODUCTION THE STATE OF RETAIL MARKET GROWTH GEOGRAPHIC TRENDSOOH media is still recovering to pre-pandemic levels,and the increased digitization of the medium means new opportunities forcross-channel measurement and engagement.Opportunities are presenting themselves to execute innovative OOH campaigns in areas where eager consumers are set tospend.1234Clients should work closely with their agency partners to understand how consumer sentiment is changing as life moves forward.Consumer demands are evolving and priorities are shifting,so the assumptions that underlie current media plans may need to be rethought.Retail media exploded during the pandemic and is here to stay.Now is the time to evaluate how emerging channels fit into your media mix and find the right balance between brand and performance goals.DECEMBER 2022 THIS YEAR NEXT YEAR IGLOBAL END-OF-YEAR FORECASTChinese consumers are emerging out of the countrys zero-COVID policy with new media habits anda changed outlook on how they experience the world around them,including how they engage with brands.Given the physical and mental strain brought on by the pandemic and the subsequent excitement that re-openings can inspire,its essential for marketers to present positivity and optimism at each consumer touchpoint.MARKETERTAKEAWAYSFEBRUARY 2023CHINA SPOTLIGHTIMARKETER TAKEAWAYSin USD millions20192020202120222023E2024E2025E2026E2027ETV$11,686.8$6,357.7$6,764.7$6,400.4$6,213.1$6,443.2$6,491.8$6,561.1$6,681.7 Growth-4.7%-45.6%6.4%-5.4%-2.9%3.7%0.8%1.1%1.8%Share10.6%5.5%4.9%4.6%4.2%4.1%3.9%3.8%3.6%Audio1,831.4715.2732.9709.7682.8688.5693689.2685.2 Growth-8.2%-61.0%2.5%-3.2%-3.8%0.8%0.7%-0.6%-0.6%Share1.7%0.6%0.5%0.5%0.5%0.4%0.4%0.4%0.4%Newspapers796.5585.8532.1484.5446.3443.5414384.4354.9 Growth-10.4%-26.5%-9.2%-8.9%-7.9%-0.6%-6.7%-7.1%-7.7%Share0.7%0.5%0.4%0.4%0.3%0.3%0.3%0.2%0.2%Magazines432.3325.2315.3303.2296.3289.7287.7285.7283.8 Growth-5.9%-24.8%-3.1%-3.8%-2.3%-2.3%-0.7%-0.7%-0.7%Share0.4%0.3%0.2%0.2%0.2%0.2%0.2%0.2%0.2%Outdoor Cinema9,067.97,484.09,490.76,238.66,238.06,858.57,467.28,075.48,714.4 Growth-11.4%-17.5&.8%-34.3%0.0%9.9%8.9%8.1%7.9%Share8.2%6.4%6.8%4.5%4.3%4.4%4.5%4.6%4.7%Digital86,938.6101,043.1120,871.5123,706.8132,607.5141,129.5149,753.5158,619.7167,940.1 Growth34.8.2.6%2.3%7.2%6.4%6.1%5.9%5.9%Share78.5.7.1.7.5.6.7.8.9%Total$110,753.6$116,511.0$138,707.2$137,843.3$146,484.0$155,852.8$165,107.2$174,615.6$184,660.0 Growth22.6%5.2.1%-0.6%6.3%6.4%5.9%5.8%5.8%GroupM China Ad Revenue ForecastGLOBAL PRESIDENT,BUSINESS INTELLIGENCEKATE SCOTT-DAWKINSCONTACTHEAD OF GROUPM KNOWLEDGE AND DATA CENTER,GROUPM CHINAZOD FANGGROUPM GREATER CHINA CEO&WPP GREATER CHINA CEOPATRICK XUFOR DATA INQUIRIESplease write:153 World Trade Center175 Greenwich StreetNew York,NY 10007A WPP CompanyGroupM is the worlds leading media investment company with a mission to create a new era of media where advertising works better for people.Responsible for more than$60 billion in annual media investment,according to COMvergence,the company innovates,differentiates,and generates sustained value for clients wherever they do business.GroupMs portfolio includes agencies Mindshare,Wavemaker,EssenceMediacom and mSix&Partners,as well as Choreograph(Data&Technology),GroupM Nexus(Cross-Channel Performance&Activation),and GroupM Investment.All rights reserved.This publication is protected by copyright.No part of it may be reproduced,stored in a retrieval system or transmitted in any form,or by any means,electronic,mechanical,photocopying or otherwise,without written permission from the copyright owners.Every effort has been made to ensure the accuracy of the contents,but the publishers and copyright owners cannot accept liability in respect of errors or omissions.Readers will appreciate that the data is as up-to-date only to the extent that their availability,compilation and printed schedules will allow and are subject to change.Photos on Unsplash,Pexels,&Pixabay16

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贸发会议：2022 年太平洋数字经济报告（131 页）.pdf

Layout and Printing at United Nations,Geneva191116(E)-Placeholder info 2022-0000UNCTAD/DER/2022United Nations publication placeholder infoUNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENTTowards Value Creation and InclusivenessPACIFIC EDITIONDigital Economy Report2022UNCTADUNITED NATIONSDIGITAL ECONOMY REPORT:PACIFIC EDITION 2022:TOWARDS VALUE CREATION AND INCLUSIVENESSPrinted at United Nations,Geneva2229476(E)January 2023 461UNCTAD/DTL/ECDE/2022/4ISBN 978-92-1-113084-3UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENTTowards Value Creation and InclusivenessPACIFIC EDITIONDigital Economy Report2022Geneva,2023II 2023,United NationsAll rights reserved worldwide Requests to reproduce excerpts or to photocopy should be addressed to the Copyright Clearance Center at.All other queries on rights and licences,including subsidiary rights,should be addressed to:United Nations Publications405 East 42nd StreetNew York,New York 10017United States of AmericaEmail:publicationsun.orgWebsite:https:/shop.un.org/The findings,interpretations and conclusions expressed herein are those of the authors and do not necessarily reflect the views of the United Nations or its officials or Member States.The designations employed and the presentation of material on any map in this work do not imply the expression of any opinion whatsoever on the part of the United Nations concerning the legal status of any country,territory,city or area or of its authorities,or concerning the delimitation of its frontiers or boundaries.Mention of any firm or licensed process does not imply the endorsement of the United Nations.This publication has been edited externally.United Nations publication issued by the United Nations Conference on Trade and DevelopmentUNCTAD/DTL/ECDE/2022/4 ISBN:978-92-1-113084-3eISBN:978-92-1-002336-8Sales No.E.22.II.D.52TOWARDS VALUE CREATION AND INCLUSIVENESSIIINoteWithin the United Nations Conference on Trade and Development(UNCTAD)Division on Technology and Logistics,the E-Commerce and Digital Economy Branch carries out policy-oriented analytical work on the development implications of information and communications technologies(ICTs)and e-commerce.It is responsible for the preparation of the Digital Economy Report as well as thematic studies on ICT for development.The Branch promotes international dialogue on issues related to ICTs for development and contributes to building developing countries capacities to measure the information economy and to design and implement relevant policies and legal frameworks.It also monitors the global status of e-commerce legislation(UNCTAD Cyberlaw Tracker).Since 2016,the Branch has coordinated a multi-stakeholder initiative entitled eTrade for all(etradeforall.org),which aims to improve the ability of developing countries,particularly least developed countries(LDCs),to use and benefit from e-commerce.The initiative is also behind the UNCTAD eTrade Readiness Assessment and eTrade for Women programmes,launched respectively in 2017 and in 2019.This report is published under the Pacific Digital Economy Programme,a joint initiative implemented by the United Nations Capital Development Fund(UNCDF),the United Nations Development Programme(UNDP)and UNCTAD,in support of the development of inclusive digital economies in the Pacific.The Pacific Digital Economy Programme is supported by the Government of Australia.The views expressed in this publication do not necessarily represent those of UNCDF,UNDP,or the Government of Australia.In this report,the terms country/economy refer,as appropriate,to territories or areas.The designations of country groups are intended solely for statistical or analytical convenience,and do not necessarily express a judgment about the stage of development reached by a particular country or area in the development process.Unless otherwise indicated,the major country groupings used in this Report follow the classification of the United Nations Statistical Office.These are:Developed countries:the member countries of the Organisation for Economic Co-operation and Development(OECD)(other than Chile,Mexico,the Republic of Korea and Trkiye),plus the European Union member countries that are not OECD members(Bulgaria,Croatia,Cyprus,Lithuania,Malta and Romania),plus Andorra,Liechtenstein,Monaco and San Marino.Countries with economies in transition refers to those in south-east Europe and the Commonwealth of Independent States.Developing economies in general are all the economies that are not specified above.For statistical purposes,the data for China do not include those for Hong Kong Special Administrative Region of China(Hong Kong,China),Macao Special Administrative Region of China(Macao,China)or Taiwan Province of China.An Excel file with the main country groupings used can be downloaded from UNCTADstat at:http:/unctadstat.unctad.org/EN/Classifications.html.References to Latin America include the Caribbean countries,unless otherwise indicated.Reference to Pacific small island developing States(SIDS)include the following United Nations Members States:Fiji,Kiribati,Marshall Islands,Federated States of Micronesia,Nauru,Palau,Papua New Guinea,Samoa,Solomon Islands,Tonga,Tuvalu,Vanuatu and,for the purposes of this report,Timor-Leste;as well as territories and States that are not members of the United Nations:American Samoa,Cook Islands,French Polynesia,Guam,New Caledonia,Northern Mariana Islands and Niue.References to sub-Saharan Africa include South Africa,unless otherwise indicated.References to the United States are to the United States of America,and to the United Kingdom are to the United Kingdom of Great Britain and Northern Ireland.The term“dollars”($)refers to United States dollars,unless otherwise indicated.The term“billion”signifies 1,000 million.IV DIGITAL ECONOMY REPORT PACIFIC EDITION 2022The following symbols may have been used in tables:Two dots(.)indicate that data are not available or are not separately reported.Rows in tables have been omitted in those cases where no data are available for any of the elements in the row.A dash()indicates that the item is equal to zero or its value is negligible.A blank in a table indicates that the item is not applicable,unless otherwise indicated.A slash(/)between dates representing years,e.g.2021/22,indicates a financial year.Use of an en dash()between dates representing years,e.g.20212022,signifies the full period involved,including the beginning and end years.Annual rates of growth or change,unless otherwise stated,refer to annual compound rates.Details and percentages in tables do not necessarily add up to the totals because of rounding.TOWARDS VALUE CREATION AND INCLUSIVENESSVPrefaceDigital transformation is under way in the Pacific and presents both opportunities and challenges for the region.Improvements in digital connectivity across the region are converging with growing opportunities for e-commerce,digital payments and digital trade.For some businesses,electronic commerce is opening access to new domestic,regional and international markets.This is especially important for the Blue Pacific Continent to overcome the tyranny of distance inherent in being isolated from global trade networks.The COVID-19 pandemic magnified the potential of digital technologies to provide solutions to socioeconomic challenges with new ways of working and communicating emerging across the region.In some countries,the pandemic was a catalyst that sped up long-planned digital initiatives.New mobile money and electronic payment systems accelerated financial inclusion across the region and businesses began turning to online platforms to market and sell their products.At the same time,we are reminded of the economic and social divides that may be exacerbated by increased digitalization,entrenching both leaders and followers and generating uneven social and economic progress.The digital economy should reduce,not widen,existing income and wealth disparities.The current wave of technological change is unprecedented in terms of speed,scope and scale,and presents the Pacific with a unique opportunity to deliver inclusive digital development that leaves no one behind.In this context,I am pleased to present the 2022 Pacific Edition of the Digital Economy Report,which aims to strengthen the understanding of digital transformation in the Pacific.While there is no one-size-fits-all solution to address the unique digital challenges faced by the Pacific region,the report provides an overview of the current context and explores how policymakers and local,regional and international organizations can leverage digital technologies for socioeconomic development.The ongoing adoption of digital technologies in the Pacific is driving complex outcomes that require policy planners and regulators to adopt flexible,adaptive and collaborative approaches.To tap into the tremendous potential of digital transformation in the region,new digital governance models will be needed,as well as the development of comprehensive strategies that build resilience,bridge digital divides and promote economic growth.Inclusion should be placed at the centre of this discussion;all people and sectors should benefit from the digital economy,including rural populations,women,youth and persons with disabilities.This Pacific Edition of the Digital Economy Report provides a nuanced analysis of the complexities involved in bridging digital divides,as well as important considerations related to value creation and capture in the digital economy.It concludes with a call to move towards a more holistic,coordinated approach to building inclusive digital economies in the region.It identifies future pathways and recommendations to build on,in alignment with national and regional mechanisms and strategies.I hope that the Pacific Edition of the Digital Economy Report provides valuable inputs into relevant policy processes.UNCTAD is committed to supporting the process of making digitalization work for sustainable development in the Pacific,in close collaboration with Member States and our partners in the Pacific Digital Economy Programme.Shamika N.SirimanneDirectorDivision on Technology and LogisticsUNCTADVI DIGITAL ECONOMY REPORT PACIFIC EDITION 2022AcknowledgementsThe first“Digital Economy Report:Pacific Edition 2022”was prepared under the overall guidance of Torbjrn Fredriksson,UNCTAD Head,E-commerce and Digital Economy Branch,by a team comprising Thomas van Giffen,Dominic Leong and Marcin Skrzypczyk.The Report benefited from major substantive inputs provided by Sven Callebaut,Simon Lacey and Alex Reddaway.Additional inputs were contributed by Galib Ibn Anwarul Azim,Nadira Bayat,Laura Cyron,Andrea Giacomelli,Shawn Hunter,Martine Julsaint Kidane,Daniel Ker,Jayvee Santos,Daniel Vertesy and Andrew Williamson.UNCTAD greatly appreciates additional inputs from the United Nations Capital Development Fund,the United Nations Development Programme,and the Pacific Islands Forum Secretariat.UNCTAD is grateful to the International Telecommunication Union for its support in the provision of relevant statistics.The cover,additional graphics and desktop publishing were designed by Leslie Leyva.Infographics were done by Natalia Stepanova.Marnie McDonald edited the report.Clment Lachenal-Chevallet provided administrative support.Financial support from the Government of Australia is gratefully acknowledged,with special recognition to the team covering the Pacific region.This publication is supported by the Pacific Digital Economy Programme.The Pacific Digital Economy Programme is jointly administered by the United Nations Capital Development Fund,the United Nations Conference on Trade and Development and the United Nations Development Programme and financially supported by the Government of Australia.TOWARDS VALUE CREATION AND INCLUSIVENESSVIIContentsNOTE.IIIPREFACE.VACKNOWLEDGEMENTS.VIACRONYMS AND ABBREVIATIONS.XIEXECUTIVE SUMMARY.XIICHAPTER I.SETTING THE SCENE.01A.An emerging digital economy.03B.Challenges to digital development in the Pacific.04C.Small trade-dependent economies.05CHAPTER II.DIGITAL INFRASTRUCTURE AND ICT USE IN THE PACIFIC.09A.Data transmission and storage.111.International connectivity.112.Middle-mile connectivity.163.Last-mile connectivity.18B.ICT affordability and use.211.Telephony and Internet.212.Smartphone adoption and affordability.233.Internet use.264.Digital gender divides.27C.The Pacific data gap.31CHAPTER III.DIGITAL PLATFORMS,E-COMMERCE AND VALUE CREATION AND CAPTURE.37A.The digital economy and development.391.The digital economy.392.Value creation in the digital economy.393.Channels for value creation in developing countries.43B.Digital platforms in the Pacific.461.The platform economy.462.Digital platforms in the Pacific.473.Digital payments platforms.50C.E-commerce in the Pacific.521.Regional trends.522.Emerging business models.553.E-commerce development ladder.58D.Value creation and capture in the Pacific.601.The role of global platforms.602.Local e-commerce platforms.623.Policy areas for value creation and capture.65CHAPTER IV.BUILDING AN ENABLING ENVIRONMENT FOR E-COMMERCE AND THE DIGITAL ECONOMY.69A.Building an inclusive digital economy.711.Building blocks for an inclusive digital economy.71VIII DIGITAL ECONOMY REPORT PACIFIC EDITION 20222.E-commerce readiness in the Pacific region.72B.The Pacific E-Commerce Initiative.771.National e-commerce readiness assessments and strategy development.782.Regional baseline assessment and strategy.79C.The role of regional and global initiatives and partners.821.Lessons from other regional groupings.822.E-commerce support programmes.823.Regional coordination.834.Continued donor support.845.The role of the private sector.85CHAPTER V.THE WAY FORWARD.87A.Capacity-building for digitalization.891.Digital infrastructure.892.Digital skills and entrepreneurship ecosystem.913.Digital economy statistics.914.Research on the digital economy.925.National policymaking.93B.Digital governance.941.Value creation and capture.942.Gender divide.95C.Regional cooperation and international support.95FIGURESFigure I.1.Population size and access to international markets,all countries,Caribbean countries and Pacific SIDS.05Figure II.1.The submarine cable network connecting Pacific SIDS(as of November 2022).11Figure II.2.International bandwidth per Internet user,global,by country grouping,Pacific SIDS,selected years.15Figure II.3.Population coverage of mobile network technology(2G,3G and 4G),by country grouping and selected Pacific SIDS,2021 or latest available year.18Figure II.4.Fixed broadband connection speeds,by country grouping and selected Pacific SIDS,2022.20Figure II.5.Mobile cellular and Internet subscription rate,by type,country grouping and selected Pacific SIDS,2021 or latest available year.22Figure II.6.Price of broadband as a share of monthly GNI per capita,by country grouping and selected Pacific SIDS,2021.24Figure II.7.Smartphone adoption,global and selected Pacific SIDS,selected years.25Figure II.8.Cost of the cheapest available smartphone as a share of monthly GNI per capita,by country grouping,Australia,New Zealand and selected Pacific SIDS,2022.26Figure II.9.Progress against Broadband Commission for Sustainable Development targets forbroadband-Internet user penetration,by country grouping and selected Pacific SIDS,selected years.28Figure II.10.Gender parity score for device ownership,by country grouping and selected Pacific SIDS,2021 or latest available year.29Figure II.11.Gender parity score for Internet use by country grouping,selected years.29ENDNOTES.104REFERENCES.110TOWARDS VALUE CREATION AND INCLUSIVENESSIXFigure II.12.Female and male ad audience of Facebook as ratio of female and male population(per cent)and gender parity score,Pacific SIDS and territories,2022.30Figure II.13.Availability of data on ICT access and use,by selected country grouping and Pacific SIDS.33Figure II.14.Data availability for selected ICT indicators and periods,by selected country grouping.34Figure II.15.Data availability for selected ICT indicators,2020 or 2021,by selected country grouping 35Figure III.1.Online shopping before and during the COVID-19 pandemic,by level of development.40Figure III.2.The data pyramid.41Figure III.3.Share of ICT goods in total merchandise trade,by country grouping and selected Pacific SIDS,2021 or latest available year.44Figure III.4.Share of digitally-deliverable services in total services exports,by country grouping,20062020.45Figure III.5.Share of digitally-deliverable services in total services exports and imports,Pacific SIDS,2021 or latest available year.46Figure III.6.Sales by major consumer-focused e-commerce businesses before and during the COVID-19 pandemic.47Figure III.7.Snapshot of types of digital platforms in the Pacific.48Figure III.8.Facebook user accounts,by selected country groupings and Pacific SIDS,2022.54Figure III.9.Global e-commerce development ladder.59Figure III.10.The e-commerce development ladder adapted for Pacific small island developing states.60Figure IV.1.The eTrade for all policy areas.71Figure IV.2.The Pacific Regional E-commerce Strategy and Roadmap governance framework.80BOXESBox II.1.Damage to submarine cables:The case of Tonga.14Box II.2.Initiative for a regional Internet exchange point in the Pacific.17Box II.3.Smartphone affordability and the role of telecom operators.25Box III.1.Social media provides an avenue for online business for microenterprises in Solomon Islands.53Box III.2.Makeki Online leverages social media in Samoa to grow customer base for standalone web shop.56Box III.3.International remittances drive new e-commerce business models in the Pacific.57Box IV.1.Case study:Improvements in the Solomon Islands digital ecosystem since the 2018 eTrade Readiness Assessment.73Box IV.2.The Pacific Aid for Trade Strategy.78Box IV.3.Framework for Pacific Regionalism.80Box IV.4.The Pacific Digital Economy Programme.85TABLESTable II.1.Number of submarine cables and number of inhabited islands with Internet connectivity in Pacific SIDS,by type,September 2022.13Table II.2.Number of Internet exchange points per country,by country grouping(average)and selected Pacific SIDS,April 2022.16Table II.3.Number of colocation data centres,by country grouping and selected Pacific SIDS,2022.17Table III.1.Number of hotels on B for selected Pacific SIDS,September 2022.50Table IV.1.Status of legislation in key areas related to the digital economy,Pacific SIDS,2022.75Table IV.2.Year of the most recent e-commerce assessments and strategies in Pacific SIDS.79X DIGITAL ECONOMY REPORT PACIFIC EDITION 2022ANNEX TABLESTable 1.Selected geographical and demographic characteristics of Pacific SIDS,latest available year.98Table 2.Selected economic characteristics,by country grouping and Pacific SIDS,latest available year.99Table 3.Value added by sector,tourism expenditure and trade openness,by country grouping and Pacific SIDS,selected years.100Table 4.Submarine cables in Pacific SIDS and territories,by deployment scope,route,ownership and funding(20 September 2022).101Table IV.3.Pacific Regional E-commerce Strategy and Roadmap:priority areas and strategic outputs.81Table V.1.Overview of selected indicators on digital infrastructure and ICT access and use,by selected country grouping and Pacific SIDS,20172020.90TOWARDS VALUE CREATION AND INCLUSIVENESSXIADBAsian Development BankASEANAssociation of Southeast Asian NationsASYCUDAAutomated System for Customs DataB2Bbusiness-to-businessB2Cbusiness-to-consumerCARICOMCaribbean CommunityCOVID-19coronavirus diseaseGDPgross domestic productGNIgross national incomeGSMAGlobal System For Mobile Communications AssociationICTinformation and communications technologyIDESInclusive Digital Economy ScorecardITUInternational Telecommunication UnionIXPInternet exchange pointLDCleast developed countryMNOmobile network operatorMSMEmicro,small and medium-sized enterpriseODAofficial development assistanceOECDOrganisation for Economic Co-operation and Development PACER PlusPacific Agreement on Closer Economic Relations PlusPAfTSPacific Aid for Trade Strategy 20202025PDEPPacific Digital Economy ProgrammePIFSPacific Islands Forum SecretariatSDGSustainable Development GoalSIDSsmall island developing StatesSMEsmall and medium-sized enterpriseSOEState-owned enterpriseUNCDFUnited Nations Capital Development FundUNCTADUnited Nations Conference on Trade and DevelopmentUNDPUnited Nations Development ProgrammeUNESCAPUnited Nations Economic and Social Commission for Asia and the PacificUSAIDUnited States Agency for International DevelopmentAcronyms and abbreviationsXII DIGITAL ECONOMY REPORT PACIFIC EDITION 2022Executive SummaryThe distinct characteristics of the Pacific region create unique challenges and opportunities for digital developmentDigital technologies are transforming how people interact,how businesses operate and how economies are configured.In this process,many countries around the world are struggling to determine how to deal with the development and policy implications of the evolving digital economy.For Pacific small island developing States(SIDS),challenges are amplified due to the distinct characteristics of their economies.Most countries are small in terms of population size the region is home to 8 of the 10 smallest economies globally with trade-dependent economies that are physically isolated from major markets and less integrated into global air and maritime shipping networks.This hampers participation in regional and global trading systems,exacerbates connectivity challenges and makes the region less attractive for international investments.Nevertheless,digital technologies have much to offer the region.Digitalization represents a key solution to narrowing the vast trade distances in the Pacific and to integrate urban and rural markets.For isolated archipelago nations,digital platforms can provide opportunities to open or expand access to local,regional and international markets and knowledge networks.Digital businesses also benefit from lower start-up and operating costs.From a broader perspective,digital transformation offers opportunities for the region to accelerate progress towards virtually all the Sustainable Development Goals(SDGs).This first Digital Economy Report:Pacific Edition 2022 examines the current status of the emerging digital economy in the Pacific,focusing on connectivity and access to digital technologies for people and businesses.It highlights that a relative lack of data and information on important issues hamper the ability of policymakers to make informed decisions as they deal with the development implications of the digital economy and how to create and capture value by stakeholders in the region.The approaches taken will affect not only trade,innovation and economic progress,but also a range of issues related to human rights,health,education and national security.By providing a holistic view of the Pacific digital economy,the report seeks to contribute to an enhanced understanding of these complex and interrelated factors.Although connectivity challenges remain,e-commerce is beginning to emerge and offers the potential to accelerate developmentThe geographic characteristics of Pacific SIDS with widely dispersed populations create fundamental challenges to securing affordable ICT connectivity in these countries.Despite progress related to strengthening digital infrastructure,significant gaps remain in terms of access to reliable,affordable,high-speed and high-capacity broadband Internet.On average,Pacific SIDS lag behind the average for developing economies and SIDS on most indicators of ICT connectivity.Indicators include international bandwidth per user,3G and 4G coverage,fixed broadband connection speed,mobile broadband subscriptions,affordability of broadband packages and Internet use.The average for Pacific SIDS is generally similar to the average for least developed countries(LDCs).Increasing levels of access to digital technologies are converging with growing opportunities for e-commerce and digital trade.More and more economic activity in the region occurs on digital platforms for digital payments,social media,messaging and e-commerce.Remittances carried out on digital payments platforms play a particularly important role in some economies.Although levels of activity vary across the region,online stores and e-commerce platforms are beginning to emerge and establish themselves in the Pacific.Significant commercial activity occurs on Facebook,where various groups bring together buyers and sellers in informal online marketplaces.These social sellers exist in almost all Pacific SIDS.Formal e-commerce platforms,such as Jungle and BzzMart in Papua New Guinea and VitiKart in Fiji,are gaining traction with domestic customers and businesses.Fewer export-focused e-commerce businesses have been established in the region.TOWARDS VALUE CREATION AND INCLUSIVENESSXIIINotably,global business-to-consumer(B2C)e-commerce platforms have yet to penetrate the Pacific markets.For many businesses and consumers,social media can serve as a building block for local digital entrepreneurship and innovation.The anticipated growth of digital businesses and e-commerce platforms can also lead to higher productivity,greater opportunities for micro,small and medium-sized enterprises(MSMEs)and new job creation.E-commerce could also be leveraged as a tool for integrating urban and rural markets.Archipelago states face pervasive challenges to private sector development,with their vast distances between markets and high barriers to buyerseller discovery and trade.With many people living in rural areas,businesses are forced to limit operations to their immediate surroundings.In this environment,digital marketplaces and online stores could facilitate broader market access and more domestic and regional trade.The emerging digital economy in the Pacific risks widening existing divides Notwithstanding the development potential of e-commerce and the digital economy,there are several risks to consider.The dominance of major platforms and data providers can distort the distribution of wealth created by the digital economy and hinder local value creation and capture.Evidence from other regions suggests that the pandemic may have accentuated the concentration and consolidation of market power rather than reducing inequalities between and within countries.In some instances,digitalization has resulted in job losses or the accrual of value to those with higher levels of education and income.Although digital technologies can help to achieve inclusive and sustainable development,they can also lead to new divides and greater inequality.For example,gender inequalities in the digital sphere exacerbate existing gender divides and,at the same time,women and girls remain vulnerable to digital threats.The net impact of the digital economy in the Pacific is hard to predict but the impacts in other regions suggest that the digitalization of economies will be broadly disruptive.For particular groups,sectors and industries,progress is likely to be uneven.Given these risks,inclusion should be placed at the centre of the digital development agenda.In the Pacific,digital development should not be viewed within a narrow development lens where progress is measured solely in terms of more people and businesses using the Internet or participating in e-commerce.Digital development should be pursued in the context of the broader realization of economic,social and cultural rights as well as all other human rights,and for the transformative changes envisioned in the 2030 Agenda for Sustainable Development.These rights include the right to education,the right to food,the right to health,the right to an adequate standard of living and the right to work.Policies and regulations in the Pacific need to be adapted to the digital economyDigital technologies create both opportunities and challenges.It is the responsibility of governments,in close dialogue and partnership with other stakeholders,to shape the direction of the emerging digital economy in the region so that it benefits all Pacific islanders.Policies that solely prioritize access to digital technologies for consumers and businesses will not be sufficient.A holistic approach is needed that balances the importance of access with other social and economic considerations.As in many other parts of the world,policies and regulations have not kept pace with the pace of digitalization in the Pacific.In most countries,policies related to data,competition,taxation,labour markets and intellectual property have not yet been adapted to the digital age.Trade agreements and consumer protection laws also rarely take into account the complexities associated with increased online commercial and trade activity.Policymakers in the region will need to update relevant policies and regulations,with the aim of building inclusive digital economies.Impacts on vulnerable groups should be considered in the context of potential risks such as job losses or market consolidation,which may result in lower pay or reduced labour protections in some industries.At this early stage,there are more questions than answers about how to deal with the digital economy.Given the limited empirical evidence,as well as the rapid pace of technological change,policy responses will need to be regularly reassessed and adjusted.XIV DIGITAL ECONOMY REPORT PACIFIC EDITION 2022Build on the strong momentum to address policy concerns Fortunately,there is strong momentum in the region to advance the digital economy and address its most pressing policymaking concerns.Many Pacific countries have completed e-commerce diagnostic studies and started formulating national e-commerce strategies.The diagnostic studies,such as eTrade Readiness assessments,provide a broad understanding of the digital development issues facing countries and stress the importance of policy coherence,both nationally and regionally.Looking ahead,policies that strengthen the overall business,policy and regulatory environment for the digital economy will be important.Several frameworks have been developed to provide guidance to policymakers.The emphasis within these frameworks on the cross-sectoral nature of the digital economy has important implications for policymakers,which include identifying priorities of various reforms with limited government resources;understanding core challenges and opportunities at the interplay of various ecosystem components;and articulating visions and actions that can lead to an inclusive digital economy.Research and data collection efforts should be strengthenedMore in-depth research and data on the digital economy and its development implications in the Pacific are needed.Reliable and comprehensive data on connectivity,access and use of digital technologies is needed to inform policymaking and to track the progress of related interventions.In addition,more dedicated research on the development implications of the digital economy should support policy design and implementation,development programming and regional cooperation initiatives.Enhanced research capacity could help to document and project the benefits and costs accruing to Pacific countries from digitalization.One approach to enhancing research capacity could be to establish an Institute for Pacific Digital Economies in one of the leading research institutions in the region.This institute could work with development partners,researchers and non-governmental organizations to carry out research,organize capacity building workshops and publish research findings on issues that are relevant to the digital economy in the Pacific.One important area that could benefit from additional research by such an institute is the potential development implications of the digital economy for marginalized groups,including women and people living in rural areas,in the context of achieving sustainable and inclusive outcomes.Regional cooperation and international support are key for building inclusive digital economiesWhile some issues related to the digital economy can be addressed through national policies and strategies,the unique characteristics of Pacific SIDS necessitate greater regional cooperation and consensus-building as well as international support.Effective solutions in the digital era require multi-stakeholder collaboration involving governments,the private sector,academia,non-governmental organizations,community groups,research institutions,multilateral development banks and development partners.The complexity of the challenges calls for new partnerships,innovative thinking and creative solutions.New digital governance models may be needed that balance access and growth with resilience and inclusion.In many ways,the Pacific is well placed to strengthen regional cooperation on digital development.The Pacific E-commerce Initiative provides a platform for policymakers to engage in regional dialogue and consensus-building on the digital economy.The Pacific Regional E-commerce Strategy and Roadmap also provides a common approach to strengthening the enabling policy environment for e-commerce and the digital economy in the region.This regional momentum has already resulted in significant development partner support.A number of regional programmes such as the Pacific Digital Economy Programme(PDEP),the Pacific Agreement on Closer Economic Relations Plus(PACER Plus),the Automated System for Customs Data(ASYCUDA)and Markets for Change are focused on empowering consumers,producers and innovators in the digital economy.Global initiatives can also help to bring partners together for digital development in the Pacific.These include eTrade for all(35 partner organizations working in the digital economy TOWARDS VALUE CREATION AND INCLUSIVENESSXVspace)and the Alliance for eTrade Development(a global development alliance between the United States Agency for International Development(USAID)and twelve private sector partners).Furthermore,traditional donors supporting economic and trade development in the region,including the Australian Department of Foreign Affairs and Trade,the New Zealand Ministry of Foreign Affairs and Trade,the European Union,USAID,the World Bank and the Asian Development Bank(ADB),all have ongoing multi-year,regional,subregional and national projects.Despite recent progress,more development partner support is neededThere is still scope in the Pacific to expand regional initiatives,develop synergies between initiatives at the regional and international levels,and strengthen publicprivate collaboration.The development community will need to explore more comprehensive ways to support countries in the Pacific,with development partners integrating the digital dimension into their aid policies and strategies.This support should place inclusion at the centre of the digital development agenda,with the aim of reducing digital divides and building capacities in the public and private sectors.Some Pacific countries lack the capabilities to develop,implement and enforce new policies and regulations related to e-commerce and the digital economy.In this context,more support from donors will be needed to support policymakers as they seek to strengthen the enabling business,policy and regulatory environment for the digital economy.Collecting data and information on digital connectivity and use will be important to developing evidence-based policies and to track their related impacts.Policymakers will also need to be empowered to participate effectively in processes and meetings related to the digital economy,including at regional and international levels.Finding adequate solutions to cross-border data flows,taxation of global digital platforms and international trade,for example,will require global collaboration and policy dialogue.The full involvement of Pacific countries in these discussions will be critical and any global consensus will need to incorporate the unique circumstances of SIDS.The Pacific is still in the early stages of its digital transformation.This can be seen as good news because the impacts of technology do not follow a predetermined path.Digital technologies create both opportunities and challenges,with outcomes dependent on policy choices.Governments and partners have a responsibility to build inclusive digital economies that leave no Pacific islanders behind.XVI DIGITAL ECONOMY REPORT PACIFIC EDITION 2022CHAPTER I.SETTING THE SCENE01Setting the scene02 DIGITAL ECONOMY REPORT PACIFIC EDITION 2022Unique challenges and opportunities of digital development in the Pacific region 15 000 km3 000 km10k1bn1m100mare major obstacles to accessing international marketsIn this context,in and fostering With inclusion at the center,extra attention should be given to The net impact The net impact of the digital economy in the Pacific is hard to predict.Outcomes will partly depend on the Pacific SIDSOther countrieswith relatively smallpopulations,Pacific SIDS are smallest economiesgloballynumber of populated islands per economylow-income householdswomen,girls&youthpersons with disabilitiesaverage distance from market(km)population(log scale),either domestic or international,can bring and SDGsFrench Polynesia 7667Solomon Islands347Vanuatu65Micronesia(Fed.States of)36Fiji 110TongaCHAPTER I.SETTING THE SCENE03A.AN EMERGING DIGITAL ECONOMYThe spread of digital technologies is transforming social and economic activities around the globe.In developing countries,mobile Internet is revolutionizing how people produce,work,consume and interact with each other.In more developed countries,the digital economy is also closely associated with progress with the Internet of Things,cloud computing,data analytics,artificial intelligence,blockchain technologies,three-dimensional printing,and automation and robotics.These trends are affecting economies in different ways.Business operations and value chains are increasingly digitalized whether production processes,shipping and transportation networks,retail distribution,or investments and financing.Trade is increasingly conducted online and mobile payments are now ubiquitous in some countries.Between 2017 and 2021,the number of people shopping online increased from an estimated 1.3 billion to 2.3 billion people(from 24 per cent to 39 per cent of the global population aged 15 and older).1 The COVID-19 pandemic has accelerated this process.People and businesses were brought online,with many services including remote education,remote work and remote health services becoming accessible to more people(UNCTAD,2021a).In developing countries,B2C e-commerce particularly for ride-hailing and food delivery has emerged as a key trend associated with the digital economy.Safe and effective digital technologies and platforms have become essential to sustainable development in the digital age,presenting opportunities to accelerate equitable and resilient growth.For example,digital technologies and platforms can reduce transaction costs for businesses and facilitate access to domestic and foreign markets.They can also enhance productivity and offer new opportunities for entrepreneurship,innovation and job creation.For micro,small and medium-sized enterprises(MSMEs)in particular,digital technologies can make it easier to overcome barriers to expansion,engage in peer-to-peer collaboration and use alternative funding mechanisms such as crowdfunding.In addition,cloud-based solutions have reduced the need for in-house information technology equipment and expertise(UNCTAD,2019a and 2021b).In the context of the data-driven digital economy,domestic or international data and data flows can bring many benefits as well as solutions to societal challenges,including those related to the SDGs(UNCTAD,2021b).In this environment,access to data and the ability to transform data into digital intelligence have become crucial for commercial success(UNCTAD,2019b).Many global firms use data from the digital economy to inform decision-making processes and corporate strategy,and to optimize production processes or supply chain logistics.Business models continue to emerge to support data collection,the production of insights from data,data storage,analysis and modelling(UNCTAD,2019b).This is driving further expansion of the digital economy alongside new opportunities for value creation and capture.The advance of digital technologies creates great potential.At the same time,it comes with social and economic challenges.Digital divides both in terms of access to affordable digital technologies and capacities to make effective use of them imply an unequal distribution of benefits.Automation and artificial intelligence could replace workers.Dominant global platforms could increase income inequality and contribute to a greater imbalance of market power and wealth.Digitalization may also have negative impacts on the bargaining power of users,consumers and workers,and result in the loss of privacy.Moreover,new forms of incendiary hate speech and cybercrime have emerged,which pose significant ramifications for individuals,governments,companies and organizations alike(UNCTAD,2019b).Although the pace of digital transformation varies,all economies and people are ultimately being affected.The broad implications of this shift will require policymakers to respond to these new challenges and opportunities,irrespective of the level of development or structure of the economy.The Pacific region is no exception.In this context,inclusion should be placed at the centre of the digital development agenda.In order to leave no one behind,extra attention should be given to those in vulnerable situations,such as low-income households,women and girls,youth,persons with disabilities,and indigenous peoples.A digital economy that advances the inclusion of women and other marginalized groups could help bring about a host of economic and social benefits that support several SDGs under the 2030 Agenda for 04 DIGITAL ECONOMY REPORT PACIFIC EDITION 2022Sustainable Development.Relevant SDGs include Goal 1(No Poverty);Goal 2(Zero Hunger);Goal 3(Good Health and Well-being);Goal 4(Quality Education);Goal 5(Gender Equality);Goal 8(Decent Work and Economic Growth);Goal 9(Industry,Innovation and Infrastructure);and Goal 10(Reduced Inequalities).Delivery on these and other related goals would have a positive impact on a range of human rights,including the rights to education,to food,to health,to an adequate standard of living and to work.B.CHALLENGES TO DIGITAL DEVELOPMENT IN THE PACIFICThe geographic,demographic and economic characteristics of Pacific small island developing states(SIDS)contribute to unique challenges related to digital development.Vast distances between small island economies present challenges related to Internet connectivity as well as merchandise trade and logistics,which depend heavily on relatively expensive seaport and airport infrastructure and transportation.Market and population sizes make the region less attractive for international investment.Internet penetration and use rates are relatively low due in part to large rural populations and low levels of literacy and digital skills.In addition,the multitude of local languages poses a challenge to developing online content and services that are relevant to the local population.Most countries in the region are archipelago states that consist of a few main islands surrounded by smaller islands and atolls.Many of the islands are populated Solomon Islands has more than 300 populated islands,Fiji more than 100 and French Polynesia more than 70.Moreover,a significant share of the population live away from the main island in most countries.In Solomon Islands and Vanuatu,more than 70 per cent of the population does not live on the main island(Utz,2021).In addition,Pacific countries generally have a small landmass and islands are widely dispersed both within and between countries(see annex table 1).For instance,Nauru,with a land surface of only 20 km2,is the smallest island nation and the fourth-smallest country in the world.Even compared to other SIDS,those in the Pacific are generally located the farthest from each other and from the main global economic markets(UNCTAD,2022c).2 The closest capitals within the region are those of Kiribati and Marshall Islands,which are still separated by 600 km.These geographic realities in the Pacific create fundamental barriers to rural development,education attainment,connectivity and governance.Most Pacific SIDS have relatively small populations and many people live in rural and isolated areas(see annex table 1).Figure I.1 shows the relationship between population size and the average distance from international markets and illustrates how remote Pacific SIDS are as a group of countries,even compared with Caribbean countries,for example.About three-quarters of the population lives in rural areas,3 which is well above the global average and the levels of most other country groupings.Challenges such as low levels of secure Internet connectivity can inhibit equitable access to social and economic opportunities(see chapter II).Additionally,low levels of access to affordable and reliable electricity transmission networks are a barrier to economic participation.A relatively high share of the population in some Pacific SIDS still has no postal services(see annex table 2).4 This makes last-mile delivery of goods virtually impossible in many areas.Linguistic diversity in the region is significant,with many local languages(see annex table 1).The largest Pacific SIDS,Papua New Guinea,has the highest number of living languages in the world(820),accounting for 12 per cent of the worlds spoken languages,while Vanuatu,with just over 300,000 inhabitants,has 115 languages.The Linguistic Diversity Index5(UNESCO,2009)places Papua New Guinea,Vanuatu and Solomon Islands as the three countries with the highest levels of linguistic diversity in the world.This diversity has implications for the development of local digital content and broader participation in the digital economy.If the digital landscape does not consider linguistic diversity,population groups will likely be excluded from digital interactions.For instance,access to data and information will be restricted for speakers of non-dominant languages if they cannot express themselves or create content in their own local languages.This may further increase marginalization of certain populations and limit social and economic opportunities.Literacy levels could also have an impact on digital development.Although the adult literacy rate is above 96 per cent in Fiji,Marshall Islands,Palau,Samoa and Tonga,some CHAPTER I.SETTING THE SCENE05countries still lag.This is especially the case for Solomon Islands and Timor-Leste,where 20 per cent or more of the population is still illiterate(see annex table 2).Despite these challenges,digital technologies have much to offer to the region.Digitalization is one of the key solutions that can address the lack of physical infrastructure,cover the vast distances in the region and digitally connect isolated areas.It can be critical in fostering inclusive domestic and regional digital trade by addressing uncertainty and asymmetries of information,and by improving the security of transactions among large numbers of small,widely dispersed players.For isolated archipelago nations,digital platforms can provide opportunities to open or expand access to local,regional and international markets.By generating economic activity and innovation across sectors and industries,e-commerce can contribute to growth in productive sectors.This will lead to the integration of rural and urban markets as well as to job creation and export competitiveness.Digital financial services can accelerate financial inclusion of low-income groups,MSMEs and other unbanked and underbanked segments.C.SMALL TRADE-DEPENDENT ECONOMIESEven though there is great potential for digitally driven growth in the Pacific,the size and fragility of economies in the Pacific region present several challenges.Most countries are small,have narrow-based economies and are physically isolated from major markets.It is challenging for small economies NZLAUSTONFJIVUTWSMTUVSLBPNGTLSKIRMHLFSMPLW3,0005,0007,0009,00011,00013,00015,000Average distance from market(km)Population(log scale)All countriesPacifc SIDSCaribbean10k1m10m100m1bnFigure I.1.Population size and access to international markets,all countries,Caribbean countries and Pacific SIDSVast distances from international markets lead to high trade costs in the Pacific,and small populations dispersed across thousands of islands create fundamental barriers to rural development,connectivity and governance.Source:World Bank(2017).Notes:The x-axis is in log scale.The y-axis represents the average distance from markets(the average distance to other economies weighted by their GDP).Country groupings are of the source;for the purpose of this report,Pacific island countries were renamed as Pacific SIDS.06 DIGITAL ECONOMY REPORT PACIFIC EDITION 2022to achieve economies of scale both in domestic public and private production.High transport costs prevent these economies from overcoming this challenge through specialization and trade(Utz,2021).Integration into regional and global trading systems is further hampered by weak connections to networks of value added trade due to isolation from global air and maritime shipping networks.Both agriculture and manufacturing trade costs for Pacific SIDS are often two or three time as high as costs for Australia and New Zealand(Shepherd,2016).The ability of Pacific SIDS to cope with external shocks and mitigate the risks varies considerably.More developed regional economies have higher levels of global integration than others,yet many of these Pacific economies are heavily reliant on imports and limited supplies of foreign-sourced income(remittances,exports and tourism-related income).The fragility of national economies is also affected by macroeconomic imbalances alongside substantial variation in natural resource endowments.In addition,the region is highly vulnerable to climate change and natural disasters such as tropical storms and earthquakes,which further contributes to lower economic resilience.The Pacific region is home to eight of the smallest 10 economies globally,and Kiribati,Solomon Islands,Timor-Leste and Tuvalu are classified as LDCs.6 In 2021,the average gross domestic product(GDP)per capita for Pacific SIDS was$3,966(see annex table 2),while the average gross national income(GNI)the total earnings of a resident of an economy was$3,798 in 2020.The five most-populated Pacific SIDS Papua New Guinea,Timor-Leste,Fiji,Solomon Islands and Vanuatu represent almost 90 per cent of the population of Pacific SIDS,their GDP and GNI per capita was$2,808 in 2021 and$2,641 in 2020,respectively.7Pacific SIDS are highly dependent on the import of consumer goods and services.The export sector is narrower and is focused on raw materials and agriculture,with the addition of tourism and related services in some countries.In 2021,trade openness was 30 per cent of GDP(see annex table 3),still below the level observed before the COVID-19 crisis.8Maritime transport is the main option for moving cargo internationally and domestically.The Pacific regions distance from markets creates challenges to trade.Low levels of maritime connectivity in Pacific SIDS are a major obstacle to their economic development.Most do not meet the economic threshold of demand for private shipping companies to provide regular shipping at a profit(Pacific Community,2011,cited by UNCTAD,2022a).The Liner Shipping Connectivity Index9 which measures a countrys integration level into global liner shipping networks generally ranks Pacific SIDS near the bottom(UNCTAD,2022a).Interisland logistics typically follow a hub-and-spoke system,with cargo and passengers first brought into a country through a primary(international)port and then distributed to secondary ports or other remote outer islands(Utz,2021).This has significant development implications.Outer island residents living along unprofitable routes are often underserved,limiting their access to essential supplies,education,health care and employment opportunities.For instance,Solomon Islands has a total of 300 inhabited islands but only around 22 locations have regular shipping services.Over 92 per cent of the countrys outer islands do not have regular interisland shipping coverage(Utz,2021).Remittances to Pacific SIDS accounted for an average of 4.5 per cent of GDP in 2020 and form an important contribution to economies in the Pacific(see annex table 2).This contribution varies considerably among Pacific SIDS.For some countries such as Papua New Guinea the contribution is negligible,whereas in other countries it is a much higher share of GDP.For example,Samoa recorded remittances as a quarter of GDP.Tonga has the highest share globally at almost 40 per cent of GDP.Official development assistance(ODA)also plays an important role in the region and represented 7.5 per cent of GNI in 2020.This share of foreign aid in Pacific SIDS is as high as 13.9 per cent of GNI when not accounting for Papua New Guinea.As many as six Pacific SIDS are among the global top-10 ODA recipients,with Marshall Islands and Tuvalu occupying first and second place with 61 per cent and 58 per cent,respectively(see annex table 2).10In terms of economic output,Pacific SIDS are generally dependent on the primary sector with the value added of agriculture and fishery-related activities at 13 per cent of GDP which is well above that of other SIDS and Caribbean countries(see annex table 3).11 Industrial production in Pacific SIDS stood at 26 per cent of GDP in 2020 with mining/utilities at 15 per cent of GDP.Mining is particularly present in Papua New Guinea(gold,oil and copper),Timor-Leste(oil,gas,other mineral fuels and CHAPTER I.SETTING THE SCENE07lubricants)and Nauru(phosphate).Manufacturing is well developed in Nauru(e.g.processing of coconut products)and Fiji(sugar production and the garment industry in addition to copper and gold mining)(UNCTAD,2022c).The services sector in Pacific SIDS represents 54 per cent of GDP on average,with the hospitality sector being particularly important.12 Before the COVID-19 pandemic,inbound tourism accounted for 6 per cent of GDP in Pacific SIDS(2019),or 12 per cent when excluding Papua New Guinea.This sector was one of the major economic activities and sources of income for some countries:Cook Islands(64 per cent of GDP);Palau(33 per cent);Vanuatu(32 per cent);and Fiji(25 per cent)(see annex table 3).The COVID-19 pandemic resulted in severe economic contractions in most Pacific SIDS(International Monetary Fund,2022a and 2022b).Despite relative success in containing the health consequences of COVID-19,economic activity was significantly disrupted.Pacific SIDS were among the worst-affected developing economies in economic and fiscal terms,mainly due to the supply and demand shocks related to the tourism and fishery industries.Vulnerable populations in tourism-dependent Pacific SIDS were hit particularly hard,with migrant workers and tourism-dependent households emerging as increasingly vulnerable groups.Job creation and decent employment opportunities for individuals in physical proximity service jobs and informal work have also faced disruption.Young people,women and individuals with low levels of education have been disproportionately affected and inequalities have increased.*As digitalization accelerates,the future of Pacific SIDS will partly depend on the ability to leverage digital technologies for the benefit of their people.Although digital technologies can help achieve inclusive and sustainable development,they can also lead to new divides and greater inequality.The net impact of the digital economy in the Pacific is hard to predict but evidence from other regions suggests that it will be broadly disruptive.In this environment,policy decisions will be critical to ensuring that no one is left behind in the digital era.Continued support from international development partners will also be essential.This report aims to provide a resource to inform effective policymaking in this complex environment.It presents a broad overview of the current digital economy landscape in the region and highlights key information about emerging trends and business models.Chapter II takes stock of data and trends related to the digital infrastructure in the Pacific and examines different aspects related to connectivity,followed by data and trends in ICT and Internet use.Chapter III highlights key policy areas that are relevant to value creation and capture in the Pacific,with a focus on digital platforms and e-commerce.Chapter IV focuses on the cross-cutting nature of e-commerce and the digital economy and the importance of taking action in different policy areas.Chapter V provides recommendations and pathways to support Pacific policymakers as they seek a way forward that maximizes the benefits and minimizes the risks of the digital era.DIGITAL ECONOMY REPORT PACIFIC EDITION 2022CHAPTER II.DIGITAL INFRASTRUCTURE AND ICT USE IN THE PACIFIC09Digital infrastructure lies at the core of the digital economy.While there is no widely accepted definition of the concept of digital infrastructure(UNCTAD,2019b),in this report it generally consists of the following levels:(i)ICT networks(the core digital infrastructure for connectivity);(ii)data infrastructure(such as data centres,submarine cables and cloud infrastructure);(iii)digital platforms;and(iv)digital devices and applications.This chapter takes stock of data and trends related to digital infrastructure in the Pacific and looks at different aspects of connectivity,data and trends in ICT and Internet use.The chapter concludes by highlighting important data gaps that exist for the most relevant indicators.Digital infrastructure and ICT use in the Pacific DIGITAL ECONOMY REPORT PACIFIC EDITION 2022Key challenges to ICT connectivity in Pacific SIDSPopulation coverage by 4G in 2020/21is around the same level as LDCs is very low:99SR%WorldPacific SIDSSolomon Islandsand Micronesia(Fed.States of)Papua New Guinea KiribatiMicronesia(Fed.States of)Solomon Islands in Pacific SIDS remain relevant is still for many Despite these challenges,the region has seen considerable progress in:A general lack of ICT statistics for Pacific SIDS requires as this provides the basis for progress monitoring and evidence-based policymakingICT infrastructure mobile broadband accessinternet useare still unaffordable for manyHalf of Pacific SIDShave only 1 cable orno cableat allon average,only 1 subscriptionper 100 peopleThe of a mobile subscriptionmore expen-sive per capita spent on mobile connection per capita spent on cheapest smartphoneCHAPTER II.DIGITAL INFRASTRUCTURE AND ICT USE IN THE PACIFIC11A.DATA TRANSMISSION AND STORAGE1.International connectivitya.Submarine cablesSubmarine cables contain the optical fibres that rapidly transmit large amounts of data from one point to another and are crucial for Internet connectivity in the Pacific region.These undersea cables are more reliable than satellite networks and deliver the international bandwidth necessary for the data-intensive,high-speed Internet activities associated with the digital economy.They also offer higher bandwidth capacity and are more cost-effective to operate(Pacific Islands Forum Secretariat(PIFS),2020).Pacific SIDS are connected to this bandwidth through various transmission networks:intercontinental cables(originating and terminating in Australia,Asia and the United States)with landing points in the Pacific;interregional cables linked to landing points in Asia,Australia and the United States(Hawaii);and intraregional cables connecting countries within the Pacific.Domestic submarine cables typically connecting the main islands where international cables arrive to the outer islands of a country extend the reach of these data transmission networks(see figure II.1).Tasman SeaCoral SeaCoral SeaSolomon SeaSolomon SeaBismarck SeaBismarck SeaArafura SeaArafura SeaTimor SeaTimor SeaBanda SeaPhilippine SeaSouth PacifcOceanGreat Great Australian Australian BightBightAustraliaAustraliaNew ZealandZealandPapua NewPapua NewPapua NewPapua NewPapua NewPapua NewGuineaGuineaUnited StatesUnited StatesAsiaTimor-LesteSamoaFijiVanuatuTuvaluNauruMicronesia(Fed.States of)Marshall IslandsTongaKiribatiSolomon IslandsPalauTokelauCook IslandsFrench PolynesiaAmerican SamoaWallis andFutunaNew CaledoniaNorthern Mariana IslandsUnited States(Hawaii)aii)NiueGuamSource:UNCTAD,based on TeleGeography(2022).While international cables connecting to Pacific SIDS are owned by a mix of private companies,governments and State-owned enterprises(SOEs),domestic cables are exclusively owned by SOEs(see annex table 4).Funding for intercontinental submarine cables comes predominantly from private investors.In contrast,branch cables between Pacific SIDS as well as those directly connecting the Pacific with Australia or Hawaii are generally funded by public entities and multilateral institutions(States,SOEs,the World Bank and ADB).Domestic extensions of international submarine cables are almost fully financed by the public sector and international donors.Figure II.1.The submarine cable network connecting Pacific SIDS(as of November 2022)12 DIGITAL ECONOMY REPORT PACIFIC EDITION 2022These sources of funding and ownership of international submarine cables can be attributed to their high deployment and maintenance costs in addition to the high costs of deploying domestic cable infrastructure in the Pacific region(PIFS,2020).The involvement of donors and development partners has therefore been vital to expand cable infrastructure in the Pacific.13 The leading contractor for laying cables in the region has been a private sector cable supplier and operator:Alcatel Submarine Networks(see annex table 4).The arrival of an international submarine cable to a country can sometimes generate new investment in domestic cable extensions.For example,Tonga was able to use the remaining funds from multilateral banks initially destined for the Tonga Cable project to Fiji to partially finance the Domestic Extension Cable to connect another two islands.14 The Gondwana-2/Picot-2 cable has been in service since August 2022 and assures Internet resilience in New Caledonia.Gondwana-2 is the second international connection,while Picot-2 extends access to other areas of the main island and outer islands on its way to Fiji.Although the number of Pacific SIDS with multiple submarine cable connections has increased substantially in recent years,many still rely on a single cable and others have no cable at all(see table II.1).An international submarine cable connection,especially an intercontinental one,is a key factor for remote islands to benefit from increased bandwidth and Internet connection speeds.In theory,such connections should also create broader positive effects such as lower wholesale prices for Internet suppliers,lower retail prices for consumers and higher volume for data plans.An international cable deployment often covers only the major and most-populated island.Domestic cable links can then be added from the major island to outer islands.The deployment of both international and domestic submarine cables can happen in parallel.Aside from Guam(which has 11 connections),Fiji has the largest number of connections to international cables(see table II.1).15 As of 2022,three countries were not yet connected to any international submarine cable:Nauru,Timor-Leste and Tuvalu.16 Among the 17 Pacific SIDS connected to international submarine cables,seven rely on a single cable,which is far from ideal.Being connected to multiple international submarine cables increases network redundancy,reduces the impact of outages caused by cuts of submarine cables(box II.1),improves bandwidth and connection speeds,and may decrease Internet services prices.17While important advances have been made in terms of submarine cable connectivity,it will likely take years if not decades before cable infrastructure reaches all remote communities in the Pacific.In the interim,satellite connections will remain relevant to reach these remote areas.CHAPTER II.DIGITAL INFRASTRUCTURE AND ICT USE IN THE PACIFIC13Submarine cablesInhabited IslandsTotal activeTotal plannedBy deployment scopeConnected with submarine cablesDependent on satellite or microwave(a)(p)IntercontinentalInterregionalIntraregionalDomesticapapapapGuam1144341300010Fiji60200040002108Papua New Guinea400020002050French Polynesia31100010111561Micronesia(Fed.States of)3010001010362New Caledonia300010101050Samoa300000300022American Samoa201000100015Northern Mariana Islands200000200030Tonga2000001010333Palau111100000017Kiribati1010000000120Tokelau111000000112Solomon Islands10001000004343Cook Islands1000001000211Marshall Islands1000001000222Niue100000100010Vanatu1000001000166Wallis and Fortuna100000100020Nauru000000000001Timor-Leste010100000002Tuvalu000000000009 Source:UNCTAD,based on Watson(2021),United Nations Economic and Social Commission for Asia and the Pacific(UNESCAP)(2019),TeleGeography(2022)and various governmental,non-governmental and regional sources.Note:Inhabited islands concerns either all known inhabited islands,or the major ones,per country.Table II.1.Number of submarine cables and number of inhabited islands with Internet connectivity in Pacific SIDS,by type,September 202214 DIGITAL ECONOMY REPORT PACIFIC EDITION 2022Box II.1.Damage to submarine cables:The case of Tonga Damage to submarine cables occurs all over the world.About 70 per cent of all cable faults are caused by human activities such as fishing and anchoring,and around 14 per cent are caused by natural hazards(current abrasion or earthquakes).18Repairing damaged submarine cables takes a long time.According to Submarine Telecoms Forum(2019),the average repair time was 25 days in 2019.However,repairs could take longer for intercontinental cables and for those located in remote areas in the Pacific because of travel time for the repair crews.Among international submarine cables deployed in the Pacific,only the Tonga Cable(connecting with Fiji)has ever been severed.19 The cable was damaged in the tsunamis when the Hunga Tonga volcano erupted on 15 January 2022.Because Tonga relies on this cable to access the Internet,this resulted in a shutdown of high-speed Internet in the country.It took 10 days for the closest repair crew to arrive in Tonga and Internet connectivity via the cable was only restored one month later.20 Access to high-speed Internet in Fiji was not affected during this period because it was connected to three other international submarine cables at the time.The domestic cable extension that connected the two outer islands in Tonga was also damaged following the volcanic eruption and needed to be repaired later.This experience highlights the infrastructure challenge for island nations in natural disaster zones.21The Tonga Cable had been damaged previously in 2019 by a ships anchor and the repairs took 14 days.22 Although the events of January 2022 renewed calls for a backup system to be put in place for Tonga,the company in charge of the cable noted that the cost of deploying a backup cable was an issue.While traditional satellite connections were used as backup,their performance was lower than that of the submarine cable.23 The satellite Internet company Starlink donated 50 terminals to provide high-speed Internet via low earth orbit satellites(see section II.A.1.b)to remote islands and the worst-affected communities in the immediate aftermath of the volcanic eruption.Source:UNCTAD.b.SatellitesFor decades,communication satellites have been the primary means of enabling telecommunications between Pacific SIDS and other parts of the world(UNESCAP,2019).24 One of the main advantages of satellite technology is the ability to cover large areas.As thousands of isolated islands and atolls are spread across 33 million km2,satellite technology has been an ideal connectivity solution because it is easy to install the antenna.However,satellite communications systems are very costly to install,have high maintenance costs and are not always reliable,especially during heavy rain.While all Pacific SIDS continue to use satellite technology(see table II.1),the main purpose has shifted from international and domestic connectivity to redundancy and backup services(UNESCAP,2019).Despite this shift,satellite connectivity remains relevant for telephone services and the provision of Internet access to remote communities(PIFS,2020).It is expected that satellites will continue to play a role in the overall connectivity ecosystem in the Pacific,despite the relatively low number of satellite-based broadband subscriptions.According to data from the International Telecommunication Union(ITU),there were 124 satellite subscriptions in Fiji in 2020,212 in Vanuatu and only 2 in Kiribati in 2019.25The relatively high cost of satellite Internet subscriptions is a major factor behind the low demand for these services.For instance,the average starting price of satellite Internet packages from one provider offering its services throughout the region Juch-Tech Inc.represents between 30 and 50 per cent of monthly GNI per capita in Fiji,Kiribati and Vanuatu.26More recently,traditional satellite broadband systems have been complemented by low earth orbit satellites(see box II.1).This nascent technology allows the satellites to gravitate closer to earth and reduces latency.The large number of satellites also offers better resilience.SpaceXs Starlink constellation of more than 2,000 active satellites is currently the most advanced system,27 while competitors such as Amazon and OneWeb have joined the race for satellite-based Internet.However,monthly fees remain an obstacle for many users.For instance,Starlinks service fees of about$99 per month in Fiji,Kiribati and Vanuatu are still not much lower than traditional satellite services.28CHAPTER II.DIGITAL INFRASTRUCTURE AND ICT USE IN THE PACIFIC152021 or latest available year2015296020406080100120140160180200Timor-LesteKiribatiSamoaTuvaluVanuatuSolomon IslandsMicronesia(Fed.States of)TongaFijiPapua New GuineaMarshall IslandsFrench PolynesiaPacific SIDS LDCs Developing economies World Developed economiesSource:UNCTAD calculations,based on ITU(2022d),Statistics:Global and regional ICT data,update of 25 January.Available at https:/www.itu.int/en/ITU-D/Statistics/Pages/stat/default.aspx;and ITU(2022f),World telecommunication/ICT indicators database 2022,July Edition.Available at https:/www.itu.int/en/ITU-D/Statistics/Pages/publications/wtid.aspx.Notes:The latest years with available data per grouping and country are the following:2021(all groupings except Pacific SIDS),2017(Pacific SIDS)and among the listed countries in the figure 2020(Kiribati),2018(Fiji)and 2017(all countries except Kiribati and Fiji).Country groupings are those of the source,exceps of this figure must take into account the difference of years with available data as well as the fact that ITU 2021 data for groups include estimations.The drop of bandwidth capacity per Internet user in Marshall Islands between 2015 and 2017 is related to the dramatic rise in Internet users and a constant level of international bandwidth.Figure II.2.International bandwidth per Internet user,global,by country grouping,Pacific SIDS,selected years(Kilobits per second)Greater international bandwidth in Pacific SIDS would improve the operations of content providers,cloud providers and data centre operators,and support growth in the digital economy.c.International bandwidth capacityInternational bandwidth is an important indicator of the state of an economys digital infrastructure,in particular its capacity and links with global Internet networks to exchange data traffic.29 Bandwidth capacity affects the operations of content providers,cloud providers,interconnection providers and data centre operators.Some providers have invested heavily in developing their own bandwidth capacity to be independent from public carriers and to control quality and price.These include Google 16 DIGITAL ECONOMY REPORT PACIFIC EDITION 2022(Alphabet),Facebook(Meta),Amazon and Microsoft.International bandwidth is also important to national Internet service providers such as traditional carriers,wholesalers and mobile operators.30The Pacific generally lags behind other country groupings in relation to international bandwidth capacity(see figure II.2).In 2021,Internet users in developing economies had access to 144 Kbit/s.The latest available data for most Pacific SIDS is for 2017 and cannot be compared directly with data from 2021 for other country groupings.However,data available for 2017 show that Internet users in Pacific SIDS had access to 30 Kbits/s.31 Growth in the availability of international bandwidth in Pacific SIDS in the period 20152017 was slower than in most other country groupings in the same period.32 The relatively low capacity in the region mainly reflects limited submarine cable connections(see section II.A.1.a).This results in low levels of subscriptions for broadband services(see section II.B.1.a),a limited customer base for content providers,and a limited number of data centres(see section II.A.2.b).These issues will likely become less prominent as international bandwidth capacity in the region is expected to increase with further access to intercontinental submarine cables.Country groupingDeveloped economies9.7World4.9Developing economies2.8Pacific SIDS1.4SIDS1.4LDCs1.4Selected countriesGuam3Papua New Guinea2Fiji1New Caledonia1Timor-Leste1Tonga1Vanuatu1Table II.2.Number of Internet exchange points per country,by country grouping(average)and selected Pacific SIDS,April 20222.Middle-mile connectivitya.Internet exchange pointsAn Internet exchange point(IXP)is a physical location where different networks connect to exchange Internet traffic via common switching infrastructures and,as such,forms a key element in the global Internet infrastructure.The networks that participate in IXPs include Internet service providers,content providers,hosting companies and governments.IXPs are dispersed across countries,enabling local networks to exchange information efficiently,as they eliminate the need to exchange local Internet traffic overseas.Access speeds for local content can improve as much as tenfold with an IXP as traffic is routed more directly(Internet Society,2015).As of April 2022,there were 725 IXPs in the world,with an average of 9.7 per country for developed economies,compared with 2.8 in developing economies(see table II.2).For Pacific SIDS,the corresponding number was only an average of 1.4,which is comparable to LDCs and SIDS overall.Only a small number of Pacific SIDS or territories had established IXPs:Guam33 had three,Papua New Guinea had two,and Fiji,New Caledonia,Timor-Leste,Tonga and Vanuatu had one each.UNESCAP notes that IXPs have had a positive impact on affordability,latency and traffic capacity in the Pacific.34 The establishment Source:UNCTAD calculations,based on Peering DB(2022),The interconnection database.Available at https:/;Packet Clearing House(2022)and UNESCAP(2022b).Note:Data source for world and groups(except Pacific SIDS)is only the Packet Clearing House.of the IXP in Papua New Guinea in 2017 led to an estimated 10 per cent decrease in the price of Internet services.In Fiji,latency between local operators improved significantly from 60 milliseconds to 2 milliseconds after setting up an IXP in 2017.However,local benefits are not necessarily assured because the distribution of benefits also depends on the equal treatment of domestic and international participants using the IXP(UNCTAD,2021b).As most Pacific SIDS do not have IXPs,an initiative to establish a regional IXP has been in progress under the auspices of UNESCAP(see box II.2).CHAPTER II.DIGITAL INFRASTRUCTURE AND ICT USE IN THE PACIFIC17b.Data centresData centres and secure servers form another key part of the digital economy infrastructure.These facilities provide the infrastructure required to maintain and operate servers for both businesses and governments.The lack of domestic data centres implies a greater need to rely on cloud services using data centres located abroad,which can mean higher latency and higher costs for international Internet traffic.38 The availability of data centres can be considered a gauge of the overall digitalization of an economy because it reflects demand not only by the ICT sector but also by other sectors such as finance,transportation or legal that have high demand for digital services(ITU,2021).As of October 2022,only two countries among Pacific SIDS had one or more colocation data centres:New Caledonia with three and French Polynesia with one(see table II.3).39 Secure servers provide protection for online transactions such as through data encryption40 and are important for retailers and other businesses to conduct network Box II.2.Initiative for a regional Internet exchange point in the PacificIn 2018,Pacific SIDS requested the support of the UNESCAP secretariat and partners,through the Asia-Pacific Information Superhighway initiative,to assess the technical feasibility of establishing a Pacific IXP to improve Internet quality(latency and speed)and regional broadband performance.The secretariat collaborated with regional partners to conduct a feasibility study in 2019 and an operational modality study in 2020 to identify the options and requirements for establishing a Pacific IXP.Subsequently,the secretariat facilitated country consultations on the Pacific IXP in Fiji,New Zealand and Samoa in 20202021 to establish the subregional IXP via an intercountry agreement.35In November 2021,a capacity training workshop on operationalizing the Pacific IXP proposal was organized in Bangkok,Thailand.The workshop had two objectives.The first was to share two key documents with stakeholders:(i)the final guidelines on the operationalization strategy plan for building the Pacific IXP in the overall framework of the Asia-Pacific Information Superhighway;and(ii)a draft operational costing study on establishing the Pacific IXP for Fiji,New Zealand and Samoa.The second objective was to review a draft Memorandum of Understanding.36The Asia-Pacific Information Superhighway Steering Committee adopted the draft action plan for implementing the Asia-Pacific Information Superhighway initiative,20222026 at its fifth session on 25 November 2021.One of the three pillars in the action plan is Connectivity for All,which includes promoting Internet quality and digital connectivity on establishing IXPs.The expected outputs by 2026 are to have developed guidelines for operating subregional IXPs and to have endorsed a memorandum of understanding on establishing IXPs.The Steering Committee agreed to submit the draft action plan to the Committee on Information and Communications Technology,Science,Technology and Innovation at its fourth session in 2022 for its consideration and adoption.37Source:UNCTAD.Source:UNCTAD calculations,based on Data Center Map(2022)and UNCTADstat(2022).Available at https:/unctadstat.unctad.org.Notes:The Data Centres Maps available data are based on entries which are primarily added and maintained directly by the service providers themselves.This database indicates only countries with at least one or more data centres.Therefore,if a country does not appear,it can be either because it has no data centre or the data are not available.The results per million people for groupings are population-weighted averages.NumberPer million peopleCountry groupingSIDS685.6Developed economies39633.0World49150.7Develping economies9520.2LDCs300.1Selected countriesNew Caledonia310.3French Polynesia13.5Table II.3.Number of colocation data centres,by country grouping and selected Pacific SIDS,2022transactions.They are often located at data centres and have become essential for e-commerce as they respond to the growing need for cybersecurity and can help overcome the privacy and security concerns of Internet users around issues such as phishing and hacking.4118 DIGITAL ECONOMY REPORT PACIFIC EDITION 20223.Last-mile connectivity a.Mobile network coverageFor the development of e-commerce and the digital economy,reliable national digital infrastructure that is equitably distributed is as important as international connectivity.In most developing countries,backbone transmission networks carry data around the country,while mobile broadband connections(mostly limited to 2G,3G or 4G)provide last-mile connectivity.ITU found that only 28 per cent of people living in LDCs lived within 10 km of a transmission network and nearly 15 per cent lived more than 100km away(ITU,2021).In Pacific SIDS,91 per cent of the population lived in areas covered by 2G,almost 70 per cent in areas covered by 3G and 52 per cent by 4G in 2020/21(see figure II.3).4254545050707025254545494990908080303096965555525253537171858588889999202014142020525242421616686831818303019199 97 72525202050506 68 82454521217 72220102030405060708090100KiribatiPapua New GuineaVanuatuSolomon IslandsTimor-LesteSamoaFrench PolynesiaFijiNauruTongaCook IslandsPacific SIDSLDCsSIDSDeveloping economiesWorldDeveloped economies4G3G2G1Source:UNCTAD calculations,based on ITU(2022d),Statistics:Global and regional ICT data,update of 25 January.Available at https:/www.itu.int/en/ITU-D/Statistics/Pages/stat/default.aspx and ITU(2022f),World telecommunication/ICT indicators database 2022,July Edition.Available at https:/www.itu.int/en/ITU-D/Statistics/Pages/publications/wtid.aspx.Notes:Only countries with available data in 2020 or 2021 for all technologies,i.e.2G,3G and 4G,are listed in the figure.The 4G technology refers to the Long-Term Evolution/Worldwide Interoperability for Microwave Access mobile network.Country groupings are those of the source(2021),except Pacific SIDS(2020).The 2021 data cover the following countries:Tonga,French Polynesia,Timor-Leste,Vanuatu and Kiribati;the 2020 data covers the remaining countries.The values for 2G and 3G networks show the incremental percentage of population that is not covered by a more advanced technology network(example of Solomon Islands:25 20 50=95 per cent of the population are covered by 2G,25 20=45 per cent are covered by 3G and 25 per cent are covered by 4G).Figure II.3.Population coverage of mobile network technology(2G,3G and 4G),by country grouping and selected Pacific SIDS,2021 or latest available year(Per cent)3G and 4G coverage in Pacific SIDS is lower than in LDCs,affecting the ability of people and businesses to communicate and participate in the digital economy.CHAPTER II.DIGITAL INFRASTRUCTURE AND ICT USE IN THE PACIFIC19For e-commerce,3G and 4G networks are most relevant as they provide sufficient speed to make use of Internet services through mobile devices.In Pacific SIDS,3G and 4G coverage remains below the level of other country groupings,including LDCs.Significant disparities exist between countries,partially driven by differences in the dispersion of populations over different islands and remote rural areas.Tonga has a more concentrated population and almost the entire population was covered by 4G in 2021.In contrast,Solomon Islands has a more dispersed population over many islands and only 25 per cent was covered by 4G in 2020.As 5G deployment is still limited in the Pacific(see section II.A.3.b),4G remains the fastest and most viable option for last-mile connectivity in the near future.The proportion of the population in Pacific SIDS covered by 4G technology grew from 28 per cent in 2015 to 52 per cent in 2020,which is the second-lowest growth rate after developed economies.This overall figure is partly driven by relatively limited 4G deployment in Papua New Guinea.In 2015,4G was not yet available in Kiribati,Nauru,Samoa,Timor-Leste and Tonga;and very limited in Fiji,Vanuatu and Solomon Islands.By 2021,many of these countries had successfully introduced or significantly increased 4G coverage.Tonga had the highest coverage,with 96 per cent of the population having access to 4G in 2021.b.5G mobile broadband 5G mobile technology offers superior bandwidth capacity and much higher Internet connection speeds compared with 3G or 4G(see section II.A.3.c)and is expected to dramatically improve Internet experiences and revolutionize opportunities for online activities.43 5G mobile networks are being rolled out fast,with connections forecast to reach 25 per cent of all connections globally by 2025,compared with only 8 per cent in 2021(Global System for Mobile Communications Association(GSMA)Intelligence,2022a).The forecast for the Asia-Pacific region(excluding Australia,China,Japan,Singapore and the Republic of Korea)is 9 per cent by 2025(GSMA Intelligence,2022b).Among Pacific SIDS,5G technology has so far only been rolled out in Guam and Northern Mariana Islands.However,network coverage is still limited.44 According to GSMA Intelligence(2022a),5G should become available in Samoa in 2023.The latest forecast for Pacific SIDS is that 5G connections will represent no more than 1 per cent of all connections by 2025(GSMA Intelligence,2019b).The rise of 5G connectivity may have the additional benefit of enabling the use of fixed wireless access.45 Even though fixed wireless access has not been commercially successful in the past,newer iterations based on 5G technology can enable network operators to deliver cheaper ultra-high-speed broadband(wireless)to suburban and rural areas as an alternative to fixed-line digital subscriber line and fibre cables(Ericsson,2021).46c.Internet connection speedWith the arrival of high-speed Internet connections through fibre-optic cables,4G and 5G technologies,the use of the Internet-enabled ICT devices has changed dramatically over the past decade.The development from basic activities such as sending emails and browsing information to more data-intensive activities such as social media engagement,e-commerce,online movie streaming,video calls or semi-autonomous vehicles would not have been possible without parallel improvements in Internet connection speeds.Statistics for the Pacific region are limited.Based on Ookla data(April 2022),the median mobile broadband download speeds of Papua New Guinea and Fiji were 22.78 Mbit/s and 22.21 Mbit/s,respectively,which situated them between the median speeds of developing countries(19.93 Mbit/s)and SIDS(24.94 Mbit/s).The fastest mobile Internet connections were registered in developed economies(median speed of 50.85 Mbit/s).47More comprehensive data are available on fixed broadband connection speeds.In early 2022,the median download speed for six Pacific SIDS was 9.90 Mbit/s,still half that of the median speed for all SIDS or developing countries(see figure II.4).The fastest fixed broadband connection was in Fiji(13.77 Mbit/s)and the slowest in Timor-Leste(4.34 Mbit/s).Compared with developed countries,Pacific SIDS,like many LDCs,still lag overall.Mobile broadband connections were faster than fixed broadband connections in both Fiji and Papua New Guinea.This is in line with findings from UNCTAD(2021b),which showed LDCs on average 20 DIGITAL ECONOMY REPORT PACIFIC EDITION 2022recorded higher mobile broadband connection speeds.48 However,these numbers should be interpreted with care.The number of speed tests may influence the value of the median speed of Internet connections.In addition,the methodology to collect data for fixed broadband can include speed measurements made via mobile applications connected to Wi-Fi.The latter technology in many developing countries is based on shared mobile broadband connection(via USB/dongle)rather than fixed broadband.This is also likely to be the case for most other Pacific SIDS,as the Internet is mostly accessed through mobile broadband connections.In developed economies,where fixed broadband Internet is more widespread,the opposite is observed,where the median connection speed of fixed broadband is higher than for mobile broadband.The importance of mobile broadband use in developing countries,including in Pacific SIDS(see section II.B.1.a),implies that further extension and upgrades to 5G for existing mobile networks will be beneficial for Internet users.Upgrading to 5G will bring larger capacity and faster speeds for data transmissions.It is also possible that 3G and 4G mobile networks will not be able to run applications of the future effectively.010203040Timor-LesteVanuatuMicronesia(Fed.States of)Marshall IslandsPapua New GuineaFijiPacific SIDSLDCsDeveloping economiesSIDSWorldDeveloped economies81Source:UNCTAD calculations,based on Ookla(2022),Speedtest global index.Available at https:/speeds are median download speeds(definition and calculations of the source).World and country groupings are based on UNCTAD calculations(medians of the countries speeds in each grouping).Data concern April 2022,except for the Federated States of Micronesia(January 2022)and Vanuatu(March 2022).Figure II.4.Fixed broadband connection speeds,by country grouping and selected Pacific SIDS,2022(Megabits per second)Higher fixed broadband connections speeds in Pacific SIDS would improve the online learning experience,support businesses selling online and improve productivity.CHAPTER II.DIGITAL INFRASTRUCTURE AND ICT USE IN THE PACIFIC21B.ICT AFFORDABILITY AND USEOpportunities to participate in and benefit from the digital economy require more than just having the right ICT infrastructure in place.People and businesses need to be able to access relevant communication technologies at affordable prices and have the ability to make productive use of such access.In this context,there are significant divides within and among countries in relation to capacities to both connect to and use the Internet.This section takes stock of ICT connectivity,smartphone adoption,affordability of services and devices,and Internet use in the Pacific.1.Telephony and Interneta.Subscriptionsi.Mobile telephonyWhen comparing types of subscriptions for connectivity for Pacific SIDS,mobile telephony has the highest number of subscriptions.This is followed by mobile Internet data and fixed broadband(see figure II.5).This trend is in line with other country groupings.49 However,in actual numbers,mobile telephony subscriptions in Pacific SIDS reached only 62 subscriptions per 100 people in 2020,which is significantly lower than subscriptions in other country groupings.There are also notable differences among countries in the region.For example,Palau had 133 subscriptions per 100 people a level typically seen in developed countries whereas the Federated States of Micronesia was the second lowest in the world with 19 subscriptions per 100 people.50The average subscription rate does not necessarily reflect the proportion of people who subscribe to and use a mobile telephony service.One individual can have several subscriptions.Reasons for multiple subscriptions may include separate work and personal lines;multiple lines to benefit from cheaper calls or Internet data packages with different network providers;or as a backup to network congestions or failures.For instance,in Vanuatu,there is a significant number of dual SIM handsets and continued use of multiple networks due to bundled discount offerings by the two main telecom operators.51 This also occurs in other countries.In Fiji for example,it is common to have SIM cards from each of the two main network providers to take advantage of free calls to users of the same network provider.Another alternative which may affect the interpretation of subscription rates is when several individuals within a family or community share one SIM card,which is likely to be a more widespread practice in poorer,rural and more remote areas.ii.Mobile Internet In most developing countries,mobile broadband is the primary way for people to access the Internet.Figure II.5 shows that Pacific SIDS,on average,have the lowest penetration rate in mobile broadband Internet use among all country groupings(27 subscriptions per 100 people in 2020).52 Penetration rates do,however,vary significantly among Pacific SIDS.53The region has seen rapid growth in mobile Internet subscriptions since 2010 when penetration rates in Pacific SIDS were close to zero.54 According to UNESCAP(2018),regulatory reform played an important role in boosting penetration rates for mobile broadband subscriptions in the Pacific.Reforms included the introduction of further competition in the telecommunications sector and resulted in improved access to and affordability of mobile broadband services.In the case of French Polynesia,a new submarine cable deployed in 2010 significantly increased mobile broadband adoption.iii.Fixed Internet broadbandGlobally,fixed broadband subscription penetration is generally much lower than for mobile broadband subscriptions.This difference is particularly acute in the Pacific and LDCs(see figure II.5).Low subscription penetration for fixed broadband is not a problem in itself because the uptake of Internet in the general population in many developing countries coincided with the broad availability of Internet-enabled mobile devices.This would suggest that countries could move directly to mobile broadband without ever subscribing to fixed broadband services.However,mobile and fixed broadband are not necessarily interchangeable.Connectivity speeds and traffic volumes still rely on backbone networks 22 DIGITAL ECONOMY REPORT PACIFIC EDITION 2022020406080100120140GuamMicronesia(Fed.States of)SamoaMarshall IslandsKiribatiPapua New GuineaTongaSolomon IslandsVanuatuNauruTuvaluNew CaledoniaCook IslandsTimor-LesteFrench PolynesiaFijiPalauPacific SIDSLDCsSIDSDeveloping economiesWorldDeveloped economies285Mobile cellularMobile-broadband InternetFixed-broadband InternetSource:UNCTAD calculations,based on ITU(2022d),Statistics:Global and regional ICT data,update of 25 January.Available at https:/www.itu.int/en/ITU-D/Statistics/Pages/stat/default.aspx;and ITU(2022f),World telecommunication/ICT indicators database 2022,July Edition.Available at https:/www.itu.int/en/ITU-D/Statistics/Pages/publications/wtid.aspx.Notes:2021 data concern all country groupings(except Pacific SIDS),French Polynesia,Timor-Leste,Vanuatu,Tonga and Kiribati.2020 data concern the Pacific SIDS as a group and individually all other Pacific SIDS(except French Polynesia,Timor-Leste,Vanuatu,Tonga and Kiribati).Country groupings are of the source,except Pacific SIDS.Figure II.5.Mobile cellular and Internet subscription rate,by type,country grouping and selected Pacific SIDS,2021 or latest available year(Per 100 people)With most people accessing the Internet through mobile phones,increasing mobile broadband subscriptions in Pacific SIDS would lead to more inclusive access to the digital economy.CHAPTER II.DIGITAL INFRASTRUCTURE AND ICT USE IN THE PACIFIC23that form the basis of fixed broadband coverage.Furthermore,mobile broadband has limitations.The digital economy is increasingly associated with activities that require access to considerable bandwidth with fast upload and download speeds for example,the use of web meeting and conference tools such as Zoom,Microsoft Teams,Skype and Webex.These services are increasingly used in many workplaces and require upload and download speeds that are not always available in all locations.Fixed broadband access for Pacific SIDS was similar to access in LDCs and lower than in SIDS overall.The rate for Pacific SIDS was one subscription per hundred people in 2020.55 Cook Islands,New Caledonia and French Polynesia are the exceptions and recorded between 18 and 20 subscriptions per 100 people.The low level of subscriptions to fixed broadband in other Pacific economies is likely because of a generally low demand for fixed connectivity and a wider spread of Internet-enabled mobile devices compared with more costly computers and laptops.Additionally,this trend is driven by the logistical and financial challenges related to laying submarine and terrestrial fibre-optic cables for remote and widely dispersed islands.These locations are therefore reliant on expensive satellite broadband Internet.This,in turn,translates into higher retail prices and negatively affects affordability of fixed broadband services.b.Affordability of Internet plansAffordability of broadband plans is an important determinant for potential and regular use of the Internet.This is recognized under Advocacy Target 2 of the Broadband Commission for Sustainable Development.The target is for the cheapest data-only mobile broadband and fixed broadband basket subscriptions to be less than 2 per cent of monthly GNI in low-and middle-income countries per capita by 2025.56When expressed as the share of GNI,mobile Internet is generally more affordable than fixed broadband(see figure II.6).In 2021,the target of less than 2 per cent of GNI for mobile Internet was reached in high-income countries and almost reached in low-and middle-income countries.For fixed broadband this was only the case for high-income countries.In the Pacific,the cheapest available mobile Internet plan was on average more than twice as cheap as the cheapest fixed broadband plan.However,mobile broadband in the Pacific is almost four times more expensive than the global average and 50 per cent above the cost at the SIDS level.Only Tonga and Nauru are close to reaching the 2 per cent target set by the Broadband Commission for Sustainable Development.57 In some countries,mobile Internet is still prohibitively expensive the cost is almost 10 per cent of GNI per capita in Solomon Islands and the Federated States of Micronesia,and close to 20 per cent in Papua New Guinea.2.Smartphone adoption and affordabilityMany people in developing countries use smartphones and feature phones as the primary way to access the Internet.For instance,Facebook users in Fiji and Papua New Guinea own more smartphones than computers.58 The adoption of a smartphone depends on several factors,including affordability of the device(see section II.B.2.b)and mobile broadband services(see section II.B.1.b),and transmission networks(see section II.A.3).a.AdoptionThe smartphone adoption rate(expressed as the share of smartphone connections among all mobile connections)in the six Pacific SIDS for which data are available fell below the global average of 60 per cent in 2018.The adoption rate varied from 22 per cent in Papua New Guinea to almost 50 per cent in French Polynesia in the same year(see figure II.7).59 This gap was even more pronounced when compared to high-income countries,where smartphone adoption reached almost 80 per cent in 2020(GSMA Intelligence,2021).The rate of smartphone adoption in Fiji doubled between 2014 and 2018 but growth was considerably lower in other Pacific SIDS and even negative in the case of New Caledonia.However,GSMA forecasts that smartphone adoption in the Pacific could reach 70 per cent by 2025,catching up with global and Asia-Pacific adoption rates(GSMA Intelligence,2019b).This forecast was based on the assumption that the price of smartphones will decline and that new vendors of low-cost smartphones will emerge in the region.24 DIGITAL ECONOMY REPORT PACIFIC EDITION 202202468101214161820Marshall IslandsPapua New GuineaMicronesia(Fed.States of)Solomon IslandsKiribatiSamoaTimor-LesteVanuatuTuvaluFijiNauruTongaPacific SIDSLDCsSIDSLow-and middle-incomeWorldHigh-incomeMobile-broadbandFixed-broadband473234Broadband Commissions Advocacy Target(2 per cent of GNI per capita)Source:UNCTAD calculations,

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CKHL美国IPO招股说明书（273页）.pdf

F-1 1 ff12023_chikoholdings.htm REGISTRATION STATEMENTAs filed with the Securities and Exchange Commission on March 15,2023.Registration Statement No.333-UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549_Form F-1REGISTRATION STATEMENTUNDER THE SECURITIES ACT OF 1933_Chi Ko Holdings Limited(Exact name of registrant as specified in its charter)_Cayman Islands 1540 Not Applicable(State or other jurisdiction of incorporation or organization)(Primary Standard Industrial Classification Code Number)(IRS Employer Identification Number)Room 2620,26/F.,New Tech Plaza34 Tai Yau Street San Po Kong Kowloon,Hong Kong 852 2155 9690(Address,including zip code,and telephone number,including area code,of registrants principal executive offices_c/o Cogency Global Inc.122 East 42nd Street,18th FloorNew York,NY 10168 212 947-7200(Name,address,including zip code,and telephone number,including area code,of agent for service)_Copies to:Virginia TamK&L Gates 44/F,Edinburgh Tower,The Landmark 15 Queens Road Central,Hong Kong 852 2230 3535 Mark E.Crone,Esq.The Crone Law Group P.C.500 Fifth Avenue,Suite 938 New York,NY 10110 646 861 7891_Approximate date of commencement of proposed sale to public:As soon as practicableafter this registration statement becomes effective.If any of the securities being registered on this form are to be offered on a delayed orcontinuous basis pursuant to Rule 415 under the Securities Act,check the following box.If this Form is filed to register additional securities for an offering pursuant toRule 462(b)under the Securities Act,check the following box and list the Securities Actregistration statement number of the earlier effective registration statement for the sameoffering.If this Form is a post-effective amendment filed pursuant to Rule 462(c)under the SecuritiesAct,check the following box and list the Securities Act registration statement number of theearlier effective registration statement for the same offering.If this Form is a post-effective amendment filed pursuant to Rule 462(d)under the SecuritiesAct,check the following box and list the Securities Act registration statement number of theearlier effective registration statement for the same offering.Indicate by check mark whether the registrant is an emerging growth company as defined inRule 405 of the Securities Act:Emerging growth company If an emerging growth company that prepares its financial statements in accordance withaccounting principles generally accepted in the United States(“U.S.GAAP”),indicate by checkmark if the registrant has elected not to use the extended transition period for complying with anynew or revised financial accounting standards provided pursuant to Section 7(a)(2)(B)of theSecurities Act._ The term“new or revised financial accounting standard”refers to any update issued by theFinancial Accounting Standards Board to its Accounting Standards Codification after April 5,2012.The registrant hereby amends this registration statement on such dateor dates as may be necessary to delay its effective date until theregistrant shall file a further amendment that specifically states thatthis registration statement shall thereafter become effective in accordancewith Section 8(a)of the Securities Act or until the registration statementshall become effective on such date as the Commission,acting pursuant tosuch Section 8(a),may determine.Table of ContentsThe information in this prospectus is not complete and may be changed.Wemay not sell these securities until the registration statement filed withthe Securities and Exchange Commission is effective.This prospectus is notan offer to sell these securities and it is not soliciting an offer to buythese securities in any jurisdiction where the offer or sale is notpermitted.PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION,DATED,2023 Ordinary SharesChi Ko Holdings LimitedThis is the IPO of the ordinary shares,par value US$0.0001 per share(“OrdinaryShares”or“Shares”),of Chi Ko Holdings Limited(“CKHL”).We are offering Ordinary Shares of CKHL,representing of the Ordinary Sharesfollowing completion of the offering of CKHL.Following the offering,of theOrdinary Shares will be held by shareholders for general trading,assuming theunderwriters do not exercise the over-allotment option.Prior to this offering,there has been no public market for our Ordinary Shares.The offering price of our Ordinary Shares in this offering is expected to be between$and$per share.We intend to apply to list our Ordinary Shares onthe Nasdaq Capital Market under the symbol“CKHL.”Listing of our Ordinary Shares onNasdaq is a condition to the offering.There is no assurance that such applicationwill be approved,and if our application is not approved,this offering may not becompleted.Investors are cautioned that you are buying shares of a Cayman Islandsholding company with operations in Hong Kong by its Operating Subsidiary.CKHL is a holding company incorporated in the Cayman Islands with no materialoperations of its own,and we conduct our operations primarily in Hong Kong throughour key Operating Subsidiary Chiu&Lee Partners.References to the“Company,”“we,”“us,”and“our”in the prospectus are to CKHL,the Cayman Islands entitythat will issue the Ordinary Shares being offered.References to“Chiu&LeePartners”are to the entity operating the business.References to“OperatingSubsidiary”refer to Chiu&Lee Partners.This is an offering of the Ordinary Sharesof CKHL,the holding company in the Cayman Islands,instead of the shares of theOperating Subsidiary.Investors in this offering may never directly hold any equityinterests in the Operating Subsidiary.Investing in our Ordinary Shares is highly speculative and involves ahigh degree of risk.Before buying any shares,you should carefully readthe discussion of material risks of investing in our Ordinary Shares in“Risk Factors”beginning on page 22 of this prospectus.Our operations are primarily located in Hong Kong,a Special AdministrativeRegion of the Peoples Republic of China(“China”or the“PRC”),with its owngovernmental and legal system that is independent from mainland China and has its owndistinct rules and regulations.As of the date of this prospectus,we are not subjectto the PRC governments direct influence or discretion over the manner in which weconduct our business activities outside of the PRC.However,due to long-armprovisions under the current PRC laws and regulations,there remains regulatoryuncertainty with respect to the implementation and interpretation of laws in China.We are subject to the risks of uncertainty about any future actions of the PRCgovernment or authorities in Hong Kong in this regard.We may also be subject tounique risks due to the uncertainty of the interpretation and application of PRC lawsand regulations.Should the PRC government choose to exercise significant oversight and discretionover the conduct of our business,they may intervene in or influence our operations.Such governmental actions:could result in a material change in our operations and/or the value of oursecurities;could significantly limit or completely hinder our ability to continue ouroperations;could significantly limit or completely hinder our ability to offer orcontinue to offer our securities to investors;and may cause the value of our securities to significantly decline or beworthless.We are aware that recently the PRC government has initiated a series ofregulatory actions and new policies to regulate business operations in certain areasin China with little advance notice,including cracking down on illegal activities inthe securities market,enhancing supervision over China-based companies listedoverseas using a variable interest entity(“VIE”)structure,adopting new measuresto extend the scope of cybersecurity reviews,and expanding the efforts in anti-monopoly enforcement.Since these statements and regulatory actions are new,it ishighly uncertain how soon the legislative or administrative regulation making bodieswill respond and what existing or new laws or regulations or detailed implementationsand interpretations will be modified or promulgated,if any.It is also highlyuncertain what the potential impact such modified or new laws and regulations willhave on Chiu&Lee Partners daily business operation,its ability to accept foreigninvestments and the listing of our Ordinary Shares on U.S.or other foreignexchanges.The PRC government may intervene or influence our operations at any time and mayexert more control over offerings conducted overseas and foreign investment in HongKong-based issuers.The PRC government may also intervene or impose restrictions onour ability to move out of Hong Kong to distribute earnings and pay dividends or toreinvest in our business outside of Hong Kong.Furthermore,PRC regulatoryauthorities may in the future promulgate laws,regulations or Table of Contentsimplementing rules that require our company or any of our subsidiaries to obtainregulatory approval from PRC authorities before this offering.These actions couldresult in a material change in our operations and could significantly limit orcompletely hinder our ability to complete this offering or cause the value of ourOrdinary Shares to significantly decline or become worthless.See“ProspectusSummary Recent Regulatory Developments in the PRC”beginning on page 13.As of the date of this prospectus,our operations in Hong Kong and our registeredpublic offering in the United States are not subject to the review nor prior approvalof the Cyberspace Administration of China(the“CAC”)nor the China SecuritiesRegulatory Commission(the“CSRC”).Uncertainties still exist,however,due to thepossibility that laws,regulations,or policies in the PRC could change rapidly inthe future.In the event that(i)the PRC government expanded the categories ofindustries and companies whose foreign securities offerings are subject to review bythe CSRC or the CAC and that we are required to obtain such permissions or approvals,or(ii)we inadvertently concluded that relevant permissions or approvals were notrequired or that we did not receive or maintain relevant permissions or approvalsrequired,any action taken by the PRC government could significantly limit orcompletely hinder our operations in Hong Kong and our ability to offer or continue tooffer our Ordinary Shares to investors and could cause the value of such securitiesto significantly decline or be worthless.Furthermore,as more stringent criteria,including the Holding Foreign CompaniesAccountable Act(the“HFCA Act”),have been imposed by the SEC and the PublicCompany Accounting Oversight Board(“PCAOB”),recently,our Ordinary Shares may beprohibited from trading if our auditor cannot be fully inspected.Our auditor,ZHCPA,LLC,the independent registered public accounting firm that issues the auditreport included in this prospectus,as an auditor of companies that are tradedpublicly in the United States and a firm registered with the PCAOB,is subject tolaws in the United States pursuant to which the PCAOB conducts regular inspections toassess ZH CPA,LLCs compliance with applicable professional standards.ZH CPA,LLCis headquartered in Denver,Colorado,and can be inspected by the PCAOB.As of thedate of this prospectus,our auditor is not subject to the determinations announcedby the PCAOB on December 16,2021,relating to the PCAOBs inability to inspect orinvestigate completely registered public accounting firms headquartered in mainlandChina or Hong Kong because of a position taken by one or more authorities in the PRCor Hong Kong.On August 26,2022,CSRC,the Ministry of Finance of the PRC(the“MOF”),and the PCAOB signed a Statement of Protocol(the“Protocol”),governinginspections and investigations of audit firms based in China and Hong Kong.TheProtocol remains unpublished and is subject to further explanation andimplementation.Pursuant to the fact sheet with respect to the Protocol disclosed bythe SEC,the PCAOB shall have independent discretion to select any issuer audits forinspection or investigation and has the unfettered ability to transfer information tothe SEC.On December 15,2022,the PCAOB Board determined that the PCAOB was able tosecure complete access to inspect and investigate registered public accounting firmsheadquartered in mainland China and Hong Kong and voted to vacate its previousdeterminations to the contrary.However,should PRC authorities obstruct or otherwisefail to facilitate the PCAOBs access in the future,the PCAOB Board will considerthe need to issue a new determination.See“Risk Factors Risks Relating to OurOrdinary Shares Although the audit report included in this prospectus is preparedby U.S.auditors who are currently inspected by the PCAOB,there is no guarantee thatfuture audit reports will be prepared by auditors inspected by the PCAOB and,assuch,in the future investors may be deprived of the benefits of such inspection.Furthermore,trading in our securities may be prohibited under the HFCA Act if theSEC subsequently determines our audit work is performed by auditors that the PCAOB isunable to inspect or investigate completely,and as a result,U.S.nationalsecurities exchanges,such as the Nasdaq,may determine to delist our securities.Furthermore,on December 29,2022 the Accelerating Holding Foreign CompaniesAccountable Act was enacted,which amended the HFCA Act by requiring the SEC toprohibit an issuers securities from trading on any U.S.stock exchanges if itsauditor is not subject to PCAOB inspections for two consecutive years instead ofthree,and thus,reduced the time before the securities may be prohibited fromtrading or delisted”on page 27.We cannot assure you whether Nasdaq or otherregulatory authorities will apply additional or more stringent criteria to us.Suchuncertainty could cause the market price of our Ordinary Shares to be materially andadversely affected.Our management monitors the cash position of our Operating Subsidiary regularlyand prepares budgets on a monthly basis to ensure it has the necessary funds tofulfill its obligations for the foreseeable future and to ensure adequate liquidity.In the event that there is a need for cash or a potential liquidity issue,it will bereported to our chief financial officer and subject to approval by our board ofdirectors.For CKHL to transfer cash to its subsidiaries,CKHL is permitted under the lawsof the Cayman Islands and its memorandum and articles of association(as amended fromtime to time)to provide funding to our subsidiaries incorporated in the BVI and HongKong through loans or capital contributions.CKHLs subsidiary formed under the lawsof the BVI is permitted under the laws of the BVI to provide funding to our Hong KongOperating Subsidiary Chiu&Lee Partners subject to certain restrictions laid down inthe BVI Business Companies Act 2004(as amended)and memorandum and articles ofassociation of the relevant CKHLs subsidiary incorporated under the laws of theBVI.As a holding company,CKHL may rely on dividends and other distributions onequity paid by its subsidiaries for its cash and financing requirements.According tothe BVI Business Companies Act 2004(as amended),a BVI company may make dividendsdistribution to the extent that immediately after the distribution,the value of thecompanys assets exceeds its liabilities and that such company is able to pay itsdebts as they fall due.According to the Companies Ordinance of Hong Kong,a HongKong company may only make a distribution out of profits available for distribution.If any of CKHLs subsidiaries incur debt on its own behalf in the future,the Table of Contentsinstruments governing such debt may restrict their ability to pay dividends toCKHL.During the years ended March 31,2022 and 2021,Chiu&Lee Partners declaredcash dividends in the amounts of HK$12,000,000(approximately US$1,538,462)andHK$6,000,000(approximately US$769,231),respectively to the then-shareholder,Mr.Keung Yun Yuen.For the cash dividend declared for the year ended March 31,2021,allwere offset by the amount due from Mr.Keung Yun Yuen in March 2021.For the cashdividend declared for the year ended March 31,2022,HK$10,704,314(approximatelyUS$1,372,348)were offset by the amount due from Mr.Keung Yun Yuen in February 2022and HK$1,295,681(approximately US$166,113)were offset by the amount due from Mr.Keung in May 2022.During the years ended March 31,2022 and 2021 and as of the dateof this prospectus,CKHL did not declare or pay any dividends and there was notransfer of assets among CKHL and its subsidiaries.We do not have any currentintentions to distribute further earnings.If we determine to pay dividends on any ofour Ordinary Shares in the future,as a holding company,we will be dependent onreceipt of funds from our Hong Kong Operating Subsidiary Chiu&Lee Partners by wayof dividend payments.See“Dividend Policy,”and“Consolidated Statements of Changein Shareholders Equity in the Report of Independent Registered Public AccountingFirm”for further details.We are an“emerging growth company”and a“foreign private issuer”as defined under the federal securities laws and,as such,will be subjectto reduced public company reporting requirements.See“ProspectusSummary Implications of Being an Emerging Growth Company and a ForeignPrivate Issuer”for additional information.Upon the completion of this offering,the outstanding shares of CKHL will consistof Ordinary Shares,assuming the underwriters do not exercise theirover-allotment option to purchase additional Ordinary Shares,or Ordinary Shares,assuming the over-allotment option is exercised infull.CKHL will be a“controlled company”as defined under the Nasdaq Stock MarketRules because,immediately after the completion of this offering,our ControllingShareholder of CKHL will own%of the total issued and outstanding OrdinaryShares,representing%of the total voting power,assuming that theunderwriters do not exercise their over-allotment option,or%of the totalissued and outstanding Ordinary Shares,representing%of the total votingpower,assuming that the over-allotment option is exercised in full.Per Share Total(2)IPO price$Underwriting discounts(1)and commissions$Proceeds,before expenses,to us$_(1)Represents underwriting discounts equal to%per Ordinary Share.(2)Assumes that the underwriters do not exercise any portion of their over-allotment option.We expect our total cash expenses for this offering(including cash expensespayable to our underwriters for their out-of-pocket expenses)to be approximatelyUS$exclusive of the above discounts.In addition,we will pay additionalitems of value in connection with this offering that are viewed by the FinancialIndustry Regulatory Authority(“FINRA”),as underwriting compensation.Thesepayments will further reduce proceeds available to us before expenses.See“Underwriting.”Neither the Securities and Exchange Commission nor any state securitiescommission nor any other regulatory body has approved or disapproved ofthese securities or determined if this prospectus is truthful or complete.Any representation to the contrary is a criminal offense.This offering is being conducted on a firm commitment basis.The underwriters areobligated to take and pay for all of the shares if any such shares are taken.We havegranted the underwriters an option for a period of forty-five(45)days after theclosing of this offering to purchase up to additional Ordinary Shares from usat the IPO price,less underwriting discounts to cover over-allotments,if any.Ifthe underwriters exercise the option in full,assuming the public offering price perOrdinary Share is US$,the total underwriting discounts payable will beUS$and the total proceeds to us,before expenses,will be US$.We expect our total cash expenses for this offering to be approximately US$,including cash expenses payable to the underwriters for their reasonable out-of-pocket expenses,exclusive of the above discounts.If we complete this offering,net proceeds will be delivered to us on the closingdate.The underwriters expect to deliver the Ordinary Shares against payment as setforth under“Underwriting”on or about,2023.EF Huttondivision of Benchmark Investments,LLCThe date of this prospectus is,2023.Table of ContentsTABLE OF CONTENTS PageProspectus Summary 1Risk Factors 22Special Note Regarding Forward-Looking Statements 52Industry and Market Data 53Use of Proceeds 57Dividend Policy 58Capitalization 59Dilution 60Exchange Rate Information 62Corporate History and Structure 63Managements Discussion and Analysis of Financial Condition and Results ofOperations 65Business 81Regulations 98Management 106Related Party Transactions 112Principal Shareholders 113Description of Share Capital 114Shares Eligible for Future Sale 124Material Income Tax Considerations 127Underwriting 132Expenses Related to this Offering 137Legal Matters 138Experts 138Enforceability of Civil Liabilities 139Where You Can Find Additional Information 141Index to Consolidated Financial Statements F-1We are responsible for the information contained in this prospectus andany free writing prospectus we prepare or authorize.We have not,and theunderwriters have not,authorized anyone to provide you with differentinformation,and we and the underwriters take no responsibility for anyother information others may give you.We are not,and the underwriters arenot,making an offer to sell our Ordinary Shares in any jurisdiction wherethe offer or sale is not permitted.You should not assume that theinformation contained in this prospectus is accurate as of any date otherthan the date on the front cover of this prospectus,regardless of the timeof delivery of this prospectus or the sale of any Ordinary Shares.For investors outside the United States:Neither we nor the underwriters havedone anything that would permit this offering or possession or distribution of thisprospectus in any jurisdiction,other than the United States,where action for thatpurpose is required.Persons outside the United States who come into possession ofthis prospectus must inform themselves about,and observe any restrictions relatingto,the offering of the Ordinary Shares and the distribution of this prospectusoutside the United States.CKHL is incorporated under the laws of the Cayman Islands as an exempted companywith limited liability and a majority of our outstanding securities are owned by non-U.S.residents.Under the rules of the SEC we currently qualify for treatment as a“foreign private issuer.”As a foreign private issuer,we will not be required tofile periodic reports and financial statements with the SEC as frequently or aspromptly as domestic registrants whose securities are registered under theExchange Act.Until and including,2023(25 days after the date of thisprospectus),all dealers that buy,sell or trade our Ordinary Shares,whether or not participating in this offering,may be required to deliver aprospectus.This delivery requirement is in addition to the obligation ofdealers to deliver a prospectus when acting as underwriters and withrespect to their unsold allotments or subscriptions.iTable of ContentsCONVENTIONS THAT APPLY TO THIS PROSPECTUSUnless otherwise indicated or the context otherwise requires,all references inthis prospectus to:Articles or Articles of Association refers to the amended andrestated articles of association of our Company(as amended from time totime)adopted on and as amended,supplemented and/or otherwise modifiedfrom time to time;“BVI”refers to the British Virgin Islands;“Chiu&Lee Partners”refers to Chiu&Lee Partners Construction Co.,Limited,a company incorporated in Hong Kong with limited liability,anindirect wholly owned subsidiary of CKHL and our key Operating Subsidiary inHong Kong;“Companies Act”refers to the Companies Act(as revised)of the CaymanIslands,as amended,supplemented or otherwise modified from time to time;“Company,”“we,”“us,”and“CKHL”refers to Chi Ko Holdings Limited,an exempted Company incorporated in the Cayman Islands with limitedliability on March 29,2022,that will issue the Ordinary Shares beingoffered;“Controlling Shareholder”refers to the ultimate beneficial owner of theCompany,who is Mr.Keung Yun Yuen.See“Management”and“PrincipalShareholders”for more information;“COVID-19”refers to the Coronavirus Disease 2019;“Exchange Act”refers to the U.S.Securities Exchange Act of 1934,asamended;“HKD”or“HK$”refers to Hong Kong dollar(s),the lawful currency ofHong Kong;“Hong Kong”refers to Hong Kong Special Administrative Region of thePeoples Republic of China;“Independent Third Party”refers to a person or company who or which isindependent of and is not a 5%owner of,does not control and is notcontrolled by or under common control with any 5%owner and is not thespouse or descendant(by birth or adoption)of any 5%owner of the Company;“IPO”refers to an initial public offering of securities;“mainland China”refers to the PRC(excluding Hong Kong,Macau andTaiwan);Memorandum or Memorandum of Association refers to the amendedand restated memorandum of association of our Company(as amended from timeto time)adopted on and as amended,supplemented and/or otherwisemodified from time to time;“Nasdaq”refers to Nasdaq Stock Market LLC;“Orange Space”refers to ORANGE SPACE LIMITED,a BVI business companylimited by shares incorporated in the BVI,a direct wholly owned subsidiaryof CKHL;“Ordinary Shares”or“Shares”refer to our ordinary shares,par value$0.0001 per ordinary share;“PCAOB”refers to Public Company Accounting Oversight Board;“PRC”or“China”refers to the Peoples Republic of China;“PRC government”or“PRC authorities”,or variations of such words orsimilar expressions,refer to the central,provincial,and local governmentsof all levels in mainland China,including regulatory and administrativeauthorities,agencies and commissions,or any court,tribunal or any otherjudicial or arbitral body in mainland China;“PRC laws”refers to all applicable laws,statutes,rules,regulations,ordinances and other pronouncements having the binding effect of law inmainland China;iiTable of Contents“SEC”or“Securities and Exchange Commission”means the United StatesSecurities and Exchange Commission;“Securities Act”refers to the U.S.Securities Act of 1933,as amended;and“U.S.dollars”or“$”or“USD”or“dollars”refers to United Statesdollar(s),the lawful currency of the United States.We have made rounding adjustments to some of the figures included in thisprospectus.Accordingly,numerical figures shown as totals in some tables may not bean arithmetic aggregation of the figures that preceded them.Unless the context indicates otherwise,all information in this prospectusassumes no exercise by the underwriters of their over-allotment option.CKHL is a holding company with operations conducted in Hong Kong through its keyOperating Subsidiary in Hong Kong,Chiu&Lee Partners.Chiu&Lee Partnersreporting currency is Hong Kong dollars.This prospectus contains translations ofHong Kong dollars into U.S.dollars solely for the convenience of the reader.Unlessotherwise noted,all translations from Hong Kong dollars to U.S.dollars and fromU.S.dollars to Hong Kong dollars in this prospectus were calculated at the rate ofUS$1=HK$7.8,representing the noon buying rate in The City of New York for cabletransfers of HK$as certified for customs purposes by the Federal Reserve Bank of NewYork on the last trading day of March 31,2022.No representation is made that theHK$amount represents or could have been,or could be converted,realized or settledinto US$at that rate,or at any other rate.iiiTable of ContentsPROSPECTUS SUMMARYThe following summary highlights information contained elsewhere in thisprospectus and does not contain all of the information you should consider beforeinvesting in our Ordinary Shares.You should read the entire prospectus carefully,including“Risk Factors,”“Managements Discussion and Analysis of FinancialCondition and Results of Operations,”and our consolidated financial statementsand the related notes thereto,in each case included in this prospectus.You shouldcarefully consider,among other things,the matters discussed in the section ofthis prospectus titled“Business”before making an investment decision.Unless thecontext otherwise requires,all references to“CKHL,”“we,”“us,”“our,”the“Company,”and similar designations refer to Chi Ko Holdings Limited,an exemptedCayman Islands company and its wholly owned subsidiaries.OverviewWe are a holding company incorporated in the Cayman Islands with operationsconducted by our Hong Kong subsidiary,Chiu&Lee Partners.We are a one-stop shop construction service provider and establishedconstruction contractor in Hong Kong with over 40 years of experience in theconstruction industry,principally providing(i)foundation and site formationwork,which mainly include piling work,excavation and lateral support work andpile cap construction,work;(ii)general building work and associated services,which mainly include development of superstructures,alteration,and addition work;and(iii)other construction work,which mainly includes demolition work.We areable to undertake construction work as either a main contractor or a subcontractor.Competitive StrengthsWe believe the following competitive strengths differentiate us from ourcompetitors:Established market presence in the construction industry with over 40years of operating history;Possess a range of qualifications to undertake a range of constructionprojects;Strong and stable network of subcontractors and suppliers;Stable relationships with our customers;and Experienced and professional management team.Our StrategiesWe intend to pursue the following strategies to further expand our business:Adhere to our one-stop shop strategy and prudent financial management;Compete for sizeable and profitable construction projects;Grow through selected strategic acquisition for machinery and robotics;Enhance our participation in undertaking construction works from both theprivate sector and the public sector;and Further enhance our project management capability.Corporate History and StructureWe are a company principally engaged in construction work in Hong Kong.We haveobtained the relevant registration for our business operations via our keyOperating Subsidiary,Chiu&Lee Partners,as a general building contractor fromthe Buildings Department of Hong Kong since 1999 and as a specialist contractor inthe demolition work category,foundation work category,and site formation workcategory from the Buildings Department of Hong Kong since 2006.As of the date ofthis prospectus,our Controlling Shareholder owns of our issued sharecapital.In February 2022,Orange Space Limited was incorporated under the laws of theBritish Virgin Islands,as an intermediate holding company.1Table of ContentsIn March 2022,CKHL was incorporated under the laws of the Cayman Islands as anexempted company with limited liability,as the holding company of our BVI and HongKong subsidiaries.In April 2022,as part of the reorganization,CKHL acquired,through OrangeSpace,all the shares of Chiu&Lee Partners from the Controlling Shareholder andbecame the ultimate holding company of Orange Space and Chiu&Lee Partners.On May4,2022,CKHL issued 11,249,999 Ordinary Shares to the Controlling Shareholder.OnMay 4,2022,the Controlling Shareholder sold 551,250 Ordinary Shares each to Mr.Ling Chi Fai and Mr.Wong Chi Wai,respectively.Mr.Ling Chi Fai and Mr.Wong ChiWai are individuals that have no affiliation with CKHL and its subsidiaries.The chart below illustrates our corporate structure and subsidiaries as of thedate of this prospectus and upon completion of this offering(assuming theunderwriters do not exercise the over-allotment option):We are offering Ordinary Shares,representing%of the OrdinaryShares following completion of the offering of CKHL,assuming the underwriters donot exercise the over-allotment option.We will be a“controlled company”as defined under the Nasdaq Stock MarketRules because,immediately after the completion of this offering,our ControllingShareholder will own%of our total issued and outstanding Shares,representing%of the total voting power,assuming that the underwriters donot exercise their over-allotment option.Holding Company StructureCKHL is a holding company incorporated in the Cayman Islands with no materialoperations of its own,and we conduct our operations primarily in Hong Kong throughour key Operating Subsidiary Chiu&Lee Partners.This is an offering of theOrdinary Shares of CKHL,the holding company in the Cayman Islands,instead of theshares of the Operating Subsidiary.Investors in this offering will not directlyhold any equity interests in the Operating Subsidiary.As a result of our corporate structure,CKHLs ability to pay dividends maydepend upon dividends paid by our Operating Subsidiary.If our existing OperatingSubsidiary or any newly formed ones incur debt on their own behalf in the future,the instruments governing their debt may restrict their ability to pay dividends tous.2Table of ContentsTransfers of Cash To and From Our SubsidiariesOur management monitors the cash position of our Operating Subsidiary regularlyand prepares budgets on a monthly basis to ensure it has the necessary funds tofulfill its obligations for the foreseeable future and to ensure adequateliquidity.In the event that there is a need for cash or a potential liquidityissue,it will be reported to our Chief Financial Officer and subject to approvalby our board of directors.No regulatory approval is required for CKHL to transfer cash to itssubsidiaries is subject to the following:CKHL is permitted under the laws of theCayman Islands and its memorandum and articles of association(as amended from timeto time)to provide funding to our subsidiaries incorporated in the BVI and HongKong through loans or capital contributions.CKHLs subsidiary formed under thelaws of the BVI is permitted under the laws of the BVI to provide funding to ourHong Kong Operating Subsidiary Chiu&Lee Partners subject to certain restrictionslaid down in the BVI Business Companies Act 2004(as amended)and memorandum andarticles of association of the relevant CKHLs subsidiary incorporated under thelaws of the BVI.The ability of Orange Space,the direct subsidiary of CKHL,to transfer cash toCKHL is subject to the following:according to the BVI Business Companies Act 2004(as amended),Orange Space may make dividends distribution to the extent thatimmediately after the distribution,the value of the companys assets exceeds itsliabilities and that such company is able to pay its debts as they fall due.The ability of Chiu&Lee Partners to transfer cash to Orange Space is subjectto the following:according to the Companies Ordinance of Hong Kong,Chiu&LeePartners may only make a distribution out of profits available for distribution.Other than the above,we did not adopt or maintain any cash management policies andprocedures as of the date of this prospectus.During the years ended March 31,2022 and 2021,Chiu&Lee Partners declaredcash dividends in the amounts of HK$12,000,000(approximately US$1,538,462)andHK$6,000,000(approximately US$769,231),respectively to the then-shareholder,Mr.Keung Yun Yuen.For the cash dividend declared for the year ended March 31,2021,all were offset by the amount due from Mr.Keung Yun Yuen in March 2021.For thecash dividend declared for the year ended March 31,2022,HK$10,704,314(approximately US$1,372,348)were offset by the amount due from Mr.Keung Yun Yuenin February 2022 and HK$1,295,681(approximately US$166,113)were offset by theamount due from Mr.Keung Yun Yuen in May 2022.During the years ended March 31,2022 and 2021 and as at the date of this prospectus,CKHL did not declare or payany dividends and there was no transfer of assets among CKHL and its subsidiaries.If we determine to pay dividends on any of our Ordinary Shares in the future,as a holding company,we will be dependent on receipt of funds from oursubsidiaries by way of dividend payments.CKHL is permitted under the laws ofCayman Islands and its memorandum and articles of association(as amended from timeto time)to provide funding to its subsidiaries through loans or capitalcontributions.Chiu&Lee Partners is permitted under the laws of Hong Kong toprovide funding to CKHL through dividend distributions without restrictions on theamount of the funds distributed.We currently intend to retain all available funds and future earnings,if any,for the operation and expansion of our business and do not anticipate declaring orpaying any dividends in the foreseeable future.Any future determination related toour dividend policy will be made at the discretion of our board of directors afterconsidering our financial condition,results of operations,capital requirements,contractual requirements,business prospects and other factors the board ofdirectors deems relevant,and subject to the restrictions contained in any futurefinancing instruments.There are no statutory prohibitions in the Cayman Islands on the granting offinancial assistance by a company to another person for the purchase of,orsubscription for,its own,its holding companys or a subsidiarys shares.Therefore,a company may provide financial assistance provided the directors of thecompany,when proposing to grant such financial assistance,discharge their dutiesof care and act in good faith,for a proper purpose and in the interests of thecompany.Such assistance should be on an arms-length basis.Subject to theCompanies Act and our Memorandum and Articles of Association,our Company ingeneral meeting may declare dividends in any currency to be paid to the members butno dividend shall be declared in excess of the amount recommended by our board ofdirectors.Subject to a solvency test,as prescribed in the Companies Act,and theprovisions,if any,of the companys memorandum and articles of association,acompany may pay dividends and distributions out of its share premium account.Inaddition,based upon English case law that is likely to be persuasive in the CaymanIslands,dividends may be paid out of profits.The Cayman Islands does not impose awithholding tax on payments of dividends to shareholders in the Cayman Islands.3Table of ContentsUnder Hong Kong law,dividends could only be paid out of distributable profits(that is,accumulated realized profits less accumulated realized losses)or otherdistributable reserves,as permitted under Hong Kong law.Dividends cannot be paidout of share capital.There are no restrictions or limitation under the laws ofHong Kong imposed on the conversion of HK dollar into foreign currencies and theremittance of currencies out of Hong Kong,nor there is any restriction on foreignexchange to transfer cash between CKHL and its subsidiaries,across borders and toU.S.investors,nor there is any restrictions and limitations to distributeearnings from our business and subsidiaries,to CKHL and U.S.investors and amountsowed.Under the current practice of the Inland Revenue Department of Hong Kong,notax is payable in Hong Kong in respect to dividends paid by us.See“Dividend Policy”and“Risk Factors We rely on dividends and otherdistributions on equity paid by our subsidiaries to fund any cash and financingrequirements we may have,and any limitation on the ability of our subsidiaries tomake payments to us could have a material adverse effect on our ability to conductour business,”and Consolidated Statements of Change in Shareholders Equity inthe audited financial statements contained in this prospectus for more information.Enforceability of Civil LiabilitiesWe are incorporated under the laws of the Cayman Islands as an exempted companywith limited liability.Substantially all of our assets are located outside theUnited States.In addition,all of our directors and officers are nationals orresidents of jurisdictions other than the United States and all or a substantialportion of their assets are located outside the United States.As a result,it maybe difficult for investors to effect service of process within the United Statesupon us or these persons or to enforce judgments obtained in U.S.courts against usor them,including judgments predicated upon the civil liability provisions of thesecurities laws of the United States or any state in the United States.It may alsobe difficult for you to enforce judgments obtained in U.S.courts based on thecivil liability provisions of the U.S.federal securities laws against us and ourofficers and directors.We have appointed Cogency Global Inc.as our agent upon whom process may beserved in any action brought against us under the securities laws of the UnitedStates.Appleby,our counsel as to the laws of the Cayman Islands has advised us thatthere is uncertainty as to whether the courts of the Cayman Islands would(i)recognize or enforce judgments of U.S.courts obtained against us or our directorsor officers predicated upon the civil liability provisions of the securities lawsof the United States or any state in the United States,or(ii)entertain originalactions brought in the Cayman Islands against us or our directors or officerspredicated upon the securities laws of the United States or any state in the UnitedStates.Appleby has informed us that any final and conclusive judgment for a definitesum(not being a sum payable in respect of taxes or other charges of a like naturenor a fine or other penalty)and/or certain non-monetary judgments rendered in anyaction or proceedings brought against our Company in a foreign court(other thancertain judgments of a superior court of certain states of the Commonwealth ofAustralia)will be recognized as a valid judgment by the courts of the CaymanIslands without re-examination of the merits of the case.On general principles,wewould expect such proceedings to be successful provided that the court which gavethe judgment was competent to hear the action in accordance with privateinternational law principles as applied in the Cayman Islands and the judgment isnot contrary to public policy in the Cayman Islands,has not been obtained by fraudor in proceedings contrary to natural justice.Substantially all of our assets are located outside the United States.Inaddition,a majority of our directors and officers are nationals or residents ofjurisdictions other than the United States and all or a substantial portion oftheir assets are located outside the United States.As a result,it may bedifficult for investors to effect service of process within the United States uponus or these persons.Name Position Nationality ResidenceMr.Keung Yun Yuen Chairman of the board Chinese Hong KongMr.Chan Lee Chuen Director and Chief ExecutiveOfficer Chinese Hong KongMs.Choi Hiu Ying Chief Financial Officer Chinese Hong KongMr.ThirupathiNachiappan Independent Director Appointee Indian Hong KongMr.Wong Heung Ming Independent Director Appointee Chinese Hong KongDr.Liu Yuk Shing Independent Director Appointee Chinese Hong KongMr.Ng Wai Leung Quality Surveyor Manager Chinese Hong Kong4Table of ContentsCFN Lawyers,our counsel as to the laws of Hong Kong,has advised us that thereis uncertainty as to whether the courts of Hong Kong would(i)recognize or enforcejudgments of U.S.courts obtained against us or our directors or officerspredicated upon the civil liability provisions of the securities laws of the UnitedStates or any state in the United States,or(ii)entertain original actionsbrought in Hong Kong against us or our directors or officers predicated upon thesecurities laws of the United States or any state in the United States.A judgment of a court in the United States predicated upon U.S.federal orstate securities laws may be enforced in Hong Kong at common law by bringing anaction in a Hong Kong court on that judgment for the amount due thereunder,andthen seeking summary judgment on the strength of the foreign judgment,providedthat the foreign judgment,among other things,is(1)for a debt or a definite sumof money(not being taxes or similar charges to a foreign government taxingauthority or a fine or other penalty),and(2)final and conclusive on the meritsof the claim,but not otherwise.Such a judgment may not,in any event,be soenforced in Hong Kong if(a)it was obtained by fraud,(b)the proceedings in whichthe judgment was obtained were opposed to natural justice,(c)its enforcement orrecognition would be contrary to the public policy of Hong Kong,(d)the court ofthe United States was not jurisdictionally competent,or(e)the judgment was inconflict with a prior Hong Kong judgment.Hong Kong has no arrangement for the reciprocal enforcement of judgments withthe United States.As a result,there is uncertainty as to the enforceability inHong Kong,in original actions or in actions for enforcement,of judgments of U.S.courts of civil liabilities predicated solely upon the federal securities laws ofthe United States or the securities laws of any state or territory within theUnited States.Summary of Key RisksOur business is subject to a number of risks,including risks that may preventus from achieving our business objectives or may materially and adversely affectour business,financial condition,results of operations,cash flows,and prospectsthat you should consider before making a decision to invest in our Ordinary Shares.These risks are discussed more fully in“Risk Factors.”Risks Relating to Doing Business in Hong Kong Our key operations are in Hong Kong,a Special Administrative Region ofthe PRC.According to the long-arm provisions under the current PRC lawsand regulations,the PRC government may exercise significant oversight anddiscretion over the conduct of our business and may intervene in orinfluence our operations at any time,which could result in a materialchange in our operations and/or the value of our Ordinary Shares.The PRCgovernment may intervene or impose restrictions on our ability to movemoney out of Hong Kong to distribute earnings and pay dividends or toreinvest in our business outside of Hong Kong.Changes in the policies,regulations,rules,and the enforcement of laws of the PRC government mayalso be quick with little advance notice and our assertions and beliefs ofthe risk imposed by the PRC legal and regulatory system cannot be certain.See“Risk Factors Risks Relating to Doing Business in Hong Kong Ourkey operations are in Hong Kong,a Special Administrative Region of thePRC.According to the long-arm provisions under the current PRC laws andregulations,the PRC government may exercise significant oversight anddiscretion over the conduct of our business and may intervene in orinfluence our operations at any time,which could result in a materialchange in our operations and/or the value of our Ordinary Shares.Changesin the policies,regulations,rules,and the enforcement of laws of thePRC government may also be quick with little advance notice and ourassertions and beliefs of the risk imposed by the PRC legal and regulatorysystem cannot be certain”on page 22 of this prospectus.There are uncertainties regarding the interpretation and enforcement ofPRC and Hong Kong laws,rules,and regulations.See“Risk Factors Risks Relating to Doing Business in Hong Kong There are uncertaintiesregarding the interpretation and enforcement of PRC and Hong Kong laws,rules,and regulations”on page 23 of this prospectus.If the PRC government chooses to exert more oversight and control overofferings that are conducted overseas and/or foreign investment in China-based issuers,such action may significantly limit or completely hinderour ability to offer or continue to offer Ordinary Shares to investors andcause the value of our Ordinary Shares to significantly decline or beworthless.See“Risk Factors Risks Relating to Doing Business in HongKong If the PRC government chooses to exert more oversight and controlover offerings that are5Table of Contentsconducted overseas and/or foreign investment in China-based issuers,suchaction may significantly limit or completely hinder our ability to offeror continue to offer Ordinary Shares to investors and cause the value ofour Ordinary Shares to significantly decline or be worthless on page 23 ofthis prospectus.Adverse regulatory developments in China may subject us to additionalregulatory review,and additional disclosure requirements and regulatoryscrutiny to be adopted by the SEC in response to risks related to recentregulatory developments in China may impose additional compliancerequirements for companies like us with Hong Kong-based operations,all ofwhich could increase our compliance costs and subject us to additionaldisclosure requirements.See“Risk Factors Risks Relating to DoingBusiness in Hong Kong Adverse regulatory developments in China maysubject us to additional regulatory review,and additional disclosurerequirements and regulatory scrutiny to be adopted by the SEC in responseto risks related to recent regulatory developments in China may imposeadditional compliance requirements for companies like us with Hong Kong-based operations,all of which could increase our compliance costs andsubject us to additional disclosure requirements”on page 25 of thisprospectus.We may become subject to a variety of PRC laws and other obligationsregarding data security offerings that are conducted overseas and/orforeign investment in China-based issuers,and any failure to comply withapplicable laws and obligations could have a material and adverse effecton our business,financial condition and results of operations and mayhinder our ability to offer or continue to offer Ordinary Shares toinvestors and cause the value of our Ordinary Shares to significantlydecline or be worthless.See“Risk Factors Risks Relating to DoingBusiness in Hong Kong We may become subject to a variety of PRC lawsand other obligations regarding data security offerings that are conductedoverseas and/or foreign investment in China-based issuers,and any failureto comply with applicable laws and obligations could have a material andadverse effect on our business,financial condition and results ofoperations and may hinder our ability to offer or continue to offerOrdinary Shares to investors and cause the value of our Ordinary Shares tosignificantly decline or be worthless”on page 25 of this prospectus.Although the audit report included in this prospectus is prepared byU.S.auditors who are currently inspected by the PCAOB,there is noguarantee that future audit reports will be issued by auditors inspectedby the PCAOB,and,as such,in the future,investors may be deprived ofthe benefits of such inspection.Furthermore,trading in our OrdinaryShares may be prohibited under the HFCA Act if the SEC subsequentlydetermines our audit work is performed by auditors that the PCAOB isunable to inspect or investigate completely,and as a result,U.S.national securities exchanges,such as the Nasdaq,may determine todelist our securities.Furthermore,on December 29,2022 the AcceleratingHolding Foreign Companies Accountable Act was enacted,which amended theHFCA Act by requiring the SEC to prohibit an issuers securities fromtrading on any U.S.stock exchanges if its auditor is not subject to PCAOBinspections for two consecutive years instead of three,and thus,reducedthe time before our Ordinary Shares may be prohibited from trading ordelisted.See“Risk Factors Risks Relating to Doing Business in HongKong Although the audit report included in this prospectus is preparedby U.S.auditors who are currently inspected by the PCAOB,there is noguarantee that future audit reports will be issued by auditors inspectedby the PCAOB,and,as such,in the future,investors may be deprived ofthe benefits of such inspection.Furthermore,trading in our OrdinaryShares may be prohibited under the HFCA Act if the SEC subsequentlydetermines our audit work is performed by auditors that the PCAOB isunable to inspect or investigate completely,and as a result,U.S.national securities exchanges,such as the Nasdaq,may determine to delistour securities.Furthermore,on December 29,2022 the Accelerating HoldingForeign Companies Accountable Act was enacted,which amended the HFCA Actby requiring the SEC to prohibit an issuers securities from trading onany U.S.stock exchanges if its auditor is not subject to PCAOBinspections for two consecutive years instead of three,and thus,reducedthe time before our Ordinary Shares may be prohibited from trading ordelisted”on page 27 of this prospectus.The recent joint statement by the SEC,proposed rule changes submitted byNasdaq,and an act passed by the U.S.Senate and the U.S.House ofRepresentatives all call for additional and more stringent criteria to beapplied to emerging market companies.These developments could adduncertainties to our offering,business operations,share price,andreputation.See“Risk Factors Risks Relating to Doing Business6Table of Contentsin Hong Kong The recent joint statement by the SEC,proposed rulechanges submitted by Nasdaq,and an act passed by the U.S.Senate and theU.S.House of Representatives all call for additional and more stringentcriteria to be applied to emerging market companies.These developmentscould add uncertainties to our offering,business operations,share price,and reputation”on page 29 of this prospectus.The enactment of Law of the PRC on Safeguarding National Security in theHong Kong Special Administrative Region could impact our Hong Kongsubsidiary.See“Risk Factors Risks Relating to Doing Business in HongKong The enactment of Law of the PRC on Safeguarding National Securityin the Hong Kong Special Administrative Region could impact our Hong Kongsubsidiary”on page 30 of this prospectus.If we become subject to the recent scrutiny,criticism,and negativepublicity involving U.S.-listed China-based companies,we may have toexpend significant resources to investigate and/or defend the matter,which could harm our business operations,this offering,and ourreputation and could result in a loss of your investment in our OrdinaryShares,in particular if such matter cannot be addressed and resolvedfavorably.See“Risk Factors Risks Relating to Doing Business in HongKong If we become subject to the recent scrutiny,criticism,andnegative publicity involving U.S.-listed China-based companies,we mayhave to expend significant resources to investigate and/or defend thematter,which could harm our business operations,this offering,and ourreputation and could result in a loss of your investment in our OrdinaryShares,in particular if such matter cannot be addressed and resolvedfavorably”on page 30 of this prospectus.A downturn in Hong Kong,mainland China,or global economy,or a change ineconomic and political policies of China,could materially and adverselyaffect our business and financial condition.See“Risk Factors RisksRelating to Doing Business in Hong Kong A downturn in the Hong Kong,China,or global economy,or a change in economic and political policiesof China,could materially and adversely affect our business and financialcondition”on page 30 of this prospectus.Because our business is conducted in Hong Kong dollars and the price ofour Ordinary Shares is quoted in U.S.dollars,changes in currencyconversion rates may affect the value of your investments.See“RiskFactors Risks Relating to Doing Business in Hong Kong Because ourbusiness is conducted in Hong Kong dollars and the price of our OrdinaryShares is quoted in U.S.dollars,changes in currency conversion rates mayaffect the value of your investments”on page 31 of this prospectus.There are political risks associated with conducting business inHong Kong.See“Risk Factors Risks Relating to Doing Business in HongKong There are political risks associated with conducting business inHong Kong”on page 31 of this prospectus.The Hong Kong legal system embodies uncertainties that could limit theavailability of legal protections.See“Risk Factors Risks Relating toDoing Business in Hong Kong The Hong Kong legal system embodiesuncertainties that could limit the availability of legal protections”onpage 32 of this prospectus.You may experience difficulties in effecting service of legal process,enforcing foreign judgments or bringing actions in Hong Kong against us orour management named in this prospectus based on Hong Kong laws.See“Risk Factors Risks Relating to Doing Business in Hong Kong You mayexperience difficulties in effecting service of legal process,enforcingforeign judgments or bringing actions in Hong Kong against us or ourmanagement named in this prospectus based on Hong Kong laws”on page 32of this prospectus.Changes in international trade policies,trade disputes,barriers totrade,or the emergence of a trade war may dampen growth in Hong Kong,where the majority of our clients reside.See“Risk Factors RisksRelating to Doing Business in Hong Kong Changes in international tradepolicies,trade disputes,barriers to trade,or the emergence of a tradewar may dampen growth in Hong Kong,where the majority of our clientsreside”on page 32 of this prospectus.7Table of ContentsRisks Related to Our Business and Industry If we are unable to accurately estimate the overall risks,revenues,orcosts on our projects,we may incur contract losses or achieve lower thananticipated profits.See“Risk Factors Risks Related to Our Businessand Industry If we are unable to accurately estimate the overall risks,revenues,or costs on our projects,we may incur contract losses orachieve lower than anticipated profits”on page 33 of this prospectus.We may be unable to obtain or maintain sufficient bonding capacity,whichcould materially adversely affect our business.See“Risk Factors Risks Related to Our Business and Industry We may be unable to obtainor maintain sufficient bonding capacity,which could materially adverselyaffect our business”on page 33 of this prospectus.Design-build contracts subject us to the risk of design errors andomissions.See“Risk Factors Risks Related to Our Business andIndustry Design-build contracts subject us to the risk of design errorsand omissions”on page 34 of this prospectus.We depend on third parties for equipment and supplies essential to operateour business.See“Risk Factors Risks Related to Our Business andIndustry We depend on third parties for equipment and suppliesessential to operate our business”on page 34 of this prospectus.The construction services industry is highly schedule driven,and ourfailure to meet the schedule requirements of our contracts could adverselyaffect our reputation and/or expose us to financial liability.See“RiskFactors Risks Related to Our Business and Industry The constructionservices industry is highly schedule driven,and our failure to meet theschedule requirements of our contracts could adversely affect ourreputation and/or expose us to financial liability”on page 34 of thisprospectus.Failure to maintain safe work sites could result in significant losses,which could materially affect our business and reputation.See“RiskFactors Risks Related to Our Business and Industry Failure tomaintain safe work sites could result in significant losses,which couldmaterially affect our business and reputation”on page 34 of thisprospectus.Our revenue mainly relies on successful tenders or acceptance of ourquotations for construction projects which are non-recurring in nature andany failure in securing projects from our existing customers and/or newcustomers in the future would affect our business operation and financialresults.See“Risk Factors Risks Related to Our Business and Industry Our revenue mainly relies on successful tenders or acceptance of ourquotations for construction projects which are non-recurring in nature andany failure in securing projects from our existing customers and/or newcustomers in the future would affect our business operation and financialresults”on page 34 of this prospectus.A significant portion of our revenue was generated from contracts awardedby a limited number of customers and any significant decrease in thenumber of projects with our major customers and any significant decreasein the number of projects with our major customers may materially andadversely affect our financial condition and operating results.See“RiskFactors Risks Related to Our Business and Industry A significantportion of our revenue was generated from contracts awarded by a limitednumber of customers and any significant decrease in the number of projectswith our major customers and any significant decrease in the number ofprojects with our major customers may materially and adversely affect ourfinancial condition and operating results”on page 34 of this prospectus.We may not be able to bill and receive the full amount of gross amountsdue from customers for contract work and our revenue may fluctuate due tovariation orders.See“Risk Factors Risks Related to Our Business andIndustry We may not be able to bill and receive the full amount ofgross amounts due from customers for contract work and our revenue mayfluctuate due to variation orders”on page 35 of this prospectus.We rely on our subcontractors to help complete our projects and to supplythe machinery required.See“Risk Factors Risks Related to OurBusiness and Industry We rely on our subcontractors to help completeour projects and to supply the machinery required”on page 35 of thisprospectus.8Table of Contents As we from time to time engage subcontractors in our work,we may bearresponsibilities for any non-performance,delayed performance,sub-standard performance,or non-compliance of our subcontractors.See“RiskFactors Risks Related to Our Business and Industry As we from timeto time engage subcontractors in our work,we may bear responsibilitiesfor any non-performance,delayed performance,sub-standard performance,ornon-compliance of our subcontractors”on page 36 of this prospectus.There is no guarantee that safety measures and procedures implemented atour construction sites could prevent the occurrence of industrialaccidents of all kinds,which in turn might lead to claims in respect toemployees compensation,personal injuries,fatal accidents,and/orproperty damages against us.See“Risk Factors Risks Related to OurBusiness and Industry There is no guarantee that safety measures andprocedures implemented at our construction sites could prevent theoccurrence of industrial accidents of all kinds,which in turn might leadto claims in respect to employees compensation,personal injuries,fatalaccidents,and/or property damages against us”on page 36 of thisprospectus.We determine the price of our quotation or tender based on the estimatedtime and costs to be involved in a project and the actual time and costsincurred may deviate from our estimate due to unexpected circumstances,thereby leading to cost overruns and adversely affecting our operationsand financial results.See“Risk Factors Risks Related to Our Businessand Industry We determine the price of our quotation or tender based onthe estimated time and costs to be involved in a project and the actualtime and costs incurred may deviate from our estimate due to unexpectedcircumstances,thereby leading to cost overruns and adversely affectingour operations and financial results”on page 36 of this prospectus.The geological conditions of construction sites are difficult toanticipate and may result in higher project expenses.See“Risk Factors Risks Related to Our Business and Industry The geological conditionsof construction sites are difficult to anticipate and may result in higherproject expenses”on page 37 of this prospectus.There is no assurance that we can maintain the qualifications,licenses,and registrations for the operation of our construction business.See“Risk Factors Risks Related to Our Business and Industry There is noassurance that we can maintain the qualifications,licenses,andregistrations for the operation of our construction business”on page 37of this prospectus.We rely on the service of our authorized signatory(ies)(“AuthorizedSignatory”)and Technical Director for our registrations maintained withthe Buildings Department of Hong Kong.See“Risk Factors Risks Relatedto Our Business and Industry We rely on the service of our authorizedsignatory(ies)(“Authorized Signatory”)and Technical Director for ourregistrations maintained with the Buildings Department of Hong Kong”onpage 37 of this prospectus.Cash inflows and outflows in connection with construction projects may beirregular thus may affect our net cash flow position.See“Risk Factors Risks Related to Our Business and Industry Cash inflows and outflowsin connection with construction projects may be irregular thus may affectour net cash flow position”on page 37 of this prospectus.We may be liable for damage caused to underground service utilities andinfrastructures and/or foundation of aged building adjacent to theconstruction sites where we carry out our construction projects.See“Risk Factors Risks Related to Our Business and Industry We may beliable for damage caused to underground service utilities andinfrastructures and/or foundation of aged building adjacent to theconstruction sites where we carry out our construction projects”on page38 of this prospectus.Claims in connection with employees compensation or personal injuriesmay arise and affect our reputation and operations.See“Risk Factors Risks Related to Our Business and Industry Claims in connection withemployees compensation or personal injuries may arise and affect ourreputation and operations”on page 38 of this prospectus.We face keen competition from other players in the market.See“RiskFactors Risks Related to Our Business and Industry We face keencompetition from other players in the market”on page 38 of thisprospectus.9Table of Contents Any deterioration in the prevailing market conditions in the constructionindustry may adversely affect our performance and financial condition.See“Risk Factors Risks Related to Our Business and Industry Anydeterioration in the prevailing market conditions in the constructionindustry may adversely affect our performance and financial condition”onpage 38 of this prospectus.We are dependent on our key executives,management team and professionalstaff.See“Risk Factors Risks Related to Our Business and Industry We are dependent on our key executives,management team and professionalstaff”on page 39 of this prospectus.We may be unable to obtain sufficient funding on terms acceptable to us,or at all.See“Risk Factors Risks Related to Our Business andIndustry We may be unable to obtain sufficient funding on termsacceptable to us,or at all”on page 39 of this prospectus.Our insurance coverage may be inadequate to protect us from potentiallosses.See“Risk Factors Risks Related to Our Business and Industry Our insurance coverage may be inadequate to protect us from potentiallosses”on page 39 of this prospectus.We may be subject to litigation,arbitration,or other legal proceedingrisk.See“Risk Factors Risks Related to Our Business and Industry We may be subject to litigation,arbitration,or other legal proceedingrisk”on page 39 of this prospectus.We rely on our customer and subcontractor for the provision of machineryand equipment at construction sites.See“Risk Factors Risks Relatedto Our Business and Industry We rely on our customer and subcontractorfor the provision of machinery and equipment at construction sites”onpage 39 of this prospectus.We rely on a stable workforce to carry out our construction projects.Ifwe or our subcontractors experience any shortage of labor,industrialactions,strikes,or material increase in labor costs,our operations andfinancial results would be adversely affected.See“Risk Factors RisksRelated to Our Business and Industry We rely on a stable workforce tocarry out our construction projects.If we or our subcontractorsexperience any shortage of labor,industrial actions,strikes,or materialincrease in labor costs,our operations and financial results would beadversely affected”on page 40 of this prospectus.We may be unable to successfully implement our future business plans andobjectives.See“Risk Factors Risks Related to Our Business andIndustry We may be unable to successfully implement our future businessplans and objectives”on page 40 of this prospectus.A sustained outbreak of the COVID-19 pandemic could have a materialadverse impact on our business,operating results,and financialcondition.See“Risk Factors Risks Related to Our Business andIndustry A sustained outbreak of the COVID-19 pandemic could have amaterial adverse impact on our business,operating results,and financialcondition”on page 40 of this prospectus.A severe or prolonged downturn in the global economy could materially andadversely affect our business and results of operations.See“RiskFactors Risks Related to Our Business and Industry A severe orprolonged downturn in the global economy could materially and adverselyaffect our business and results of operations”on page 41 of thisprospectus.Risks Related to Our Ordinary Shares There has been no public market for our Ordinary Shares prior to thisoffering;if an active trading market does not develop you may not be ableto resell our Shares at any reasonable price.See“Risk Factors RisksRelated to Our Ordinary Shares There has been no public market for ourOrdinary Shares prior to this offering;if an active trading market doesnot develop you may not be able to resell our Shares at any reasonableprice”on page 42 of this prospectus.The trading price of our Ordinary Shares may be volatile,which couldresult in substantial losses to you.See“Risk Factors Risks Relatedto Our Ordinary Shares The trading price of our Ordinary Shares may bevolatile,which could result in substantial losses to you”on page 42 ofthis prospectus.10Table of Contents We rely on dividends and other distributions on equity paid by oursubsidiaries to fund our cash and financing requirements we may have,andany limitation on the ability of our subsidiaries to make payments to uscould have a material adverse effect on our ability to conduct ourbusiness.See“Risk Factors Risks Related to Our Ordinary Shares Werely on dividends and other distributions on equity paid by oursubsidiaries to fund our cash and financing requirements we may have,andany limitation on the ability of our subsidiaries to make payments to uscould have a material adverse effect on our ability to conduct ourbusiness”on page 43 of this prospectus.Our lack of effective internal controls over financial reporting mayaffect our ability to accurately report our financial results or preventfraud,which may affect the market for and the price of our OrdinaryShares.See“Risk Factors Risks Related to Our Ordinary Shares Ourlack of effective internal controls over financial reporting may affectour ability to accurately report our financial results or prevent fraud,which may affect the market for and the price of our Ordinary Shares”onpage 43 of this prospectus.Our Ordinary Shares are expected to initially trade under$5.00 per shareand thus would be known as a“penny stock.”Trading in penny stocks hascertain restrictions and these restrictions could negatively affect theprice and liquidity of our Ordinary Shares.See“Risk Factors RisksRelated to Our Ordinary Shares Our Ordinary Shares are expected toinitially trade under$5.00 per share and thus would be known as a“pennystock.”Trading in penny stocks has certain restrictions and theserestrictions could negatively affect the price and liquidity of ourOrdinary Shares”on page 44 of this prospectus.If we fail to meet applicable listing requirements,Nasdaq may delist ourOrdinary Shares from trading,in which case the liquidity and market priceof our Ordinary Shares could decline.See“Risk Factors Risks Relatedto Our Ordinary Shares If we fail to meet applicable listingrequirements,Nasdaq may delist our Ordinary Shares from trading,in whichcase the liquidity and market price of our Ordinary Shares could decline”on page 44 of this prospectus.The market price of our Ordinary Shares could be negatively affected bysales of substantial amounts of our Ordinary Shares in the public markets.See“Risk Factors Risks Related to Our Ordinary Shares The marketprice of our Ordinary Shares could be negatively affected by sales ofsubstantial amounts of our Ordinary Shares in the public markets”on page of this prospectus.If you purchase our Ordinary Shares in this offering,you will incurimmediate and substantial dilution in the book value of your Shares.See“Risk Factors Risks Related to Our Ordinary Shares If you purchaseour Ordinary Shares in this offering,you will incur immediate andsubstantial dilution in the book value of your Shares”on page 44 of thisprospectus.If a limited number of participants in this offering purchase asignificant percentage of the offering,the effective public float may besmaller than anticipated and the price of our Ordinary Shares may be morevolatile than it otherwise would be.See“Risk Factors Risks Relatedto Our Ordinary Shares If a limited number of participants in thisoffering purchase a significant percentage of the offering,the effectivepublic float may be smaller than anticipated and the price of our OrdinaryShares may be more volatile than it otherwise would be”on page 45 ofthis prospectus.Our directors,officers,and principal shareholders have significantvoting power and may take actions that may not be in the best interests ofour other shareholders.See“Risk Factors Risks Related to OurOrdinary Shares Our directors,officers,and principal shareholdershave significant voting power and may take actions that may not be in thebest interests of our other shareholders”on page 45 of this prospectus.Our board of directors may decline to register the transfer of OrdinaryShares in certain circumstances.See“Risk Factors Risks Related toOur Ordinary Shares Our board of directors may decline to register thetransfer of Ordinary Shares in certain circumstances”on page 45 of thisprospectus.11Table of Contents Because the amount,timing,and whether or not we distribute dividends atall is entirely at the discretion of our board of directors,you must relyon price appreciation of our Ordinary Shares for return on yourinvestment.See“Risk Factors Risks Related to Our Ordinary Shares Because the amount,timing,and whether or not we distribute dividends atall is entirely at the discretion of our board of directors,you must relyon price appreciation of our Ordinary Shares for return on yourinvestment”on page 46 of this prospectus.Our management has broad discretion to determine how to use the fundsraised in the offering and may use them in ways that may not enhance ourresults of operations or the price of our Ordinary Shares.See“RiskFactors Risks Related to Our Ordinary Shares Our management hasbroad discretion to determine how to use the funds raised in the offeringand may use them in ways that may not enhance our results of operations orthe price of our Ordinary Shares”on page 46 of this prospectus.Our disclosure controls and procedures may not prevent or detect allerrors or acts of fraud.See“Risk Factors Risks Related to OurOrdinary Shares Our disclosure controls and procedures may not preventor detect all errors or acts of fraud”on page 46 of this prospectus.We do not intend to pay dividends for the foreseeable future.See“RiskFactors Risks Related to Our Ordinary Shares We do not intend to paydividends for the foreseeable future”on page 46 of this prospectus.Securities analysts may not publish favorable research or reports aboutour business or may publish no information at all,which could cause ourOrdinary Share price or trading volume to decline.See“Risk Factors Risks Related to Our Ordinary Shares Securities analysts may notpublish favorable research or reports about our business or may publish noinformation at all,which could cause our Ordinary Share price or tradingvolume to decline”on page 47 of this prospectus.Certain judgments obtained against us by our shareholders may not beenforceable.See“Risk Factors Risks Related to Our Ordinary Shares Certain judgments obtained against us by our shareholders may not beenforceable”on page 47 of this prospectus.You may have more difficulties protecting your interests than you would asa shareholder of a U.S.corporation.See“Risk Factors Risks Relatedto Our Ordinary Shares You may have more difficulties protecting yourinterests than you would as a shareholder of a U.S.corporation”on page48 of this prospectus.Cayman Islands economic substance requirements may have an effect on ourbusiness and operations.See“Risk Factors Risks Related to OurOrdinary Shares Cayman Islands economic substance requirements may havean effect on our business and operations”on page 48 of this prospectus.We are a foreign private issuer within the meaning of the rules under theExchange Act,and,as such,we are exempt from certain provisionsapplicable to U.S.domestic public companies.See“Risk Factors RisksRelated to Our Ordinary Shares We are a foreign private issuer withinthe meaning of the rules under the Exchange Act,and,as such,we areexempt from certain provisions applicable to U.S.domestic publiccompanies”on page 48 of this prospectus.As a foreign private issuer,we are permitted to adopt certain homecountry practices in relation to corporate governance matters that differsignificantly from Nasdaq corporate governance listing standards.Thesepractices may afford less protection to shareholders than they would enjoyif we complied fully with Nasdaq corporate governance listing standards.See“Risk Factors Risks Related to Our Ordinary Shares As a foreignprivate issuer,we are permitted to adopt certain home country practicesin relation to corporate governance matters that differ significantly fromNasdaq corporate governance listing standards.These practices may affordless protection to shareholders than they would enjoy if we complied fullywith Nasdaq corporate governance listing standards”on page 49 of thisprospectus.12Table of Contents We may lose our foreign private issuer status in the future,which couldresult in significant additional costs and expenses.See“Risk Factors Risks Related to Our Ordinary Shares We may lose our foreign privateissuer status in the future,which could result in significant additionalcosts and expenses”on page 49 of this prospectus.There can be no assurance that we will not be a passive foreign investmentcompany(“PFIC”),for U.S.federal income tax purposes for any taxableyear,which could result in adverse U.S.federal income tax consequencesto U.S.holders of our Ordinary Shares.See“Risk Factors RisksRelated to Our Ordinary Shares There can be no assurance that we willnot be a passive foreign investment company(“PFIC”),for U.S.federalincome tax purposes for any taxable year,which could result in adverseU.S.federal income tax consequences to U.S.holders of our OrdinaryShares”on page 49 of this prospectus.We are an emerging growth company within the meaning of the Securities Actand may take advantage of certain reduced reporting requirements.See“Risk Factors Risks Related to Our Ordinary Shares We are anemerging growth company within the meaning of the Securities Act and maytake advantage of certain reduced reporting requirements”on page 50 ofthis prospectus.We will incur increased costs as a result of being a public company,particularly after we cease to qualify as an“emerging growth company.”See“Risk Factors Risks Related to Our Ordinary Shares We will incurincreased costs as a result of being a public company,particularly afterwe cease to qualify as an“emerging growth company”on page 50 of thisprospectus.As a“controlled company”under the rules of the Nasdaq Capital Market,we may choose to exempt our Company from certain corporate governancerequirements that could have an adverse effect on our public shareholders.See“Risk Factors Risks Related to Our Ordinary Shares As a“controlled company”under the rules of the Nasdaq Capital Market,wemay choose to exempt our Company from certain corporate governancerequirements that could have an adverse effect on our publicshareholders”on page 50 of this prospectus.Recent Regulatory Developments in the PRCWe are aware that,recently,the PRC government initiated a series ofregulatory actions and statements to regulate business operations in certain areasin China with little advance notice,including cracking down on illegal activitiesin the securities market,enhancing supervision over China-based companies listedoverseas using variable interest entity(“VIE”)structure,adopting new measuresto extend the scope of cybersecurity reviews,and expanding the efforts in anti-monopoly enforcement.For example,on July 6,2021,the General Office of theCommunist Party of China Central Committee and the General Office of the StateCouncil jointly issued a document to crack down on illegal activities in thesecurities market and promote the high-quality development of the capital market,which,among other things,requires the relevant governmental authorities tostrengthen cross-border oversight of law enforcement and judicial cooperation,toenhance supervision over China-based companies listed overseas,and to establishand improve the system of extraterritorial application of the PRC securities laws.Also,on July 10,2021,the Cyberspace Administration of China(the“CAC”)issueda revised draft of the Measures for Cybersecurity Review for public comments(the“Revised Draft”),which required that,in addition to“operators of criticalinformation infrastructure,”any“data processor”controlling personalinformation of no less than one million users that seeks to list in a foreign stockexchange should also be subject to cybersecurity review,and it further elaboratedthe factors to be considered when assessing the national security risks of therelevant activities.On December 24,2021,the CSRC released the Administrative Provisions of theState Council Regarding the Overseas Issuance and Listing of Securities by DomesticEnterprises(Draft for Comments)(the“Draft Administrative Provisions”)and theMeasures for the Overseas Issuance of Securities and Listing Record-Filings byDomestic Enterprises(Draft for Comments)(together with the Draft AdministrativeProvisions,the“Draft Rules Regarding Overseas Listing”).The Draft RulesRegarding Overseas Listing lays out the filing regulation arrangement for bothdirect and indirect overseas listing and clarifies the determination criteria forindirect overseas listing in overseas markets.Among other things,if a domesticenterprise intends to indirectly offer and list securities in an overseas market,the record-filing obligation is with a major operating entity incorporated in thePRC,and such filing obligation shall be completed within three working days afterthe overseas listing application is submitted.The required filing materials for anIPO and listing13Table of Contentsshall include,but not be limited to:regulatory opinions,record filing,approval,and other documents issued by competent regulatory authorities of relevantindustries(if applicable),and security assessment opinions issued by relevantregulatory authorities(if applicable).On December 27,2021,the NationalDevelopment and Reform Commission(“NDRC”)and the Ministry of Commerce jointlyissued the Special Administrative Measures for Entry of Foreign Investment(Negative List)(2021 Version)(“Negative List”),which became effective andreplaced the previous version.Pursuant to the Negative List,if a PRC company,which engages in any business where foreign investment is prohibited under theNegative List,or prohibited businesses seeks an overseas offering or listing,itmust obtain the approval from competent governmental authorities.Based on a set ofQ&A published on the NDRCs official website,a NDRC official indicated that aftera PRC company submits its application for overseas listing to the CSRC and wherematters relating to prohibited businesses under the Negative List are implicated,the CSRC will consult the regulatory authorities having jurisdiction over therelevant industries and fields.Because the Draft Rules Regarding Overseas Listingare currently in draft form and given the novelty of the Negative List,thereremain substantial uncertainties as to whether and what requirements,includingfiling requirements,will be imposed on a PRC company with respect to its listingand offerings overseas as well as with the interpretation and implementation ofexisting and future regulations in this regard.On February 17,2023,the CSRC issued the Trial Administrative Measures ofOverseas Securities Offering and Listing by Domestic Enterprises,or the TrialMeasures,which will become effective on March 31,2023.On the same date of theissuance of the Trial Measures,the CSRC circulated No.1 to No.5 SupportingGuidance Rules,the Notes on the Trial Measures,the Notice on AdministrationArrangements for the Filing of Overseas Listings by Domestic Enterprises and therelevant CSRC Answers to Reporter Questions on the official website of the CSRC,orcollectively,the Guidance Rules and Notice.The Trial Measures,together with theGuidance Rules and Notice,reiterate the basic supervision principles as reflectedin the Draft Overseas Listing Regulations by providing substantially the samerequirements for filings of overseas offering and listing by domestic companies,yet made the following updates compared to the Draft Overseas Listing Regulations:(a)further clarification of the circumstances prohibiting overseas issuance andlisting;(b)further clarification of the standard of indirect overseas listingunder the principle of substance over form,and(c)adding more details of filingprocedures and requirements by setting different filing requirements for differenttypes of overseas offering and listing.Under the Trial Measures and the GuidanceRules and Notice,domestic companies conducting overseas securities offering andlisting activities,either in direct or indirect form,shall complete filingprocedures with the CSRC pursuant to the requirements of the Trial Measures withinthree working days following its submission of initial public offerings or listingapplication.The companies that have already been listed on overseas stockexchanges or have obtained the approval from overseas supervision administrationsor stock exchanges for its offering and listing and will complete their overseasoffering and listing prior to September 30,2023 are not required to make immediatefilings for its listing yet need to make filings for subsequent offerings inaccordance with the Trial Measures.The companies that have already submitted anapplication for an initial public offering to overseas supervision administrationsprior to the effective date of the Trial Measures but have not yet obtained theapproval from overseas supervision administrations or stock exchanges for theoffering and listing may arrange for the filing within a reasonable time period andshould complete the filing procedure before such companies overseas issuance andlisting.On January 4,2022,the CAC,the NDRC,and several other administrationsjointly adopted and published the revised Cybersecurity Review Measures(“CRM”),which took effect on February 15,2022,and replaced the Revised Draft issued onJuly 10,2021.Pursuant to the revised CRM,if a network platform operator holdingpersonal information of over one million users seeks for“foreign”listing,itmust apply for the cybersecurity review.In addition,operators of criticalinformation infrastructure purchasing network products and services are alsoobligated to apply for the cybersecurity review for such purchasing activities.Although the CRM provides no further explanation on the extent of“networkplatform operator”and“foreign”listing,we do not believe we are obligated toapply for a cybersecurity review pursuant to the revised CRM,considering that(i)we are not in possession of or otherwise holding personal information of over onemillion users,and it is also very unlikely that we will reach such threshold inthe near future;and(ii)as of the date of this prospectus,we have not receivedany notice or determination from applicable PRC governmental authoritiesidentifying it as a critical information infrastructure operator.Our Operating Subsidiary may collect and store certain data from our clients inHong Kong,in connection with our business and operations.Given that(1)ourOperating Subsidiary is incorporated and located in Hong Kong;(2)we have nosubsidiary,VIE structure,nor any direct operations in mainland China;and(3)pursuant to the Basic Law,which is a national law of the PRC and theconstitutional document for Hong Kong,national laws of the PRC shall not beapplied in Hong Kong except for those listed in Annex III of the Basic Law(whichis confined to laws relating to defense and foreign affairs,as well as othermatters outside the autonomy of Hong Kong),and we do not currently14Table of Contentsexpect the Measures for Cybersecurity Review(2021),the PRC Personal InformationProtection Law,and the Draft Overseas Listing Regulations to have an impact on ourbusiness,operations,or this offering,as we do not believe that our OperatingSubsidiary is deemed to be an“Operator”that is required to file forcybersecurity review before listing in the United States because(i)our OperatingSubsidiary is incorporated in Hong Kong and operates in Hong Kong without anysubsidiary or VIE structure in mainland China,and each of the Measures forCybersecurity Review(2021),the PRC Personal Information Protection Law,and theDraft Overseas Listing Regulations remains unclear whether it shall be applied to acompany based in Hong Kong;(ii)as of date of this prospectus,our OperatingSubsidiary has neither collected nor stored any personal information of PRCindividuals;(iii)all of the data our Operating Subsidiary has collected is storedin servers located in Hong Kong;and(iv)as of the date of this prospectus,ourOperating Subsidiary has not been informed by any PRC governmental authority of anyrequirement that it file for a cybersecurity review or a CSRC review.Since these statements and regulatory actions are new,it is highly uncertainhow soon the legislative or administrative regulation making bodies will respond orwhat existing or new laws or regulations or detailed implementations andinterpretations will be modified or promulgated,if any.It is also highlyuncertain what the potential impact such modified or new laws and regulations willhave on CKHLs daily business operations,its ability to accept foreigninvestments,and the listing of our Ordinary Shares on a U.S.or other foreignexchange.There remains significant uncertainty in the interpretation andenforcement of relevant PRC cybersecurity laws and regulations.If the DraftOverseas Listing Regulations are adopted into law in the future and becomesapplicable to our Operating Subsidiary,if any of our Operating Subsidiary isdeemed to be an“Operator,”or if the Measures for Cybersecurity Review(2021)orthe PRC Personal Information Protection Law becomes applicable to our OperatingSubsidiary,the business operation of our Operating Subsidiary and the listing ofour Ordinary Shares in the United States could be subject to the CACscybersecurity review or CSRC Overseas Issuance and Listing review in the future.Ifthe applicable laws,regulations,or interpretations change and our OperatingSubsidiary becomes subject to the CAC or CSRC review,we cannot assure you that ourOperating Subsidiary will be able to comply with the regulatory requirements in allrespects,and our current practice of collecting and processing personalinformation may be ordered to be rectified or terminated by regulatory authorities.If our Operating Subsidiary fails to receive or maintain such permissions or if therequired approvals are denied,our Operating Subsidiary may become subject to finesand other penalties that may have a material adverse effect on our business,operations,and financial condition and may hinder our ability to offer or continueto offer Ordinary Shares to investors and cause the value of our Ordinary Shares tosignificantly decline or be worthless.Additionally,due to long-arm provisions under the current PRC laws andregulations,there remains regulatory uncertainty with respect to theimplementation and interpretation of laws in China.We are also subject to therisks of uncertainty about any future actions the PRC government or authorities inHong Kong may take in this regard.Should the PRC government choose to exercise significant oversight anddiscretion over the conduct of our business,they may intervene in or influence ouroperations.Such governmental actions:could result in a material change in our operations;could hinder our ability to continue to offer securities to investors;and may cause the value of our Ordinary Shares to significantly decline or beworthless.Permission Required from Hong Kong and PRC AuthoritiesDue to the registration requirements of the Buildings Department of Hong Kong,Chiu&Lee Partners is required to apply for the relevant registrations to conductits operation in Hong Kong and has been a registered specialist contractor in thecategories of foundation,site formation,and demolition work since 2006 andregistered general building contractor since 1999.As of the date of thisprospectus,Chiu&Lee Partners has received all requisite permissions andapprovals for the operation of our business in Hong Kong and no permission has beendenied.See“Business Major Qualifications,Licenses and Certifications”onpage 94.Chiu&Lee Partners business operation and personnel are also subject tothe relevant laws and regulations.See“Regulations Regulations Related to OurBusiness Operations in Hong Kong”on page 98.As of the date of this prospectus,Chiu&Lee Partners is not required to obtain any permission or approval fromHong Kong authorities to issue our Ordinary Shares to foreign investors.15Table of ContentsWe are also not required to obtain permissions or approvals from any PRCauthorities before listing in the United States and to issue our Ordinary Shares toforeign investors or operate our business as currently conducted,including theCSRC,the CAC,or any other governmental agency that is required to approve ouroperations.Hong Kong is a Special Administrative Region of the PRC and the basic policiesof the PRC regarding Hong Kong are reflected in the Basic Law,which serves as HongKongs constitution.The Basic Law provides Hong Kong with a high degree ofautonomy and executive,legislative and independent judicial owers,including thatof final adjudication under the principle of“one country,two systems”.The PRClaws and regulations do not currently have any material impact on our business,financial condition or results of operations.However,there is no assurance thatthere will not be any changes in the economic,political and legal environment inHong Kong in the future.In the event that(i)the PRC government expanded thecategories of industries and companies whose foreign securities offerings aresubject to review by the CSRC or the CAC and that we are required to obtain suchpermissions or approvals,(ii)we inadvertently concluded that relevant permissionsor approvals were not required or that we did not receive or maintain relevantpermissions or approvals required,or(iii)applicable laws,regulations,orinterpretations change and require us to obtain such permissions or approvals inthe future,we may face similar regulatory risks as those operated in mainlandChina,including the ability to offer securities to investors,list theirsecurities on a U.S.or other foreign exchanges,conduct their business or acceptforeign investment or sanctions by the CSRC,the CAC,or other PRC regulatoryagencies.Recent PCAOB DevelopmentsOn May 20,2020,the U.S.Senate passed the HFCA Act,which includesrequirements for the SEC to identify issuers whose audit work is performed byauditors that the PCAOB is unable to inspect or investigate completely because of arestriction imposed by a non-U.S.authority in the auditors local jurisdiction.The U.S.House of Representatives passed the HFCA Act on December 2,2020,and theHFCA Act was signed into law on December 18,2020.Pursuant to the HFCA act,oursecurities may be prohibited from trading on the Nasdaq or other U.S.stockexchanges if our auditor cannot be inspected by the PCAOB for three consecutiveyears,and this ultimately could result in our Ordinary Shares being delisted.On March 24,2021,the SEC adopted interim final rules relating to theimplementation of certain disclosure and documentation requirements of the HFCAAct.A company will be required to comply with these rules if the SEC identifies itas having a“non-inspection”year under a process to be subsequently establishedby the SEC.The SEC is assessing how to implement other requirements of the HFCAAct,including the listing and trading prohibition requirements described above.On June 22,2021,the U.S.Senate passed the Accelerating Holding ForeignCompany Act,which was signed into law on December 29,2022,reduced the number ofconsecutive non-inspection years required for triggering the prohibitions under theHFCA Act from three years to two years.On December 2,2021,the SEC issued amendments to finalize rules implementingthe submission and disclosure requirements in the HFCA Act,which took effect onJanuary 10,2022.The rules apply to registrants that the SEC identifies as havingfiled an annual report with an audit report issued by a registered publicaccounting firm that is located in a foreign jurisdiction and that PCAOB is unableto inspect or investigate completely because of a position taken by an authority inforeign jurisdictions.On December 16,2021,PCAOB issued a Determination Report,which found that thePCAOB is unable to inspect or investigate completely registered public accountingfirms headquartered in mainland China of the PRC or Hong Kong,a SpecialAdministrative Region and dependency of the PRC,because of a position taken by oneor more authorities in the PRC or Hong Kong.Our auditor,ZH CPA,LLC,the independent registered public accounting firmthat issues the audit report included elsewhere in this prospectus,as an auditorof companies that are traded publicly in the United States and a firm registeredwith the PCAOB,is subject to laws in the United States pursuant to which the PCAOBconducts regular inspections to assess our auditors compliance with theapplicable professional standards.ZH CPA,LLC is headquartered in Denver,Colorado,and can be inspected by the PCAOB.As of the date of this prospectus,ourauditor is not subject to the determinations announced by the PCAOB on December 16,2021 in mainland China or Hong Kong because of a position taken by one or moreauthorities in the PRC or Hong Kong.On August 26,2022,CSRC,the MOF,and the PCAOB signed the Protocol,governinginspections and investigations of audit firms based in China and Hong Kong.TheProtocol remains unpublished and is subject to further explanation andimplementation.Pursuant to the fact sheet with respect to the Protocol disclosedby the SEC,16Table of Contentsthe PCAOB shall have independent discretion to select any issuer audits forinspection or investigation and has the an exemption from the rule that a majorityof our board of directors must be independent directors;unfettered ability totransfer information to the SEC.On December 15,2022,the PCAOB Board determined that the PCAOB was able tosecure complete access to inspect and investigate registered public accountingfirms headquartered in mainland China and Hong Kong and voted to vacate itsprevious determinations to the contrary.However,should PRC authorities obstructor otherwise fail to facilitate the PCAOBs access in the future,the PCAOB Boardwill consider the need to issue a new determination.See“Risk Factors Risks Relating to Our Ordinary Shares Although theaudit report included in this prospectus is prepared by U.S.auditors who arecurrently inspected by the PCAOB,there is no guarantee that future audit reportswill be prepared by auditors inspected by the PCAOB and,as such,in the futureinvestors may be deprived of the benefits of such inspection.Furthermore,tradingin our securities may be prohibited under the HFCA Act if the SEC subsequentlydetermines our audit work is performed by auditor

7 人看过 2023 年 3 月 20 日 273页 5星

HDI：2023 年服务管理技能和薪资报告（34 页）.pdf

2023 HDI Service Management Salary and Skills Report7 Key Takeaways To Maximize Your Skills,Salary&CareerABOUT THE STUDYThis report,focusing on the state of service management,provides service management and technical support leaders with the essential insights and knowledge needed to make data-based decisions that will ultimately improve the services and support provided by their organizations and help them advance in their careers.It illustrates current practices,processes,solutions,and strategies related to service management and enterprise service management.All survey responses were collected via a web-based survey from September-October 2022.This report compiles the responses from 252 service management and technical support professionals in more than 20 vertical industries.Just over one-third of respondents are at the director-level or above(36%);43%are either managers or specialist managers(knowledge,project,change,etc.).More than two-thirds(72%)of the respondents are aligned with service management in addition to various other areas of the business,while 16%are exclusively affiliated with service management.KEY FINDINGSFor the purposes of this study,we solicited feedback on three roles within servicemanagement:ITSM Process Owner/Manager,ITSM Service Delivery Manager,andBusiness Relationship Manager.Seventy-three percent of respondents organizationsstaff at least one of these roles.Nine out of ten managers and specialist managers have tenure of five years or more intheir roles.Filling dedicated service management roles can be challenging.Just over one-quarter ofrespondents(27%)report having no difficulty at all filling roles,but two out of fiverespondents struggle.Salaries for service management roles lag behind salaries for general technical supportroles,based on comparison against salaries reported in Robert Halfs 2023 TechnologySalary Guide(US only).In our sample,ITSM Process Owners/Managers average$93,999a year;ITSM Service Delivery Managers,$100,971;and Business Relationship Managers,$82,011.The value of service management is linked to an increase in customer satisfaction(55%),a decrease in incident volume(44%),and an increase in incidents resolved without abusiness impact(35%).KEY FINDINGSSixty-seven percent of respondents organizations are currently using a service management solution,with 14%of those in the process of replacing their existing solutions.Those who are replacing legacy solutions are doing so with an eye toward improving the user/customer experience(47%),improving features and functionality(34%),or upgrading an end-of-lifecycle solution(33%).Almost 50%of the organizations that are currently implementing or planning to implement a service management solution for the first time are investing in an on-premises solution.A further 43%said they will implement a SaaS solution and about a quarter are working to add a cloud-based platform-as-a-service SM solution.More service management solutions are being applied to non-IT business areas,such as HR,finance,facilities,etc.but the transition to ESM is not yet mainstream:just 45%of organizations said they are applying ITSM practices and principles outside of IT.General business operations are the top target for service management expansion,with customer service/support close behind.Forty-five percent of respondents report that their organizations are using the principles and practices of ITSM outside of the IT department;82%of respondents report that their organizations have a defined strategy or approach for using ITSM practices/capabilities outside of the IT department.KEY FINDINGSBy and large,ESM is being championed by leaders at the top of the organizational chart.CIOs(44%)and CTOs(43%)are leading the charge,followed by service desk managers(35%)and,far more distantly,by dedicated practice/process managers(6%).The impacts of ESM on IT can be significant.Forty seven percent of respondents report that introducing ESM has required IT to expand its scope of services/support;in 55%of respondents organizations,IT is now playing a consultative role to other business areas as ESM is rolled out.Only about a quarter say that added responsibility is being matched with additional funding,matching the percentage who see IT gaining recognition for the value ESM is providing to the business.Nearly all survey respondents(95%)include non-IT employees in the process of determining how service management practices/capabilities will be applied in the areas they work in;49%involve employees in developing the plan and program,and 63%solicit feedback from employees before,during,and after the expansion.STAFFING,SKILLS&SALARIESService Management RolesFor the purposes of this study,we solicited feedback on three roles within service management(percentage of organizations that staff these roles in parenthesis):ITSM Process Owner/Manager(53%)ITSM Service Delivery Manager(54%)Business Relationship Manager(51%)An ITSM Process Owner/Manager is a specialist manager and subject matter expert responsible for enforcing compliance,monitoring,measuring,and continually improving one or more process/practice areas.This individual provides guidance to service desk and service management staff who execute day-to-day process and support activities.An ITSM Service Delivery Manager is a specialist manager responsible for ensuring service management processes are in place to meet the businesss needs.This role is often stakeholder-facing,and it requires skill at setting and delivering on expectations.A Business Relationship Manager is a strategic specialist responsible for seeing the big picture,understanding the business(mission,vision,goals),helping to prioritize projects and initiatives to maximize return on investment,and ensuring that the organizations IT and service management strategies support the businesss overall strategy.Tenure by Role5%5%7%2%7%6 %9%2%2%9%Less than 1 year1 year2 years3 years4 years5 years5-8 years8-10 yearsMore than 10 yearsBusiness Relationship ManagerITSM Service Delivery ManagerITSM Process Owner/ManagerWithin the wider technical support community,managers and specialist managers tend to have high tenure;in our most recent community interest survey,96%of manager and specialist manager respondents reported average tenures of more than five years.For specialist roles in service management,51%have four years of tenure or less.On average,however,these are long-term,high-tenure positions.Percentage of respondentsFilling RolesFilling dedicated service management roles can be challenging.Just over one-quarter of respondents(27%)report having no difficulty at all filling roles,but two out of five respondents struggle.Why is that?Competitive hiring environment.Its hard to find well-qualified candidates.Its hard to find people who are specialized in this field.The market for IT skills is tight,and our sector cant always pay competitive salaries.Skill Profile by Role73qphdbRRHEDB1$#!%6%Customer serviceCommunicationProblem-solvingInterpersonal skillsKnowledge managementRelationship managementBusiness managementCollaborationCommitment to ongoing learningChange managementInnovation and creativityData analysisAgilityAutomationDigital securityMobility/device managementArtificial intelligenceDevOpsSought-After Skills,OverallITSM Process Owner/Manager1.Customer service2.Problem-solving3.Interpersonal skills4.Communication skills5.Knowledge managementITSM Service Delivery Manager1.Problem-solving2.Customer service3.Interpersonal skills4.Communication skills5.Knowledge managementBusiness Relationship Manager1.Problem-solving2.Interpersonal skills3.Customer service4.Knowledge management5.Communication skills6.Interpersonal skills6.Collaboration7.Data analysis8.Business management9.Innovation and creativity10.Professional development6.Professional development7.Collaboration8.Business management9.Change management10.Innovation and creativity6.Business management7.Data analysis8.Innovation and creativity9.Professional development10.CollaborationPercentage of organizationsSalary by RoleAverage salaries for service management roles lag behind salaries for general technical support roles.As reported in Robert Halfs 2023 Technology Salary Guide,technical support and operations managers average$112,00 on the low end and$168,250 on the high end(USD).ITSM Process Owner/ManagerITSM Service Delivery ManagerBusiness Relationship Manager$72,436$108,131$93,899$74,458$111,721$100,971$58,736$104,012$82,011$35k$55k$65k$75k$85k$95k$105k$115k$125kPROCESSES&PRACTICESMethodologies,Frameworks&Standards41!G#%& 2 3C $0#!%8!%#! #CP(1EQ82F17BRRAA%AgileCMMICOBITDevOpsHDI Support Center StandardISO 9000ISO/IEC 20000ITIL 3 or earlierITIL 4KaizenKnowledge-Centered ServiceLeanMicrosoft Operations FrameworkProcess Maturity FrameworkPMI/PMBoKSAFeSix SigmaTotal Quality ManagementWaterfallCurrently usePlanning to useHave used in the pastHavent used and dont plan to usePercentage of organizationsService Management Practices(A-P)17$() 2H5#9A&60ADqtucwvxfvutXwigCbgrbIRUWre%Architecture managementAvailability managementBusiness analysisCapacity and performance managementChange enablementContinual improvementDeployment managementIncident managementInformation security managementInfrastructure and platform managementIT asset managementKnowledge managementMeasurement and reportingMonitoring and event managementOrganizational change managementPortfolio managementProblem managementProject managementPractice adopted*Process defined*Dedicated manager*Percentage of organizations|*Percentage of organizations that have adopted this practiceService Management Practices(R-Z)223$X %5$B3tsdwuwxucXtWvWVwXgbxivu%Relationship managementRelease managementRisk managementService catalogue managementService configuration managementService continuity managementService designService deskService financial managementService level managementService request managementService validation and testingSoftware development and managementStrategy managementSupplier managementWorkforce and talent managementPractice adopted*Process defined*Dedicated manager*Percentage of organizations|*Percentage of organizations that have adopted this practiceMeasuring the Value of Service Management55D53)&%1%Increase in customer satisfactionDecrease in incident volumeIncrease in incidents resolved without business impactDecrease in mean time to resolve(MTTR)Percentage of successful changesImproved security managementDecrease in incidents due to failed/unapproved changesIncrease in knowledge articles linked in ticket/case recordsIncrease in number of problem records openedIncrease in number of known errors in the known error databaseService management is accepted as the cost of doing businessPercentage of organizationsTECHNOLOGYBudget and Solution/Framework Alignment26#%9%9%Annual BudgetLess than$500,000$500,000-$1,000,000$1,000,001-$2,500,000$2,500,001-$5,000,000$5,000,001-$10,000,000More than$10,000,00031)%$ %8%5%Knowledge-Centered Service(KCS)ITIL 4DevOpsMicrosoft Operations Framework(MOF)HDI Support Center StandardTotal Quality Management(TQM)ISO 9000LeanCapability Maturity Model(CMMI)ITIL 3 or earlierSix SigmaSAFeCOBITISO/IEC 20000Process Maturity Framework(PMF)KaizenDesired Framework/Methodology Alignment When Acquiring New Tools and SolutionsPercentage of organizationsPercentage of organizationsCurrent Service Management SolutionsSixty-seven percent of respondents organizations are currently using a service management solution,with 14%of those in the process of replacing their existing solutions.Those who are replacing legacy solutions are doing so with an eye toward improving the user/customer experience(47%),improving features and functionality(34%),or upgrading an end-of-lifecycle solution(28%).Bad news for vendors 34%of respondents told us that dissatisfaction with vendor support and/or relationship drove their decision to replace their SM solution.Forty-five percent of respondents organizations are using SaaS solutions;43%are running on-premises solutions.Just over a quarter are operating PaaS in the cloud,and 13%are hosting a licensed solution in their organizations cloud.23%8%7%7%5%4%3%3%3%3%2%ServiceNowMicrosoft Dynamics AX,CRM,System Center Service Manager(SCSM)Atlassian JIRA Service ManagementManageEngine ServiceDesk PlusSOracle Functional Service Desk,Siebel CRM,PeopleSoft,RightNowBMC Remedy,Helix,ServiceDesk Express,Footprints,Track-It!,Remedyforce,Remedy OnDemand,Remedy9Cherwell Service ManagementFreshworksIBM Maximo,TivoliSolarWindsAxios assystPercentage of organizationsNew Service Management Solution ImplementationsAlmost 50%of the organizations that are currently implementing or planning to implement a service management solution are investing in an on-premises solution.A further 43%said they will implement a SaaS solution and about a quarter are working to add a cloud-based platform-as-a-service SM solution.Just 8%plan to host a new service management solution in their own cloud.18%8%8%7%7%5%5%5%3%Oracle-Functional Service Desk,Siebel CRM,PeopleSoft,RightNowMicrosoft-Dynamics AX,CRM,System Center ServiceManager(SCSM)Atlassian JIRA Service ManagementSMicro Focus formerly Serena Service ManagerServiceNowAxios assystIBM-Maximo,TivoliDeveloped in-house(homegrown)BMC-Remedy,Helix,ServiceDesk Express,Footprints,Track-It!,Remedyforce,Remedy OnDemand,Remedy9Percentage of organizationsSTRATEGYMaturity&Objectives of ITSM59XIAAA40) %Improve customer experienceImprove service qualityImprove service deliveryControl costsImprove knowledge managementImprove employee experienceStreamline operations(do more with less)Improve ability to achieve service level commitmentsEnsure complianceImprove ability to innovateMitigate risksCore Objectives Driving Interest in ITSMNot started,but planned,7rly stages/in progress,50%Proficient/advanced,35%Leading,9%Overall ITSM MaturityPercentage of organizationsStrategic Expansion of ITSM45%of respondents report that their organizations are using the principles and practices of ITSM outside of the IT department82%of respondents report that their organizations have a defined strategy or approach for using ITSM practices/capabilities outside of the IT departmentNot started,but planned,3rly stages/in progress,38%Proficient/advanced,42%Leading,18%Maturity with Expanding ITSMESM Definition&DriversService management solutions are increasingly capable of supporting business activities outside the IT department:85%of organizations with a service management solution in place say those solutions can be used in non-IT areas of the business.As a business strategy,the expansion of ITSM practices and capabilities beyond the IT department goes by many names:Digital transformation(44%)Service management(38%)IT service management(34%)Enterprise service management(33%)Digital workflow enablement(16%)For the remainder of this report,well refer to this strategy as enterprise service management.71FP%To improve the customerexperienceThe expanded capabilities ofservice managementsolutionsTo improve employeesatisfaction/engagementA specific business need orchallengeESM DriversPercentage of organizationsESM Practice Targets&ChampionsBy and large,ESM is being championed by leaders at the top of the organizational chart.CIOs(44%)and CTOs(43%)are leading the charge,followed by service desk managers(35%).Other C-suite roles are getting more involved,with COOs(29%)and CEOs(28%)playing an increasing role.In only 6%of organizations are dedicated practice/process managers acting as the driving force behind ESM adoption.57UQ522)$%Business operationsCustomer service/supportSecurityFinanceProcurementHRFacilitiesSales and/or marketingLegalLearning and developmentNon-IT Business Areas Targeted for ESM(Practices/Capabilities)Percentage of organizationsESM Solution Capabilities&ApplicationsClearly,more service management solutions are being applied to non-IT business areas,such as HR,finance,facilities,etc.,but the transition to ESM is not yet mainstream:just 45%of organizations said they are applying ITSM practices and principles outside of IT.While HR is frequently highlighted as an early target for service management expansion,only one-third of this years survey participants told us HR is on their list of ESM targets.General business operations are the top target for service management expansion,with customer service/support close behind.58E77521%Business operationsCustomer service/supportFinanceFacilitiesHRSecurityProcurementSales and/or marketingLegalLearning and developmentNon-IT Business Areas Targeted for ESM(Solutions)Percentage of organizationsPractices,Capabilities&ImpactThe impacts of ESM on IT can be significant.Forty-seven percent of respondents report that introducing ESM has required IT to expand its scope of services/support;in 55%of respondents organizations,IT is now playing a consultative role to other business areas as ESM is rolled out.More than 80 percent report IT staff is embedded in other business units.Only about a quarter say that added responsibility is being matched with additional funding,matching the percentage who see IT gaining recognition for the value ESM is providing to the business.38432)(&$!%Asset managementContinual improvementCase managementProblem managementFinancial managementChange enablementService catalog management and/or self-serviceService configuration managementService request managementSupplier managementRelationship managementIncident managementKnowledge managementService designPractices and Capabilities Prioritized for ESMPercentage of organizationsEngagement,Satisfaction&ProductivityNearly all survey respondents(95%)include employees in the process of determining how service management practices/capabilities will be applied in the areas they work in;49%involve employees in developing the plan and program,and 63%solicit feedback from employees before,during,and after the expansion.Crucially,the majority(77%)provide service management training to non-IT staff in preparation for expanding service management practices and tools into their business areas,improving the likelihood that their input and feedback will be informed and relevant.Despite training,productivity lags other metrics slightly,likely reflecting the learning curve that comes with introducing new technology and process.78t%Measuring Satisfaction and ProductivityEmployee satisfactionCustomer satisfactionProductivity70qe%Improvement After ESMPercentage of organizationsDEMOGRAPHICSCompany&Support Organization Size14%9 %9%8%5%7%Company Size,by Number of EmployeesFewer than 5050-99100-499500-9991,000-4,9995,000-9,99910,000-19,99920,000-49,999More than 50,00042%6%4%2%1%0.44%Support Organization Size,by Number of EmployeesFewer than 5050-99100-499500-9991,000-4,9995,000-9,99910,000-19,99920,000-49.99950,000 or morePercentage of organizationsPercentage of organizationsRole&Function331%7%6%3%RolePractitioner:Internal and external service/support(blended)Practitioner:Internal service/supportPractitioner:External service/support(customer-facing)ConsultantOutsourced or managed service providerVendor/solution provider3%63%9%FunctionNon-IT executive managementIT/technical executive managementSenior management(VP,director)Mid-level management(manager)Specialist management(knowledge,project,problem,etc.)Supervisor/team leadCustomer supportPercentage of respondentsPercentage of respondentsArea&Focus72X7)(!%3%Service managementService deskDesktop supportMobility/endpoint managementContact center operationsDevelopmentHuman resourcesFacilitiesFinanceOtherBusiness Area65H)$%3%Service managementOperations managementProject/program managementStrategy managementDevOpsOtherPrimary FocusPercentage of respondentsPercentage of respondents involved with service management,service desk,and developmentABOUT HDIFor over 30 years,HDI has partnered with thousands of organizations to improve their customer service and service management performance by educating their people,elevating their processes,and empowering their strategy.From C-level professionals to directors,managers,and frontline staff,HDI is the definitive source of industry information,leadership,and performance planning.Through events,certification and training,consulting,community,and industry resources,HDI aims to transform service and support organizations and reimagine their approach to delivering exceptional service and value.Learn more at ThinkHDI.com.HDI is a part of Informa Tech,a division of Informa PLC,a leading B2B information services group and the largest B2B events organizer in the world.To learn more and for the latest news and information,visit.Copyright 2022 HDI.All rights reserved.HDI is a part of Informa Tech.KCSSMis a registered service mark of the Consortium for Service Innovation.ITIL is a registered trademark of AXELOS Limited.All other trademarks,service marks,and product or trade names are property of their respective owners.

2人浏览 2023 年 3 月 20 日 34页 5星

ComScore：2022年全球及亚洲票房概览报告（英文版）（26页）.pdf

概述Global＆Asian票房Frank Perikleousv P A Pa C＆a c＆a c c＆a l a l i i a2global票房自2017年以来*Gower Street估计估计2022source：CPA主题报告/Gower Street 3Global Market Market Market Market Market Sharet票房：全球市场股票Office Bock Office1WaternameChource20 2％APAC 20％APAC 20％APAC 20％Apac 20％20％20％20％2％2％ 4 2021 年全球观众票房来源：CPA/Gower Theme Report StreetInternational28%China34%APAC（中国以外）17%Domestic。 BOX CHANGE IN 2020From 17 November 202220.48.9I.4h.60.5X.4Y.4b.9%Asia (ex-China)ChinaEurope, Africa & Middle EastLatin & Central AmericaInner PacificRussia CISAAall ex-China17GET 2022 *Gower Street is estimated at 2022International3 4 % 中国 17% 亚太地区（中国除外）19% 国内 30%8*Gower Street 到 2022 年的估计资料来源：CPA Theme Report/Gower Street22% GLOBAL CASE CHANGE CHANGE GROWTH CHAN21GUM Y 2 021 *截至 2025 年 11 月 17 日 25.9% - 37.3 平方米。 * 亚洲票房成绩突出Han Seng LimS E A S I A C L I E N T S E R V I C E C O N S ULTA N T11CHINA30。 2021 年 9 月类型：动作、剧情 12CHINA02。 2021 年 12 月类型：剧情喜剧13中国*从 2022 年 11 月 17 日起发行标题 DATEGBO(LC)GBO(USD)1Battle At Lake ChangJin,09/30/20215,741,266,3358W29887, 175,579, 75 3,3698 27.888 .0163你好妈妈， 12.02。 20215. 1. 08、664.59910美人鱼0 8.02。 20163,723,608,958566,241,76714 日本 16。 202015 年 10 月 JAPAN06。 2022216 年 8 月 JAPAN24。 202117 年 12 月 日本 *自 2022 年 11 月 17 日起 影片评级发布日期 GBO(LC)GBO(USD)1 恶魔杀手 The Movie:Mugen Train10/16/20202040.38 1,101,600383,4725 01425, 444, 583,1 60250,629,14 43你的名字26 .08.201625,011,781,750248,715,7624 连体胶片 红色06.08.202216,644,349,83129 .200915, 582,836. 460170.008.7646P onyo07/19/ 200815,336,312,715143,394,5247Resist with you07/19/201914,113,242,000131,426,8478柔术会战 12/24/2020 1151429 0F。 2( 2019 )11.22.201913 ,350,523,900122, 946,48510Up Gun Maverick27.05.202213,131,661,930103,350,85618KOREA18. 2022 年 5 月类型：动作，犯罪 19COREA* 从：2022 年 11 月 17 日 RANKTIT LERRELEASE DATEGBO(LC)GBO(USD)1Aladdin05/23/2019141,089,692,37890,821Ex249,54，工作 2 86、366 123,517。 5933 海军上将：咆哮的水流，The30/07 /2014135,740,173,910 133,037.0 524Roundup，The5/18/2022131,296,821,679 103,641/2014,020 5,000 107,751,1356Aven ger s:Endgame 24.04.2019122,490,506,020 107,162, 2297 with The Gods: The Two Worlds20 .12.2017115,704,379 .137 106,641,8948Her zen221.11.2019114,810,421,450 98,931,31849O. 8,130 10 2,059,26310退伍军人05.08.2015105.166,556,250 89,953 .31720 马来西亚23。 2022 年 6 月类型：动作、剧情21 马来西亚*自 2022 年 11 月 17 日起分级标题发行日期GBO(LC)GBO(USD)1Mat Kilau06/23 /2022290.000.197 20.423me20079 87 619 21 095.4513 复仇者联盟：奥创纪元无限战争 25 .04.201868 .071.743 17.429 .6024蜘蛛侠：无家可归12/16/202163926974 15113342 5狂暴702/04/201558.3 7 15162，丛林21/2/201757，39231 3 140875117勇敢者游戏：下一关05.12。 201954。 322,098 13,007,5848 速度与激情,The13 .04,201753,807,587 12,166,0159侏罗纪世界：堕落王国07.06.201852,64 3,575 13,2101Aven333 47.786.118 13.2 34.9 592 2印度尼西亚30。 2022 年 4 月类型：Horror23INDONESIA04。 2022 年 8 月类型：恐怖 24 印度尼西亚*状态：2022 年 11 月 17 日标题发布排名日期LOGBO(LC)GBO(USD)1Avengers:Endgame04/24/20 19494,596,533,02K2003 De 22369, 3 53,880, 00026 , 000.0003 复仇者联盟：无限战争 2018 -04-25352,370,215,00025,372,8534撒旦的奴隶：圣餐08/4/2022255,638,800,501/20001 249,468,560.00017.087 3476 蜘蛛侠：英雄远征07.03.201924 2,517,799, 00017,152,9747 狂暴 701/04 /2015219,246,128 ,31416,769,1068勇敢者游戏：更上一层楼。 0015,184,3 149 美国队长：内战 28.04.2016206.055.206。 00015.614.70610复仇者联盟：奥创纪元04/22/2015202 .057.688.00015.613.77011 嗯，The05.09.2018197.832.318.00013。 244.25512侏罗纪世界：堕落王国 7/4/2018194,676,442,00013,556,48225THAILAND30。 2022 年 4 月类型：浪漫、喜剧要下载此幻灯片的副本，请扫描上方的二维码。

2人浏览 2023 年 3 月 20 日 26页 5星

Accenture：支付个性化（英文版）（37 页）.pdf

Paymentsgets personalHow to remain relevant as consumers seek controlIn the aftermath of the COVID-19 crisis,the tempo of change in consumer behaviors and expectations has hastened.Geopolitical shifts,accelerating digitalization and significant economic turbulence are reshaping how people pay and move their money.At the same time,the friction-free experiences offered by social and e-commerce platforms are setting new benchmarks for consumer payments.With economic volatility growing,consumers are seeking more control over their payments choices.As payments methods continue to evolve,consumers want to pay anywhere,anytime,anyhow.However,the payments landscape is becoming increasingly complex and fragmented with innovative digital payment providers taking a much larger share of wallet at the expense of traditional providers.Our new report identifies ways leading banks and payments players can increase their relevance in the consumer transaction journey and capitalize on future innovations.Staying ahead in an increasingly complex game2Payments Gets Personal|IntroductionNext-generation consumer payments have been growing at a rapid rate dueto changes in consumer behavior,advances in technology and regulation,and the entry of innovative new players into the payments space.Rising inflation and higher interest rates are also changing the dynamics of the market as consumers look to reduce costs.An Accenture survey of 16,000 customers in 13 countries spanning Asia,Europe,Latin America and North America found that more than half of all consumers have adopted digital payment methods such as digital wallets,many of which displace banks brands from the customer experience.Traditional payments methods still dominate most markets,but next-gen alternatives are rapidly gaining share.Our survey found that consumers are frustrated with current in-person and online payment options.Slow transactions,failed payments and a lack of merchant support for their preferred payments options Executive summary:Capitalize on consumer demand for trusted,friction-free experiencesare among their biggest frustrations.Payments providers need to offer frictionless experiences or risk losing customers to players that offer more flexibility,speed and ease of use.Furthermore,while consumers trust their banks more than other payments players,they are open to novel ways to pay.Indeed,a third of consumers that use credit cards as their primary payment method for in-person shopping are considering or are willing to switch to alternative payment methods.Half of them plan to switch to non-interest-charging methods as they seek to reduce debt interest.An Accenture analysis suggests that card-issuing banks that take a timid approach to payments innovation could lose out on 4.6%of total global card and online payments revenues,or$89 billion,in the next three years.Conversely,banks that rethink their strategies and capitalize on consumers trust in their stability and security could expand revenues and market share.Payments leaders can get an edge by supporting their customers desire for more control and less friction in their payments experiences.They have an opportunity to position their brands front-and-center in payments once again.In addition,these players can maximize payments liquidity and transaction volumes to ensure growth and profitability in a higher interest rate environment.Leading banks will not only enhance their relevance and drive revenues from new products,but also create opportunities to offer value-added services and revenues that cement customer trust and drive higher levels of engagement.New market entrants such as fintechs and bigtechs,too,can unlock opportunities to drive revenue growth and closer customer relationships through frictionless payments.3Payments Gets Personal|Executive SummaryThe future is digital,even for face-to-face payments4Payments Gets PersonalTraditional payments methods still dominate the consumer payments landscape,with our survey showing high usage of cash,debit and credit cards.However,next-generation offerings such as digital wallets,account-to-account(A2A)and buy now,pay later(BNPL)are rapidly gaining shareand more disruption is incoming from biometrics,machine-to-machine and metaverse payments.Next-gen payment methods are gaining shareFigure 1.The payments landscape yesterday,today and tomorrow.When we asked consumers which next-generation payments they use at least five times a month,we found that 56%use digital wallets,10%use A2A payment apps and 6%use BNPL.Many of these and other innovations were created by new market entrants such as fintechs and bigtechs in response to emerging and unmet consumer demands.Incumbents thus face both a rising threat and a budding opportunity.Cash,Card,Check,E-commerce,Digital wallet,Account-to-Account,BNPL,Crypto,Biometric,Machine-to-Machine,MetaverseCash,Card,Check,E-commerce,Digital wallet,Account-to-Account,BNPL,CryptoFuturePresentPastCash,Card,Check5Payments Gets Personal|The future is digital,even for face-to-face paymentsFigure 2.Cash is still dominant,but digital wallet adoption is soaring.Q:Which of the following payment methods do you use at least 5 times per month?Source:Accenture Payments Survey,2022 A2A appsDebit cardCashDirect debitBank transferDigital walletCredit cardBNPLAsia-PacificEuropeNorth AmericaLatin AmericaGlobal:66dVH %6CAEhYcw%6Seb1rTvYd&(%9%55%8%4%6%1%6Payments Gets Personal|The future is digital,even for face-to-face paymentsAdoption of next-generation payment methods varies by region due to regulation and competition.Asia-Pacific and Latin America are early adopters,while North American and European consumers prefer cash,card and bank transfers.Figure 3.Next-generation payment method adoption by region.NorthAmericaLatinAmericaUsage of Next-Generation Payment MethodsAsia-PacificEuropeHighHighLowNote:Circle size reflects GDPUsage of Traditional Payment MethodsSource:Accenture Payments Survey,2022;The World Bank,20227Payments Gets Personal|The future is digital,even for face-to-face paymentsMacroeconomic conditions,especially inflation and rising interest rates,play a significant role in consumer payments preference.Nearly a third(31%)of respondents who use credit cards as their primary payments method for in-person shopping are considering switching to other payment methods.Half of these are looking to reduce their interest expenses by choosing debit card,cash,BNPL or prepaid card.The other half are planning to switch because they prefer the convenience or control of banking apps,digital wallets or A2A apps for payments.Figure 4.Credit card users switching in-person payment method due to inflation and rising rates.Q:Would a significant increase in the cost of living cause you to switch to another payment method for in-person shopping?If so,what would be your preferred method?Not switching,69%Switching to other payment method,31!bit card17sh12%BNPL4%Prepaid card9A apps9nk transfer11nking app9%Digital wallet4%Check4%CryptoPreferred alternative payment methodsConsumers who prefer credit cards when shopping in-personSource:2022 Accenture Global Consumer Payments SurveyMethods that reduce interestMethods that reduce interest and offer convenience and controlMethods that offer convenience and control8Payments Gets Personal|The future is digital,even for face-to-face paymentsThe channel and size of the transaction influence how consumers choose to payOur survey found that next-generation payments have taken off in the online world20%of respondents use one or more next-gen methods for e-commerce,especially for small purchases.But a similar trend is affecting the real world9%of consumers use these methods as their primary way to pay for face-to-face transactions.This number is expected to double in the next three years.In most territories,consumers tend to prefer to use cash and debit cards for smaller in-person purchases such as groceries,clothes and transportation.A higher percentage of consumers in Asia-Pacific use digital wallets for small purchases than in the other regions.For larger face-to-face purchases such as appliances and travel,consumers tend to use cards,especially credit cards.Next-gen payment methods are widely used for online purchases,especially for small-ticket items in Europe and Asia-Pacific.But cards are still preferred by the majority of consumers in the US.Figure 5.Next-gen payments as the primary in-person method are likely to grow in three years.Q:Do you currently prefer to use traditional or next-generation payment methods?Which do you expect to be using in three years time?91%9 %Next-genMethodsTraditional MethodsBy 2025TodayNote:Traditional payment methods include cash,cards,check and bank transfers,while next-generation payment methods include digital wallets,account-to-account payments,BNPL and crypto payments.Source:2022 Accenture Global Consumer Payments Survey9Payments Gets Personal|The future is digital,even for face-to-face paymentsFigure 6.Top primary payment methods for small-ticket items.1Aapps1%Digitalwallet16%Creditcard28bitcard46sh6%Other8%Digitalwallet16bitcard22%Directdebit28%Creditcard18nktransfer4%Other3Aapps27%Creditcard32sh33bitcard4%Other1Aapps2%Digitalwallet3%Other7nktransfer9%Digitalwallet23bitcard24%Directdebit32%Creditcard1Aapps17%Creditcard34bitcard38sh5%Other2Aapps4%Digitalwallet2Aapps11nktransfer23%Creditcard8%Other16%Digitalwallet25bitcard15%Directdebit2Aapps21bitcard36sh11%Other18%Digitalwallet12%Creditcard4Aapps15%Creditcard23%Directdebit6%Other17nktransfer22%Digitalwallet14bitcardEuropeAsia-PacificNorthAmericaLatinAmericaIn-personOnlineNote:Other includes checks,cryptocurrency,pre-paid vouchers,banks apps,bank transfers and buy now,pay now.Source:Accenture Payments Survey,2022 For small-ticket in-person purchases,cash and debit cards are used in most regions,while Asia-Pacific has a higher usage of digital wallets(18%).Next-gen payments are widely used across most regions for small online purchases,especially in Europe and Asia-Pacific,where digital wallets account for 16%and 22%respectively.10Payments Gets Personal|The future is digital,even for face-to-face paymentsFigure 7.Top primary payment methods for big-ticket items.Note:Other includes checks,cryptocurrency,pre-paid vouchers,banks apps,bank transfers and buy now,pay now.Source:Accenture Payments Survey,2022 1Aapps2%Digitalwallet25bitcard12sh8%Other52%Creditcard11bitcard15%Directdebit50%Creditcard11nktransfer3Aapps5%Digitalwallet5%Other1Aapps2%Digitalwallet28bitcard8%Other55%Creditcard5sh1A apps5nktransfer6%Digitalwallet18%Directdebit45%Creditcard5%Other20bitcard34%Creditcard39bitcard14%Other2Aapps3%Digitalwallet7sh2Aapps12nktransfer12%Digitalwallet14%Directdebit22bitcard28%Creditcard10%Other28%Creditcard28bitcard22%Other11%Digitalwallet8sh2Aapps4Aapps12nktransfer13%Digitalwallet19bitcard19%Directdebit25%Creditcard8%OtherEuropeAsia-PacificNorthAmericaLatinAmericaIn-personOnlineFor face-to-face purchases of larger products and services(appliances,travel,home repair etc.)we found that cash is replaced by cards,especially credit cardswhich are preferred by 55%of US consumers.Consumers across all regions have a higher preference for using traditional cards for larger online transactions.11Payments Gets Personal|The future is digital,even for face-to-face paymentsSince theyre often used to digitize a consumers existing debit or credit card,digital wallets straddle the worlds of traditional and online payments.Three out of four(75%)digital wallets are linked to a credit or debit card and use traditional card rails rather than replacing them.The introduction of a convenient next-generation experience on top of a card which the customer already owns has helped to drive significant adoption.Consumers who participated in our survey are already making more use of digital wallets than credit cards.More than half(56%)of respondents use digital wallets more than five times a month to transact,compared to 48%who use their credit cards that often.Most(60%)consumers who use digital wallets use more than one,due to individual use cases offered by wallet providers.Wallets from major retailers or hospitality brands,for example,offer perks such as loyalty rewards and may only be used to purchase products and services from those brands.Wallets such as PayPal,Apple Pay and Google Pay can be used at a far wider range of merchants.Much of the innovation in digital wallets has been driven by non-banks,such as the bigtechs.Digital wallets:the most popular next-generation payments optionWhat is a digital wallet?A digital wallet is an application that allows you to pay from a mobile device so that you dont need to carry your cards around with you.It securely stores your payment information and passwords.You enter and store your credit card,debit card,or bank account information on your phone or tablet.You can then use your device to pay.Digital wallets require you to connect to a debit or credit card or to top up your account with funds.You authenticate payments using biometrics,a passcode or a one-time PIN.12Payments Gets Personal|The future is digital,even for face-to-face paymentsThe pioneers in digital wallets are continuing to innovate,adding new products and valued services to their wallets in an effort to grow their share of their customers spend.Apple,for instance,has added a digital card to Apple Pay.Apple Pay is also a contender in the BNPL market and has rolled out tap-to-pay features to compete with other contactless payment providers.Major digital wallet players are continuously expanding their solutions to be more competitive.PayPal,for example,has come to market with a BNPL solution.In the third quarter of 2022,it processed nearly$5 billion in BNPL volume,up 157%from the prior year.1Fintechs like Revolut are also driving innovation.Revolut offers a single app that enables users to exchange currencies,send money through social networks and spend with a multi-currency card everywhere Mastercard is accepted.The early movers managed to secure a strong foothold in the markets they targeted(Figure 8).Except for PayPal,few players have established themselves as major contenders in more than one or two markets.Today,PayPal is used by 60%of respondents in Germany,51%in Mexico and 42%in Australia.13Payments Gets Personal|The future is digital,even for face-to-face paymentsCanadaPayPal 28%,Apple Pay 13%,Interac Online 10%USAPayPal 35%,Apple Pay 12%,Venmo 11%MexicoPayPal 51%,Mercado 22%,Google Pay 8%BrazilPIX 69%,PayPal 36%,PicPay 22%SpainPayPal 41%,Bizum 28%,Google Pay 10%IndiaGoogle Pay 71%,Amazon Pay 48%,PayPal 30%ItalyPayPal 50%,Apple Pay 6%,Google Pay 6%FrancePayPal 39%,Apple Pay 9%,Google Pay 4%AustraliaPayPal 42%,Apple Pay 13%,AfterPay 12%ChinaWeChat Pay 82%,Alipay 79%,PayPal 6%SwedenSwish 51%,PayPal 27%,Klarna 23%GermanyPayPal 60%,Klarna 16%,Apple Pay 7%UKPayPal 46%,Apple Pay 17%,Google Pay 10%Figure 8.The share of consumers who use the top three next-generation payment methods in each market at least five times a month.Bigtechs and fintechs have edged ahead in digital walletsSource:2022 Accenture Global Consumer Payments Survey14Payments Gets Personal|The future is digital,even for face-to-face paymentsOur survey reveals that A2A adoption is rapidly ramping up,with 10%of all respondents using the method at least five times a month.A2A payments are lightly regulated or unregulated in many markets.This means there is a higher risk of fraud than with traditional payments.Despite high-profile social engineering and phishing scams on A2A services,consumers are willing to take the risk because A2A payments are fast and convenient.From a merchant perspective,A2A transaction fees are lower than those of cards.A trend to watch for is A2A enabling underbanked nations to improve financial inclusion,leapfrog cards and move directly to digital wallets for the mass market.Consider the high levels of A2A usage in Latin America,where cash was traditionally king because of the high costs associated with cards and alternative payment methods.What is A2A?Account-to-account payment involves moving money directly from one account to another without the need for additional intermediaries or payment instruments such as cards.Account-to-account(A2A):An emerging alternative to card paymentsIn 2020 the Central Bank of Brazil launched an A2A payments system called PIX.2 Merchant transaction fees for PIX are only 0.22%compared to 1%for debit cards and 2.2%for credit cards.Two years later,69%of Brazilians report that they use PIX at least five times a month.Nations where A2A adoption could follow a similar trajectory include India and Mexico.Figure 9.The share of consumers in each market who use account-to-account payment at least five times a month.65%5%Asia-PacificEuropeNorth AmericaLatin AmericaGlobal:10%Source:Accenture Payments Survey,2022 15Payments Gets Personal|The future is digital,even for face-to-face paymentsBuy now,pay later is the digital evolution of the installment and layby payments options that some retailers have offered for years.BNPL has high consumer appeal because it helps people stretch their budgets and shields them from interest payments.Our survey respondents said they would double their usage of BNPL for online shopping in the next three years.Some 40%of respondents said they would be more willing to adopt BNPL if it was provided by their primary bank.In response to demand,incumbents like JPMorgan Chase3 in the US and TD Bank in Canada4 are dipping their toes in the water.Banks tend to charge interest on their BNPL offerings,albeit at a lower rate than on their credit cards.But banks entrance into BNPL could bring more stability to a sector that is mostly unregulated.By applying robust vetting and credit scoring criteria,banks can help prevent consumers from overextending themselves.For banks,BNPL embedded into cards or as a standalone product represents an opportunity to promote financial wellbeing and help their customers optimize their finances via responsible lending.With consumers looking to reduce interest payments at this time of rising inflation and interest rates,BNPL could be a compelling way for banks to expand their product set.of consumers already use BNPL at least 5 times a monthof current BNPL users think it could replace their credit cards5of consumers would be more willingto use BNPL if provided by their primary bankResponsible BNPL:Bringing robust vetting to an unregulated segmentWhat is BNPL?Buy now,pay later is a short-term financing option that offers consumers the credit they need,often at the online or physical point of sale,to make purchases without immediate payment.The credit is usually repaid in interest-free installments,with fees incurred only if the repayment is late.6b%Source:2022 Accenture Global Consumer Payments Survey16Payments Gets Personal|The future is digital,even for face-to-face paymentsMost consumers still use traditional options such as bank transfers(45%)and traditional money remittance providers(33%)for cross-border payments.However,they are increasingly willing to consider alternatives that are faster,easier,more convenient,and more affordablefor example,money remittance mobile apps(used by 10%of our survey respondents)or fintech-provided peer-to-peer apps(10%).In some growth markets like Brazil,we see higher adoption of fintech peer-to-peer apps,with 29%of consumers preferring this method compared to the 36%who favor traditional bank transfers.These solutions offer a lifeline to unbanked populations in growth markets who traditionally use cash to send money abroad.For many banks,remittances are an unprofitable sector due to small volumes;in some countries,banks have exited the space.For consumers in emerging markets,fintech applications are faster and more affordable.They also offer people in remote areas a financial service they may not otherwise be able to access.Among our respondents,one in five claim to own cryptocurrencies.Consumers bought crypto for several reasons:as a long-term investment,out of curiosity or for speculation.However,17%bought them to have access to an alternative payment method,and 12%claim they use it for cross-border payments.Consumers are considering alternatives for cross-border paymentsFigure 10.Reasons most likely to persuade consumers to switch to a next-gen cross-border payments option.Q:Which of the following factors would convince you to change the method you use for cross-border payments?19%One click in a mobile wallet without involving a third-party providerMore affordable/favorable exchange rateMore convenient for the receiver to get the fundsMy bank recommends an alternative methodThe alternative method clears in real-timeSource:Accenture Payments Survey,2022 17Payments Gets Personal|The future is digital,even for face-to-face paymentsThe recent volatility in cryptocurrencies could slow down their adoption,at least until the market becomes more regulated.Central bank digital currencies(CBDCs)could eventually emerge as an alternative,but large-scale deployment is years away.According to data from the Atlantic Council,105 countries,representing over 95%of global GDP,are exploring a CBDC and 10 countries have fully launched a digital currency.6 Yet a lack of standardization and the complexity of harmonizing regulations across jurisdictions may impede usage of CBDCs for cross-border transactions.Figure 11.The reasons why consumers bought cryptocurrencies.Q:Why did you decide to purchase crypto currency?What are the different types of digital currencies?A cryptocurrency is a token on a distributed consensus ledger that represents a medium of exchange and a unit of account.It can be obtained,stored,accessed and transacted electronically,facilitating peer-to-peer transactions without going through an intermediary.A stablecoin is cryptocurrency designed to have a relatively stable price,typically through being pegged to a commodity or currency.A central bank digital currency(CBDC)is the digital form of a countrys fiat currency.28%As a long-term investment22!%Out of curiosityTo have access to alternative payment methods17%Use for cross-border paymentsFor short-term speculation/trading purposesSource:2022 Accenture Global Consumer Payments Survey18Payments Gets Personal|The future is digital,even for face-to-face paymentsEven when consumers are paying in-person,payments are increasingly becoming a fully digital experience,with new technologies such as biometrics and machine-to-machine payments removing even more friction.While still in its infancy as a transactional channel,the metaverse could also create new opportunities and bring disruption to the payments ecosystem.Among our respondents,42%agreed biometrics will be widely used by 2025 and 9%said they would be willing to use it as their primary method of in-person payment by 2025 if it were available.We estimate this could represent$5.2 trillion in transaction value.Trailblazers such as Amazon,with its palm recognition payments solution,are already preparing for this future.7Machine-to-machine(M2M)payments are automated,real-time payments between connected devices such as digital wallets,smart home devices or autonomous vehicles that require minimal or no human intervention.An example is a connected car paying for gas,battery charging,or parking from a digital wallet,without the driver getting out to present a card.The future is even more seamless,but control remains important19Payments Gets Personal|The future is digital,even for face-to-face payments“Id like to see a feature that makes it a little easier for me to access my digital wallet.Being able to just use my face or fingerprint recognition would be great.”Amy,38,Tucson,USIn fact,many consumers are already making small automated purchases,such as paying tolls with a transponder fitted to their car.Among our respondents,42%said they would use M2M payment for low value transactions,but they still want control over their transactions.Some 58%are afraid of losing track of their payments if automated machines pay on their behalf.Metathe owner of WhatsApp,Instagram and Facebookhas led investment into the metaverse.The company recently revamped and rebranded Meta Pay,a possible first step toward creating a digital wallet for the metaverse.8 We found that 58%of consumers are afraid to transact in the metaverse as they dont trust the payment providers.But 50%would be more comfortable transacting in the metaverse if their primary bank facilitated the transaction.of respondents would use machine-to-machine payments for low value purchasesare afraid of losing track of payments if automated machines pay on their behalf42X%Source:2022 Accenture Global Consumer Payments Survey20Payments Gets Personal|The future is digital,even for face-to-face paymentsTurning disruption into opportunity for growth21Payments gets personalBased on the trends we uncovered in the survey and an analysis of global payments revenues,Accenture believes there is significant revenue at risk for banks that are slow on the uptake when it comes to investing in next-generation payments options.Our analysis suggests that disruptions in payments mean that 4.6%($89 billion)of banks payment revenues between 2022 and 2025 are at risk.Revenues are at risk as competitionheats up and consumer behaviors evolveFigure 12.Payments revenues at risk of disruption.North America accounts for$34 billion of the total revenue at stake,followed by Asia-Pacific($24 billion)and Latin America($25 billion).In Europe,where more than 55%of consumers do not make regular use of credit cards,only$4 billion is at risk.Revenue at risk due to consumers switching to alternative payment methods.Revenues include interchange fee from card transactions,interest income from credit cards and fees attributable to banks from alternative payments.Assumptions for scenarios based on Accenture Global Consumer Payments Survey 2022.Revenue($bn)$89bn2022202320242025750700500550600650Disruptive scenarioBaseline scenarioSource:Accenture analysis based on GlobalData 22Payments Gets Personal|Turning disruption into opportunity for growthIn a time of economic volatility and evolving customer expectations,banks have an ace in the hole:consumers trust traditional financial institutions more than they do bigtechs,fintechs and other next-generation players.Battered by the COVID-19 crisis and facing rampant inflation,consumers are gravitating towards financial brands that project stability and security.Consumers have faith that banks are not only financially stable,but also that they can be trusted to offer a secure environment for transactions.They are confident that regulators will step in when fraud or bankruptcies arise.By contrast,consumers confidence in next-generation payments providers and newer instruments such as cryptocurrencies has been shaken by high-profile incidents of fraud and mismanagement.Trust is an advantage for banksbut its not enough23Payments Gets Personal|Turning disruption into opportunity for growthOur research indicates 84%of consumers trust their bank,compared to just 31%who trust BNPL providers.Because they trust banks to secure payments,more than a third(38%)would be willing to use next-generation payments instruments such as BNPL and crypto if provided by their main bank.This offers banks an opportunity to step in with solutions that level the playing field with new entrants.Figure 13.Banks are trusted to offer secure payments.Percentage of consumers who trust organizations to provide a secure environment for payments and purchasing.That said,banks cannot count on trust alone as a competitive edge that will last forever.While consumers have less trust in next-gen payment solutions and providers,they are still willing to try alternatives to their banks traditional offerings.This is especially true when they are frustrated with their banks payments experience or if they have needs that the bank is not addressing.Source:Accenture Payments Survey,2022 Asia-PacificEuropeNorth AmericaLatin America35%My primary bankCard networksA2A transfer appsBNPL providersBigtech21%Crypto wallets70w3gtcUst(Ac1PD%Global:84tdG1#$Payments Gets Personal|Turning disruption into opportunity for growthOur survey reveals that consumers are frustrated with current in-person and online payment options.Slow transactions,failed payments and a lack of merchant support for their preferred payments options are among the biggest frustrations consumers reported in our survey.Banks need to offer frictionless experiences or risk losing customers to players that offer more flexibility,speed and ease of use.It is not surprising that the key drivers for adoption of next-gen payment methods are solutions that address the frustrations.Consumers want friction-free experiences,but control matters tooFigure 14.Consumer payments frustrations.Q:What are your greatest frustrations with current payment methods?19%7%6%Slow payment experienceIts cumbersome to purchase online with my current credit cardMerchants dont allow me or lack the infrastructure for me to pay using my preferred methodCant link my card to my digital walletPayment gets declinedor tap to pay is not functionalSpeedControlFrictionFintechs are identifying new areas of consumer friction and delivering innovative solutions.In a landscape characterized by rapid technology evolution and economic uncertainty,consumer needs are evolving fast.Agile fintechs are already responding to emerging consumer needs.Our survey found that 39%of respondents would like to get paid as they work(earn asyou work)each day rather than weekly or monthly.Fintechs like GajiGesa9 in Indonesia and Symmetrical.ai10 in Poland already offer solutions that allow employees to get their salary on demand earlier rather than on the date of the scheduled money transfer.Collaboration with these fintechs could enable banks to stay ahead of the curve.Source:2022 Accenture Global Consumer Payments Survey25Payments Gets Personal|Turning disruption into opportunity for growthConsumers are eager to adopt streamlined solutions that offer flexibility,speed,and ease of use,without sacrificing security.According to the survey,security is a key advantage of digital wallets.Consumers also appreciate Figure 15.The attributes of digital wallets which consumers value most.“Ive stopped using my debit card as much and Im using cash just to be able to budget easier,feel more in control,less tempted to overspend.I can only spend whats in my purse,so I dont go looking around for little extra treats to give myself.”Lyndsey,44,Rochdale,UK.seamless money transfers and tap to pay.They dont just want payments to be easythey want options that help them to control their budgets and manage their financial wellness.Source:2022 Accenture Global Consumer Payments Survey48YIf6$5!%SecurityConvenienceSpeedNorth AmericaEuropeAsia-PacificLatin America26Payments Gets Personal|Turning disruption into opportunity for growthOne way that banks could address consumers demand for solutions that help them control their payments and financial lives is by developing super-apps.Our research finds there is a growing segment of consumers ready to embrace apps that offer full visibility of payments together with disparate financial products like savings,cashback,rewards,investments,and wealth management.Today,there are only a handful of true super-appssuch as Line in Japanmost of them in Asia-Pacific.But our research suggests that the time for super-apps may finally be at hand in other markets,too.Furthermore,we are seeing players as disparate as PayPal,Revolut and even Twitter move towards becoming super-apps.Is the super-apps time at hand?Indias Paytm11 and PhonePe12 offer not only payments options and financial products(insurance,equity trading)but also train tickets and cinema bookings.Paytm already has 300 million users in India and aims to deliver financial inclusion to 500 million consumers,in a country where 13%of the adult population is unbanked13.What is a super-app?A super-app is a mobile or web application that can provide multiple services including payment and financial transaction processing.It is a self-contained commerce and communication online platform that embraces many aspects of personal and commercial life including activities such as travel,entertainment,traffic updates,personal services from providers such as doctors,and more.27Payments Gets Personal|Turning disruption into opportunity for growthNot all consumers will seek the same journey.Some are likely to desire payments options that are simply fast,convenient,secure and easy to understand.Furthermore,56%of users want the convenience of a single app for all payments,and 60%want a single app which tracks payments from multiple payment providers,giving them greater transparency and control.Others yet might be interested in apps that combine financial and lifestyle options in one place.From the consumers perspective,ease of transacting is the most important feature in a super-app,followed by control and convenience.Many consumers value having transparency of their purchases and the ability to consolidate shopping and reward programs in a single app.There will be nuances in in super-app adoption between different customer segments and markets.But our survey shows that banks are well positioned to capitalize on consumer trust to offer super-apps.Among respondents,43%said they trust that their banks app is secure and would be happy to use it for as many everyday life activities as possible.of users want the convenience of a single app for all paymentswant a single app which tracks payments from multiple payment providers,giving them greater transparency and control56%Avo super-app drives consumer engagement for NedbankAvo from Nedbank in South Africa is a super-app that aggregates services and goods from a variety of providers.The app started out as a platform to buy groceries,order a meal,or access services like plumbing.It has since expanded into offerings such as Avo Autoan end-to-end virtual vehicle mall.14 Avo has grown to 1.5 million users and 21,000 merchants since it was launched in 2020.Source:2022 Accenture Global Consumer Payments Survey28Payments Gets Personal|Turning disruption into opportunity for growthFigure 16.Features that would encourage consumers to adopt super apps.Q:Which attributes would be most likely to persuade you to use a super-app?“I would love to have a digital wallet able to link to a stores loyalty system and process all your payments in one place.”Shivanjani,36,Brisbane,AustraliaSource:2022 Accenture Global Consumer Payments Survey403)48111&%4%Lifestyle featuresControl/ConvenienceOtherEase of transactingNorth AmericaEuropeAsia-PacificLatin America29Payments Gets Personal|Turning disruption into opportunity for growthTaking the painout of payments:four strategiesfor banks30Payments Gets PersonalMaking it safe and easy to pay anywhere,anytime,anyhowConsumers are re-evaluating how they pay in a time of rising inflation and interest rates,but secure and frictionless experiences matter more than ever to them.Banks can increase their consumer relevance,defend wallet share and drive revenue growth with next-generation payments that make it safe and easy to pay anywhere,anytime,anyhow.PayPal and Apple Pay are examples of digital wallets that have driven above-average adoption and usage by offering a smooth user experience.Amazon Go offers an example of a next-generation payments experience that makes payments even more seamless.15 Customers at an Amazon Go store never need to wait in line.They simply enter the store,take the products they want to buy,and leave.The customers Amazon Go Android app is linked to their Amazon account for billing.After they leave the store,their receipt is available and they are charged using their preferred payment method.Purchase,checkout,and payment at Amazon Go stores are fully automated using technologies such as computer vision,deep learning algorithms,and sensors.Successful players will tailor their strategies to the competition,regulation and evolving consumer behaviors in their markets.While simplicity and convenience are key,security and reliability are also essentialeven a few hours of downtime can create chaos for retailers,service providers and customers alike.So too is speedconsumers are more insistent than ever that payments are effected in as near to real-time as possible.This places a liquidity burden on financial institutions,which is a more important issue now that global markets are facing a rising interest rate cycle.The growth of digital transactions increases the potential for fraudulent transactions and technology failures.Protecting payments systems from these threats should be a core focus for both banks and non-bank players.31Payments Gets Personal|Taking the pain out of payments:four strategies for banks1.Partner to scalePlayers following this strategy will scale quickly to ensure rapid adoption of their next-generation payments solutions.Simple customer journeys and the right partners are the keys to success.Banks in many markets have defended core payments revenues by collaborating with each other to lock out new entrants.In the US,for example,Bank of America,Truist,Capital One,JPMorgan Chase,PNC Bank,U.S.Bank,and Wells Fargo launched the Zelle peer-to-peer money transfer app in 2017.Since then,more than five billion transactions and nearly$1.5 trillion have moved across the network.16 Banks in Poland built the Blik national A2A payments system to avoid losing market share to non-banks.17Building on their Apple Card partnership,Goldman Sachs and Apple are introducing high yield savings accounts for Apple Card holders.Under the agreement,Goldman Sachs will administer the zero-fee,FDIC-insured accounts.18 This partnership has the potential to bring new customers to the bank and provide a significant platform to scale other products in future.To achieve seamless payments experiences,banks can choose to pursue one or more of the following strategies:Banks that choose this strategy will focus on increasing customer intimacy through deep insight into customers behaviors and needs.Most banks are already offering banking apps and digital wallets to replace physical branch interactions and digitize payments.While these applications are limited in functionality,usage is high,and customers trust the apps.Banks can invest in artificial intelligence(AI)and the cloud to contain costs and streamline the experience.Wise is a fintech with a vision of making international money transfers cheap,fair,and simple.Today it stays true to its core strategy of international payments but has laser focus on reducing friction and cost for its customers.It added an international debit card to its product portfolio to better serve travellers shopping abroad.It serves 13 million customers and move more than$10 billion per month,saving customers$3 million a day compared to traditional international payment services.192.Simplicity and speed32Payments Gets Personal|Taking the pain out of payments:four strategies for banksBanks can differentiate their payments brands by focusing on customer or product niches.Deep understanding of customer requirements and the right partnerships are essential.Minna Bank,Japans first digital bank,launched an innovative banking and payments app which saw more than 1.6 million downloads in the past 18 months.Key to its success is its core customer-centric strategy and a commitment to developing services from the customers perspective.203.Niche focus4.Beyond paymentsBanks can go beyond payments with online marketplaces or super-apps.Such a strategy can position them in the center of consumers digital lives.They will need to use dynamic data to understand and respond to consumers requirements,and are likely to partner with other companies in the ecosystem to identify and resolve customers unmet needs.Players such as PayPal illustrate how such a strategy succeeds when banks invest in core technologies such as cloud and AI to enable easier partner integration and speed to market.Part of PayPals success lies in its ability to partner at scale with players like banks,commerce platforms and other fintechs.21These partners give PayPal access to incredible skills,technology and market entry assets,which it leverages to reduce friction and expand its product portfolio.Singapores DBS,meanwhile,collaborates with start-ups through a marketplace enabled by application programming interfaces(APIs).Its open banking marketplace curates a range of experiences from partners in health,cars,education,travel,property and more.2233Payments Gets Personal|Taking the pain out of payments:four strategies for banksFigure 17.Four potential strategies for banks aiming to grow their payments revenues.Sources:Accenture Research Analysis 1.Partner to scale2.Simplicity and speed3.Beyond payments Super-appcontinued innovation Dynamic datacontinuous customer monitoring and product integration Pro-active new product identification/solving unmet needs Ecosystem collaboration is key to success,always enhancing product value Technology priorities e.g.cloud,AI to enhance agility and speed to market Customer journey front and centera differentiator Select product sets are key,while choosing partners to scale quickly Data intimacybetter understanding of customer requirements is key to success Differentiate payment productselect partners to enhance solutions and focus on unmet needs Speed and convenience are key differentiators Cost containment is key to competitiveness4.Niche focusSingle productBlikPartnerAloneNedbank AvoTypical bank payment appMinna BankWisePaytmZellePayPalDBS MarketplaceGoldman Sachs Apple CardWeChatApproachBreadth ofofferingMultiple products34Payments Gets Personal|Taking the pain out of payments:four strategies for banksBanks walk a delicate line between protecting their existing interchange fees and interest income from traditional payments on the one hand,and capitalizing on revenues from new digital payments options on the other.While many banks are making investments in newer technologies,their core focus remains on protecting the integrity of their core banking systems and avoiding risk.However,as our consumer data reveals,customer behavior is evolving at a rapid pace and new competitors are appearing as quickly to meet any emerging needs that banks are unable to address.In a recent survey,94%of banking executives agreed that peoples lives are changing faster than they can change their business.23With rising interest rates pushing up the price of money,both payment providers and consumers are impacted.Consumers are already considering switching to a different primary payment method to reduce cost,while providers find it more difficult to maintain liquidity in the face of growing demands for real-time payment in a rising interest rate environment.Consumers will welcome solutions that give them more choice and control in payments,while providers should ensure liquidity through predictive solutions.The revenue opportunity at stake is significant,and now is the time for banks to choose a strategy that will ensure their future growth and relevance in payments.Put a stake inthe ground35Payments Gets Personal|ConclusionReferences1.PayPal Holdings(PYPL)Q3 2022 Earnings Call Transcript,4 November 20222.Pix:The rapid development of instant payment in Brazil,14 April 20223.Chase moves into buy now,pay later market,17 November 20224.TD Payment Plans Give Credit Card Holders More Payment Options,14 June 20225.Study:Buy Now,Pay Later Services Grow in Popularity,18 July 20226.Central Bank Digital Currency Tracker,retrieved 8 November 20227.Amazon begins large-scale rollout of palm-print-based payments,8 October 20228.Metas rebranding of Facebook Pay to Meta Pay is rolling out globally,28 September 20229.Indonesias GajiGesa Rolls Out Its Earned Wage Access Services on WhatsApp,6 October 202210.Payroll provider Symmetrical.ai nabs$18.5m to streamline employee payouts,28 April 202211.Digital payment giant Paytm could be the largest IPO in Indias tech boom,10 November 202212.PhonePe launches a new Savings Product to help Indians earn more,12 January 202013.RBI Report:Indias Financial Inclusion Index is 53.9 by the end of March 2021,28 August 202114.Do less.Get more with the Avo super app,10 October 202215.Amazon Go and Amazon Fresh:How the Just walk out tech works,11 March 202216.Zelle reaches five-year transactions milestone,8 September 202217.BLIK in Q2 2022:nearly 300 million transactions in one quarter,significant increases in all channels,16 August 202218.Apple partners with Goldman Sachs ot introduce high-yiel savings accounts for Apple Card,13 October 202219.The Wise Story,retrieved November 202220.Accenture Minna Bank Client Story,November 202121.PayPal growing through partnerships,11 February 2020 22.DBS Marketplace,retrieved 12 October 2022 23.Accenture Life Centricity Playbook,August 2022 banking-specific data cutThis report draws on insights from the Accenture 2022 Global Consumer Payments study,a survey of 16,000 customers in 13 countries spanning Asia-Pacific,Europe,Latin America and North America.Fieldwork took place between 10 August and 19 September 2022.The margin of error(at the 95%confidence level)is 1%at the global level and 3.1%at the country level.We enriched these insights with a VoxPopMe-powered video survey among 60 consumers based in the UK,the US and Australia in August 2022.We used our proprietary consumer survey data and data provided by GlobalData to estimate the revenue pools for in-person card payments and total online payments.The model included the forecast and scenario analysis.To estimate the total payment revenue pools for all online payments and in-person card payments,and thereby to calculate the revenue at risk for banks,we examined data provided by GlobalData and UK Finance,and taken from our proprietary global consumer survey run by Accenture Research in August 2022.We included interchange fees from all card transactions,interest income from credit cards,and fees attributable to banks from alternative online payments.Using the consumer survey results and an analysis of recent payment trends,Accenture Research carried out a scenario analysis to estimate the payment methods likely to be used,in future,by consumers in each of the 13 countries in our sample(which together represent 83%of global bank payments revenue).These estimates were extrapolated globally.The scenario analysis was based on current consumer payment preferences and expected changes in payment flows as indicated by survey respondents.For example,we discovered that some consumers plan to switch from credit cards to debit cards,while others plan to adopt digital wallets instead of cash as their primary method of payment.Our baseline as-is scenariowhich is built on our proprietary Accenture Payments Revenue Modelwas adjusted accordingly,incorporating inflation,country-specific dynamics,and input from our global payment experts.About the research36Payments Gets PersonalAuthorsContributorsSulabh AgarwalGlobal Payments Lead,AccentureAbout AccentureAccenture is a global professional services company with leading capabilities in digital,cloud and security.Combining unmatched experience and specialized skills across more than 40 industries,we offer Strategy and Consulting,Technology and Operations services and Accenture Song all powered by the worlds largest network of Advanced Technology and Intelligent Operations centers.Our 721,000 people deliver on the promise of technology and human ingenuity every day,serving clients in more than 120 countries.We embrace the power of change to create value and shared success for our clients,people,shareholders,partners and communities.Visit us at.About Accenture ResearchAccenture Research creates thought leadership about the most pressing business issues organizations face.Combining innovative research techniques,such as data science led analysis,with a deep understanding of industry and technology,our team of 300 researchers in 20 countries publish hundreds of reports,articles and points of view every year.Our thought-provoking research developed with world leading organizations helps our clients embrace change,create value,and deliver on the power of technology and human ingenuity.Margaret WeichertNorth America Payments Lead,AccentureEdlayne BurrGrowth Markets Payments Lead,AccentureHannes FourieResearch Manager,AccentureDominika BosekAssociate Research Manager,AccentureAccenture PaymentsAccenture Banking BlogAccenture LinkedInStay ConnectedCopyright 2022 Accenture.All rights reserved.Accenture and its logo are registered trademarks of Accenture.37Payments gets personal

9 人看过 2023 年 3 月 20 日 37页 5星

John Maeda：2023 技术设计报告（42 页）.pdf

2Howdy!Back in 2015,I started sharing everything Id recently learned into a kind of“music album”of knowledge to drop at SXSW.Its a side project that hasnt left my side,thus farI guess it saves me time so I dont have to write another book: ).The typeface used in the 2023 Design in Tech Report is Inter by Rasmus AnderssonWhat is the 2023 Design in Tech Report?DESIGNINTECH.REPORTjohnmaedaDESIGNINTECH.REPORTAESTHETICS31.Design People 2.DE$IGN And Digital Transformation 3.How To Speak Machine How To Speak Human 4.The AI Ketchup Bottle Moment 5.Resilience Or Renewal 6.AESTHETICS of ETHICSUseful AI Stuff For Right Now0.TABLE OF CONTENTSSorry I couldnt fit the 150 other slides I had planned to go through because I realize the backstory may not matter as much to everyone than the parts about the now.I.Machines Run LOOPS 1.Computers excel at repeating themselves through loops.2.Hard machines are visible;soft machines are invisible.3.Human computers are the original computing machines.4.Recursion is the most elegant means to repeat oneself.5.Loops are indestructible unless a programmer has made an error.II.Machines Get LARGE 1.Embracing exponential thinking is unnatural at first.2.Loops wrapped inside loops open new dimensions.3.Be open to both directions of the powers of ten.4.Losing touch with human scale can make you toxic.5.Computers team up with each other way better than we do.III.Machines Are LIVING 1.Discerning whats alive versus whats not used to be simpler.2.The science of lifelikeness is undergoing a renaissance.3.An artists perspective keeps you humanly curious.4.Life is defined by how we live in relation to each other.5.Computers wont replace us if we remain audacious.How To Speak Machine Computational Thinking For The Rest Of Us2019Source:Raymond Kurzweil https:/Kurzweils predictions from 2011 seem to trending towards“maybe he was right”DESIGNINTECH.REPORTAESTHETICSHow To Speak Machine Computational Thinking For The Rest Of Us 2019Source:johnmaeda.How To Speak MachineA biologist lives next to a pond.She clears the pond of lily pads.And runs and experiment with a species of lily pads that doubles over night Simple Moores Law explanation of why ChatGPT feels like it appeared“all of a sudden.”DESIGNINTECH.REPORTAESTHETICSHow To Speak Machine Computational Thinking For The Rest Of Us On Day 3014 15 16 17 18 19 20 21 22 23 24 25 26 27 28 292019Source:johnmaeda.How To Speak MachineOn day 1,theres 1 lily pad.On day 2,theres 4.And so forth.On day 30,the pond is covered with lily pads.Simple Moores Law explanation of why ChatGPT feels like it appeared“all of a sudden.”DESIGNINTECH.REPORTHow To Speak Machine Computational Thinking For The Rest Of Us On Day 3014 15 16 17 18 19 20 21 22 23 24 25 26 27 28 292019Source:johnmaeda.How To Speak MachineOn what day is the pond half full of lily pads?Day 15?Simple Moores Law explanation of why ChatGPT feels like it appeared“all of a sudden.”DESIGNINTECH.REPORTHow To Speak Machine Computational Thinking For The Rest Of Us On Day 3014 15 16 17 18 19 20 21 22 23 24 25 26 27 28 292019Source:johnmaeda.How To Speak MachineOn what day is the pond half full of lily pads?Or Day 30?Simple Moores Law explanation of why ChatGPT feels like it appeared“all of a sudden.”DESIGNINTECH.REPORTRESILIENCETECH.REPORT9Design 501:The 4th I.R.introduced a new kind of design.I wrote a book about it in 2019.The trope of,“Speed,price,quality:you only get to pick two”gives way to,“you get all three with computational design!”That means undesirable work can get automated so that you can work on the parts that you want.Finally!Source:johnmaeda TIMEValue creationClassical DesignPHYSICAL WORLDDesign ThinkingORGANIZATIONAL WORLDA GENTLE INTRODUCTION TO A.I./MACHINE LEARNINGComputational DesignDIGITAL WORLDIndustrial Revolution201520162017201820192020202120222023DESIGNINTECH.REPORTAESTHETICS10Computational Design:Artificial IntelligenceAI isnt good at inclusive design because we arent,too88%of designers surveyed believe that it will be atleast 5 years or more until visual designers arereplaced by AI.AI can already do a lot right now.The history of AI and generating visual art goes backto the 1960s with A.Michael Noll and other artists atBell Labs,and stretches back to Marcel Duchamp.AI is extremely proficient at tedious tasks that nohuman should really have to do,like:adjust imagecontrast,correct messy lines,and re-style images.Google is by far the leader in mixing AI with designexperimentation due to the amazing talent theyveacquired like Martin Wattenberg and FernandaViegas who at IBM first advanced datavisualization with their landmark Many Eyes.AI is showing us the unintended consequences ofrunning what appear to be“fair”algorithms that feedoff of past activity and practices that are convertedinto training data.But embedded in that trainingdata is our long history of exclusion.2018 Design In Tech Report|Computational Design:AI58/91201520162017201820192020202120222023DESIGNINTECH.REPORTAESTHETICS11Towards conversational designConversation is not a new interface.Its the oldest interface.Conversation is how humans interact with one another,and havefor millennia.We should be able to use the same principles tomake our digital systems easy and intuitive to use by finallygetting the machines to play by our rules.Erika HallSource:mulegirl Conversational Interfaces2018 Design In Tech Report|Computational Design54/91201520162017201820192020202120222023DESIGNINTECH.REPORTAESTHETICS12Nicholas Negroponte and team sensed the future,and made it.Imagine a machine that can followyour design methodology and at thesame time discern and assimilate yourconversational idiosyncrasy.The samemachine,after observing yourbehavior,could build a predictivemodel of your conversationalperformance.Such a machine couldthen reinforce the dialogue by using apredictive model to respond to you ina manner that is in rhythm with yourpersonal behavior and conversationalidiosyncrasies.”NicholasNegroponte,The ArchitectureMachine(1967)“Source:2019 Design In Tech Report|Yaaaaaaaaawn!Boring AI79/98201520162017201820192020202120222023/nollcurve/stepamp exch def/numsteps exch def/cycles exch def/xscale exch def/amp exch def 0 amp moveto/curx 0 def 1 1 cycles/i exch def/radbase 180 i 1 sub mul 90 add def/numincrs numsteps stepamp i mul mul def/dx 180 numincrs div def/x radbase def 1 1 numincrs pop curx amp x sin mul lineto/x x dx add def/curx curx xscale add def for for stroke def/noll90.7 setlinewidth 0 setgray 1 1 90 gsave 3.4 mul 20 add 0 exch translate 15 1 9 8 1.25 nollcurve grestore for defnoll90A RT A N D C O M P U TAT I O N/1 9 9 0technologydesign1990ICYMIDESIGNINTECH.REPORTAESTHETICSDESIGNINTECH.REPORTAESTHETICS14Useful AI Stuff For Right NowSource:johnmaeda Things that are top of mind for me right now.Everything else in this preso is looking backwards,to help me look forwards.If you want to do that too,then stick around!0DESIGNINTECH.REPORTAESTHETICSEvery year I run a survey related to the Design in Tech Report.But this year Ive been a little busy with all-things GPT-universe.That said,I got a lot of great contributions!As Figma AI plug-ins go,has some really cool ones.My favorite obscure find was the Pokemon generator.For ready-to-eat prompts go to promptbase or lexica.art which are prompt marketplaces.Source:johnmaeda Annual Design in Tech Survey Respondees|futurepedia.io has amore of these kinds of finds for you to forage through 15Thank you to Henrik,Frederik,Sean-Wood,Kai,Kim,Samuel,Henry,Ryan,Chris,Colin,Agnieszka,Bob,Gary,Agu,Dave,Moiss,Me,Ankita,Darius,Rachel,Aldo,PChia,Heather,Justine,Miguel,Florentin,Juliana,Amanda,Sam,Gaby,Kerry,Chloe,Duncan,Jan,Harshika,Arum,Gael,Raffaela,Ghizlene,Marcel,Narasimha,Eelko,Jason,Debk,Andrea,Ashish,Andr,Bill,Maria,Art,Puneet,Vidhi,Matt,Lauren,Brian,Sridhar,Gaurang,Julie,Ocean,Axel,Sithembiso,Rodolfo,Sanmitra,Sbastien,Bruce,Jason,Maria,Carlo,Bs,Angelina,Silvia,Filippo,Manisha,Roland-Philippe,Andrs,Ame,Lucas,Marin,Mark,Cristin,Quang,Juhan,Pat,Luiza,Zyo,Chrys,Mea,Rupert,Ellie,Richard,Paolo,Sean,Guy,Kaladhar,Sebastian,Alessio,Surya,Richard,Andre,Dani,Vivek,Christina,Jesper,Ranjeet,Kshipra,Betsongeorge,Jodean,Marc,Paul,Akshay,Roman,Dylan,Naomi,George,Paul for contributing to the 2023 survey!How likely will the design profession need to change given the emergence of Large Language Model AI systems like ChatGPT?Average=8 10=“highly likely”What prominent Design AI tool out there is top of mind for you?Adobe Tools Figma AI Plugins DALL-E Midjourney Runway D-ID Copy.ai Elevenlabs Stable Diffusion Hugging Face*Anything*ChatGPT/ChatGDP/Chat GBTWhat*obscure*Design AI tool out there is top of mind for you?Pinecone|Weaviate|Qdrant:Vector DB Uizard:Instant UI NVIDIA Gaugan:Universe Painter Vizcom:3D From Prompts Autodraw:Early Google Experiment Wombo:Lip Sync Synesthesia:Avatar Spokesperson Luma AI:Instant 3D Deepl:Language translator Tome:Instant Presos Lyric Studio:Instant Music Playground:IRL Observability Photofeeler:Judge Your Photo Edward Teaching BotSomeone I know has been directly affected by the recent spate of layoffs in tech.65%Good luck to everyone out there who will find their next step in life.I believe in you!3 JohnCONTEXTNSWENSWETO DA I J I T E M P L E|N A R A,J A PA N 2 0 0 11992DESIGNINTECH.REPORTAESTHETICSD E S I G N“”I S D E F I N E D B YM AT E R I A L S S E L E C T I O Nmaterials1992DESIGNINTECH.REPORTAESTHETICSDESIGNINTECH.REPORTAESTHETICS“A Comprehensive Survey on Pretrained Foundation Models:A History from BERT to ChatGPT”Learn about many of the models out there at https:/huggingface.co/docs/transformers/model_doc/flavaSource:https:/arxiv.org/pdf/2302.09419.pdf18CV Context Exemplar-CNNCV BiGAN NAT CountingCV BigBiGAN DeepCluster RotNetCV MoCo SimCLR BEiT MAEGraph DeepWalk LINEGraph VGAE node2vec GraphSageGraph DGIGraph GCC GraphCL SUGAR MoCLHISTORY OF PRETRAINED FOUNDATION MODELS20142016201820202022NLP Skip-GramNLP GloVe LM-LSTMNLP CoVE Shared LSTM FastTextNLP RoBERTa GPT-2 BERTNLP GPT-3 BART PET SimCSE ChatGPT=Large Language ModelUnified PFMs UNIFIED-IO OFA FLAVA Gato BEiT-3=Unified PFMUnified IO https:/OFA(Once For All)https:/FLAVA(A Foundational Language And Vision Alignment Model)https:/Gato https:/BEiT(Bidirectional Encoder representation from Image Transformers)https:/Ball)https:/en.wikipedia.org/wiki/BB-8 Just checking if youre still awake DESIGNINTECH.REPORTAESTHETICSThe end of the year seemed to go really fast for me.Same for you,too?Source:Sonya Huang https:/17OCT 24SEP 19DESIGNINTECH.REPORTAESTHETICSIt helps to squint a little to understand a few things.Because theres a lot to take in rn.Source:Sequoia https:/OF MODELSpre-20202030?What you build will change as there are more models available to use.KINDS OF MODELSThe app you build depends upon the model(s)you have available.Green means“look to be surprised”MODEL LAYERAPP LAYERDESIGNINTECH.REPORTAESTHETICSSimons Scissors:Context and CognitionScissors Photo by Matt Artz on UnsplashSource:Dan Lockton,“Simons Scissors and Ecological Psychology in Design for Behavior Change”in SSRN Electronic Journal,Aug 2012.21CognitionHuman rational behavior is shaped by a scissors whose blades are the structure of task environments and the computational capabilities of the actor.”Herbert Simon,“Invariants of Human Behavior”in Annual Review of Psychology,41,1990,p.1-19“THE PRETRAINED FOUNDATIONAL MODELTHE PROMPT YOU FEED THE MODELDESIGNINTECH.REPORTAESTHETICSCognitionTo build apps with models takes a little time to settle into your mind.Its not as easy as saying to yourself as a dev,“Hey.This is similar to XYZ.”Because its not.New models are being built with plenty of determination across the world.The blade that matters to the non-model builders is where a lot is happening.OSS langchain and llamaindex are great for design-devs to try out!Source:Unusual VC https:/www.unusual.vc/post/devtools-for-language-modelsLLM APIPrompt DesignVector DB Other DataYour ProductEASYEASYEASY“DevTools for language models predicting the future”unusualvcMachine Learning Data WarehouseHire ML ExpertBuild ModelWrap EndpointHARDYour ProductDESIGNINTECH.REPORTAESTHETICSPrompt Engineering 101Source:https:/the core promptMake your wish.Be specific about the outcome,length,format,and style.Use precision in how you prompt.When referring to text to act upon,delimit it with“”(3 double quote marks)or#(3 hash sign marks).3.Add in useful contextGive one example of how youd like your prompt to behave.Give multiple examples of how you want your prompt to behave.When you dont give guidance with examples,thats“zero shot.”The other cases are called“one shot”and“few shot.”4.Tune the models settingsSet the temperature high to make it more random;lower the temperature to make it more deterministic.Alternatively,adjust the“p”parameter to broaden or narrow the range of words that will be generated in response.Give it more tokens when you need to work with longer prompt or longer responses.OLDER($)NEWER($)1.Select a large language model*Davinci Curie Babbage Ada The OpenAI universe also includes Codex(for generating computer code)and the new ChatGPT model DESIGNINTECH.REPORTAESTHETICSPrompt Engineering 201Playing with the OAI tokenizer https:/gives you valuable insights on how it“eats”text.And learn more about how“chain of thought”prompting works via https:/arxiv.org/abs/2201.11903 asap.Source:https:/arxiv.org/abs/2201.1190324C.Use“chain of thought”promptingGetting a model to use our own human tendency to“think out loud”has been shown to produce more accurate outcomes.When prompting,give an explicit“thinking out loud”explanation for how a problem is to be solved with your related reasoning.A.Shorten an often-used prompt You can reduce*the amount of tokens that get used by finding a similar but shorter version of a prompt.This way if youre using the prompt a lot,youre not using up as many tokens in a cumulative sense.*One DiT survey responder suggested using Quillbot.B.Go for a two-fer or three-ferSometimes with one prompt you can get multiple things done.DESIGNINTECH.REPORTAESTHETICSWhen I mentioned the Herbert Simon scissors metaphor to Sam Schillace,I recall him quickly saying,“And what did our parents teach us?Dont run with scissors.”Scissors Photo by Matt Artz on UnsplashSource:Sam Schillace https:/HAI“On the Opportunities and Risks of Foundation Model”(2022)Its the most comprehensive take on the pros and cons of pretrained foundation models as a 160 page“weapon of understanding”with 30 pages of references if youre new to this space,its a godsend.Source:https:/arxiv.org/pdf/2108.07258.pdf26MACHINE LEARNINGDEEP LEARNINGFOUNDATION MODELSTIMEEmergence ofHomogenization of“how”featuresfunctionalitieslearning algorithmsarchitecturesmodels1.While new capabilities emerge,our reliance on a more homogenized approach creates a single point of failure.2.Ultimately,all of this modeling eventually gets deployed to real people.And the implications at the scale of millions are huge.Data CreationData CurationTrainingAdaptationDeploymentLarge uncharted data sets are a source of robustness and are an increased risk of poisoningFoundational models are a security choke point and also an increased attack surfaceDownstream apps easier to develop but“dual use”(use for unintended purposes)risk S E C U R I T YDESIGNINTECH.REPORTAESTHETICSFor my introductory AI course,I had Professor Joseph Weizenbaum as the instructor.His significance was lost on me until many years later I realized that he was a GOAT.Theres a fab article on Dr.Weizenbaum on 99%Invisible https:/99percentinvisible.org/episode/the-eliza-effect/Source:Computer Power and Human Reason(1976)27I knew of course that people form all sorts of emotional bonds to machines,for example,to musical instruments,motorcycles,and cars.And I knew from long experience that the strong emotional ties many programmers have to their computers are often formed after only short exposures to their machines.What I had not realized is that extremely short exposures to a relatively simple computer program could induce powerful delusional thinking in quite normal people.This insight led me to attach new importance to questions of the relationship between the individual and the computer,and hence to resolve to think about them.”Joseph Weizenbaum(1976)“DESIGNINTECH.REPORTAESTHETICSJudgment Call kicked off a nuanced approach to talking about AI in product companies.And Professor Helen Armstrongs 2021 book on AI for designers is certainly timely.Judgment Call(2019)was authored by Stephanie Ballard,Karen M.Chappell,Kristin Kennedy to use value sensitive design and design fiction to surface ethical concerns related to technology.Source:Mira Lane/Helen Armstrong/Sarah Gold28 More card toolkit recommendations courtesy of data and trust guru CEO/Founder Sarah Gold of(UK)DESIGNINTECH.REPORTAESTHETICSIts easy to get GPT-bots to“pretend youre a”for everything ranging from a JS console to a math teacher.Critical thinking is key right now;David Karam has“Culture Club”for you.Other approaches recommended by DiT survey responders are for simulate audience reaction,webcam reaction aggregation,and synthetic health which is an open source patient generator.Source:https:/Karam https:/give us the opportunity to explore concepts from multiple perspectives in simulation.”David Karam“DESIGNINTECH.REPORTAESTHETICSMorris was not entirely against the use of machines,but felt that the division of labour a system designed to increase efficiency,in which the manufacture of an object was broken into small,separate tasks,meaning individuals had a very weak relationship with the results of their labour was a move in the wrong direction.”V&A“Ruskin&Morris famously led the Arts&Crafts Movement in the late 1800s as a reaction to the Industrial Revolutions introduction of new fabrication technologies.A useful take on the plight of the Luddites in relationship to whats happening now with AI fears is https:/Morris,made by Ada Phoebe Godman(1877)30DESIGNINTECH.REPORTAESTHETICSJust like in the Arts&Crafts Movement,we should expect to see*critical making*happen.Like this brand new animation just released by design technologist Masashi KawamuraSource:masakawa https:/Will Foundation Models Impact Design Thinking?Source:https:/web.stanford.edu/class/me113/d_thinking.html32Summarize customer support or field logs1Categorize common problems2Generate possible solutions3Visualize solution journeys and examples4Simulate customer reaction5EmpathizeDefineIdeatePrototypeTestThis is one hypothetical way:DESIGNINTECH.REPORTAESTHETICSThe Creative ProcessExplore Experiment PracticeCreateReflect Assess ReviseShareImagine Examine PerceiveThis is one hypothetical way:How Will Foundation Models Impact Classical Design?Source:https:/www.kennedy-center.org/education/resources-for-educators/classroom-resources/articles-and-how-tos/articles/collections/arts-integration-resources/arts-integration-and-universal-design-for-learning/33Test options with AIUse AI audienceChat with AI criticGenerate options with AISketch with AIDESIGNINTECH.REPORTAESTHETICSIn this new age of partnering with PFMs,we need to keep in mind what we dont enjoy doing versus what we really love to do.Remove the drudgery while increasing your joy.I run a poll regularly in large groups of what people prefer not to do at work versus what they really love doing at work.It turns out theres tons of things that dont spark joy in the workplace.Ya think?Source:johnmaeda34Calendar Management Making Powerpoint Decks Cleaning Data Low-priority E-mails Competitive Research Summarizing Monitoring/Alerts“DOES NOT SPARK JOY”Decision Making Talking With People Learning With Others Mentoring/Coaching Relationship Building Delivering Presentations Crafting Strategy“DOES SPARK JOY”Simplifying the Laws of Simplicity.Quiz:Which cookie will a child choose?2005DESIGNINTECH.REPORTAESTHETICSQuiz:Which cookie will a child choose?2005DESIGNINTECH.REPORTAESTHETICSWhich pile of laundry will a child choose?2005DESIGNINTECH.REPORTAESTHETICSwant more(enjoy/consume)want less(work/transform)Simplicity is about living life with more enjoyment and less pain.2005LAUNDRYCOOKIEDESIGNINTECH.REPORTAESTHETICS2023Think of how to use AI to get rid of things you dont really want to do.So that you have more time to do more of what you love to do.LAUNDRYCOOKIE“DOES NOT SPARK JOY”“DOES SPARK JOY”DESIGNINTECH.REPORTAESTHETICSDESIGNINTECH.REPORTAESTHETICSSource:johnmaeda IMDB40 Ive used two sci-fi movie metaphors when struggling to understand this stuffUseful AI Stuff For Right Now1.Arrival(2016)Directed by Denis Villeneuve Story by Ted Chiang Its about communicating with an alien race within a set of strict limitations in how long you can talk with the alien.The mystery is grounded in discovering the language of the alien through trial and error.Spacetime Language=Prompts2.Black Panther(2018)Directed by Ryan Coogler Story by Ryan Coogler Joe Cole Its about the king of an African nation called Wakanda which is the most technologically advanced country on earth.Their early access to an alien material with special properties that defy physics shaped their history.Vibranium=Cognition BladeDESIGNINTECH.REPORTAESTHETICSSource:johnmaeda41 Designers tend to care about people as people.Instead of just as prospects or customers.Design as a field has evolved to speak more machine,more scale,and more$s.A lot of work has been done in the design world to birth a new“aesthetics of ethics.”Speaking human really well will matter more than speaking machine in this next chapter.But its not mainstage because it doesnt sound like“time or$s saved”or“new$s.”Next years report will center around the business value of this new kind of design.Good luck to us all!SummarySource:Tony Ruth lunchbreath in the 2020 CX ReportA MESSAGE FROM OUR SPONSOR THE EARTH DESIGNINTECH.REPORTAESTHETICS

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国际治理创新中心：中国数字治理：数据、人工智能与新兴技术与数字商务（英文版）(24 Seiten).pdf

Conference Report Virtual Workshop,November 28,2022Digital Governance in China Data,AI and Emerging Technologies,and Digital TradeAlex He and Robert FayConference Report Virtual Workshop,November 28,2022Digital Governance in China Data,AI and Emerging Technologies,and Digital TradeAlex He and Robert FayAbout CIGIThe Centre for International Governance Innovation(CIGI)is an independent,non-partisan think tank whose peer-reviewed research and trusted analysis influence policy makers to innovate.Our global network of multidisciplinary researchers and strategic partnerships provide policy solutions for the digital era with one goal:to improve peoples lives everywhere.Headquartered in Waterloo,Canada,CIGI has received support from the Government of Canada,the Government of Ontario and founder Jim Balsillie.propos du CIGILe Centre pour linnovation dans la gouvernance internationale(CIGI)est un groupe de rflexion indpendant et non partisan dont les recherches values par des pairs et les analyses fiables incitent les dcideurs innover.Grce son rseau mondial de chercheurs pluridisciplinaires et de partenariats stratgiques,le CIGI offre des solutions politiques adaptes lre numrique dans le seul but damliorer la vie des gens du monde entier.Le CIGI,dont le sige se trouve Waterloo,au Canada,bnficie du soutien du gouvernement du Canada,du gouvernement de lOntario et de son fondateur,Jim Balsillie.CreditsManaging Director of Digital Economy Robert FayProgram Manager Jenny ThielPublications Editor Susan Bubak Senior Publications Editor Jennifer GoyderGraphic Designer Brooklynn SchwartzCopyright 2023 by the Centre for International Governance InnovationThe opinions expressed in this publication are those of the authors and do not necessarily reflect the views of the Centre for International Governance Innovation or its Board of Directors.For publication enquiries,please contact publicationscigionline.org.This work is licensed under a Creative Commons Attribution Non-commercial No Derivatives License.To view this license,visit(www.creativecommons.org/licenses/by-nc-nd/3.0/).For re-use or distribution,please include this copyright notice.Centre for International Governance Innovation and CIGI are registered trademarks.67 Erb Street West Waterloo,ON,Canada N2L 6C2www.cigionline.org Table of Contentsvi About the Authorsvi Acronyms and Abbreviations1 Introduction1 Key Takeaways3 Data Governance in China7 Governance of AI and Emerging Technologies in China 10 Chinas Participation in Digital Trade12 Conclusion13 Agenda15 ParticipantsviConference Report Virtual Workshop,November 28,2022 About the AuthorsXingqiang(Alex)He is a CIGI senior fellow.He is an expert on digital governance in China,the Group of Twenty(G20),China and global economic governance,domestic politics in China and their role in Chinas foreign economic policy making,and Canada-China economic relations.Prior to joining CIGI in 2014,Alex was a senior fellow and associate professor at the Institute of American Studies at the Chinese Academy of Social Sciences(CASS)and a visiting scholar at the Paul H.Nitze School of Advanced International Studies,Johns Hopkins University,in Washington,DC(20092010).Alex was also a guest research fellow at the Research Center for Development Strategies of Macau(20082009)and a visiting Ph.D.student at the Centre of American Studies at the University of Hong Kong(2004).Alex is the author ofThe Dragons Footprints:China in the Global Economic Governance System under the G20 Framework,published in English(CIGI Press,2016)and Chinese editions,and co-author ofA History of China-U.S.Relations(Chinese Social Sciences Press,2009).Alex has published dozens of academic papers,book chapters,and newspaper and magazine articles.Alex has a Ph.D.in international politics from the Graduate School of CASS and previously taught at Yuxi Normal University in Yunnan Province,China.Alex is fluent in Chinese and English.Robert(Bob)Fay is a highly accomplished and respected leader in the field of digital economy research.With more than 30 years of experience working in the public and private sectors,he has developed expertise in economics,policy analysis and strategic planning.Currently,Bob serves as managing director of digital economy at the Centre for International Governance Innovation(CIGI),where he leads a network of researchers focused on the intersection of technology,trade,innovation and governance.In this position,he has played a key role in shaping the discourse around the digital economy and has contributed to numerous policy debates and research initiatives on topics such as data governance,digital innovation and the future of work.Before joining CIGI,Bob held various leadership positions at the Bank of Canada(BoC),where he was responsible for the assessment of digital technologies for Canadas economy and international economic developments,and provided short-term forecasting,structural analysis and policy advice.He was also special assistant to BoC Governor Mark Carney and his chief of staff,playing a key role in delivering policy direction.Bob began his career as an economist at the Organisation for Economic Co-operation and Development,where he worked on labour market issues and country-specific analyses.Bob holds an M.A.in economics from Queens University and has published numerous research papers and policy briefs on a range of economic and policy topics.Acronyms and AbbreviationsAI artificial intelligenceCAC Cyberspace Administration of ChinaCCP Chinese Communist PartyCIGI Centre for International Governance InnovationCPTPP Comprehensive and Progressive Agreement for Trans-Pacific PartnershipDEPA Digital Economy Partnership AgreementGDPR General Data Protection RegulationIP intellectual propertyIT information technologyMIIT Ministry of Industry and Information TechnologyPIPL Personal Information Protection LawR&D research and developmentRCEP Regional Comprehensive Economic PartnershipWTO World Trade Organization1Digital Governance in China:Data,AI and Emerging Technologies,and Digital TradeIntroductionChinas massive presence in the digital economy is defined by its focus on big data,artificial intelligence(AI)and other emerging technologies,digital trade,standards,intellectual property(IP)and innovation.Further,digital governance in China constitutes a significant global issue at the intersection of technology and international governance.At the same time,the ongoing technological and trade decoupling between the United States and China may have dimmed the future of the digital economy and high-tech development in China.The long-awaited Chinese Communist Partys(CCPs)20th National Congress in October 2022 concluded with a norm-breaking third term for President Xi Jinping as the partys general secretary,consolidating unprecedented power among Xi and his loyalists(not seen since Chairman Mao Zedong)in the top leadership positions,which has left more questions and uncertainties for the future of China.In the context of these latest developments,the Centre for International Governance Innovation(CIGI)organized and hosted a virtual workshop on November 28,2022,to examine the status and future development of Chinas digital governance practices.With experts from Canada,China,Europe,Singapore and the United States,the workshop discussed Chinas digital governance practices in three critical areas:data governance,governance of AI and other emerging technologies,and Chinas participation in digital trade to shed light on the countrys digital governance and its international implications.This conference report shares key takeaways from the workshop,which was held under the CIGI Rule.1 The workshop summary does not purport to represent a consensus among the participants,nor to convey the views of any individual or organization.Rather,its goal is to review the latest developments in Chinas digital governance,in particular in the three areas mentioned above to demonstrate the global impact of the countrys digital governance system.1 See www.cigionline.org/about/cigi-rule/.Key TakeawaysData Governance The enormous economic value of data is a key to understanding Chinas data governance system,which is different from the data protection frameworks in Europe that primarily focus on protecting the individuals right to privacy,and practices in the United States that focus on regulating private law relationships between economic players and protecting individuals from government intervention.Chinas data protection framework has evolved to consist of two major pillars:the Personal Information Protection Law(PIPL)and the Data Security Law.The former is primarily concerned with data by which individuals can be identified but is not a legal framework that deals with any kind of data.The latter,with its vague definition of key terms and wide coverage of potentially all data,makes China unique among major digital players as it essentially protects national security,the public interest and the collective against harm that might arise out of the misuse of any kind of data.A significant effort has been made to create a protective wall in China regarding the export of data and its accessibility to safeguard the economic value of data as well as to address national security as“securitization”has become a leading economic objective under President Xi.The future of outbound data transfers from China is in a state of flux.Regulations are becoming increasingly clear when it comes to cross-border data transfer while the vague terminologies on data governance remain in place.Regulators still retain a lot of leeway and can mandate an outbound data transfer assessment and block data export whenever they deem it necessary.Data security is clearly regarded as a very important part of Chinas national security strategy,and the crackdowns on digital and data trade regulations in the name of national security will continue after the 20th National Congress everything in China can be connected to national security.China is building its own version of a digital economy to integrate with the real economy or the industrial sector.Chinas digital giants 2Conference Report Virtual Workshop,November 28,2022 have refocused on industrial sectors,such as those that develop AI and information technology(IT),to bolster high-tech innovation using Chinas digital and data capacity.Most of Chinas big digital platforms are transactions-based platforms related to payments and are therefore not innovative,although they have a large number of users and access to massive amounts of personal data.These platforms are now facing strict data supervision for violating personal data regulation after a period of wild growth.In that context,Chinas data regulation framework requires large digital platforms to take more responsibility to protect data security and personal information while stressing the need for data-driven economic development to maximize the value of data.Digitalizing the real economy and unlocking the potential of data is a top priority for China.In this sense,use of the term“crackdown”on the digital economy is misleading.Nevertheless,Chinas data governance regime is developing a dual-track trajectory.Data abuses by tech giants are severely punished while state entities have mostly free rein to collect citizens information.Although the Chinese,EU and US regimes have very different starting points and different emphasis and values in specific areas of data privacy versus data as a national security issue versus rent capture in industrial policy,there appears to be some general convergence moving toward a framework with features from each.The antitrust actions that are being taken by China,Europe and the United States,as well as the fact that they all heavily engaged in industrial policy to capture rents,are two important technological conditions that are driving the convergence.Although there will be many obstacles en route to building a rules-based order for the digital economy,perhaps this can be achieved by negotiations rather than through unilateral actions such as harsh bans on the export of data,whether in China or the United States.China is pursuing multiple goals simultaneously and is seeking to balance trade-offs between the use of data as an economic resource and its role in domestic governance.This approach stands in contrast to the popular Western commentary framing data issues in China in binary terms:either totalitarian surveillance or personal information protection,either data localization or a competitive digital economy.The CCP is preoccupied with mass collection of Chinese citizens data as a conduit to security and stability.However,big problems such as data silos continue to hinder the achievement of this data-driven governance.Governance of AI and Emerging Technologies China has moved first in algorithm regulation relative to other major jurisdictions,especially in areas such as online delivery services and social media platforms.The Internet Information Service Algorithmic Recommendation Management Provisions,effective March 1,2022,regulate the recommendation algorithms,setting an example for the West on how to regulate algorithms and tech companies.However,the key question for the far-reaching policy and incredibly ambitious regulations is whether they can be implemented.Chinas new regulation on recommendation algorithms has increased state control over the dissemination of information via vague definitions and rules forbidding algorithms from engaging in activities that harm national security or the public interest.At the same time,the regulation has also tried to protect worker and consumer rights,which gives Chinese internet users more consumer rights related to algorithms than users anywhere else on the planet.The policy dilemma for China developing emerging technologies is that leading technologies have been financed by venture capital,which is profitability driven and growth-stage investment oriented,and not well suited under the current geopolitically uncertain global environment.Chinas biggest problem in financing emerging technologies is its lack of patience.There is a lot of investment in emerging technologies because of foreign import substitution,but it is unclear whether this investment is sustainable.China has become the largest global source of top AI research talent,followed by the United States,the European Union and India.China led 3Digital Governance in China:Data,AI and Emerging Technologies,and Digital Tradeall countries in the number of AI-related papers it published in 2020.Although China is trying to produce a lot of AI research and development(R&D),US companies and universities remain the driving force behind most of the game-changing breakthroughs,especially in recent years.With the US export control on high-end chips,including AI chips to China,there is not much China can do in the short term,but it will be very difficult for American tech companies to give up the huge market in China.Chinese regulators behave like start-ups:they fail fast and early.Under Chinas one-party system,implementing and updating policy does not involve arguing with many other parties.It is expected that regulators will see what works and what does not,and then release a series of policy updates and supporting regulations that define some of these more ambitious and vague rules.It is very clear that Chinas AI governance regulations and practices borrowed many ideas from the European Union,especially the risk-based AI classification system.China can contribute to global AI governance based on its rich AI applications and the challenges it faced.Digital Trade China is very serious about joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership(CPTPP)and the Digital Economy Partnership Agreement(DEPA)and willing to meet their obligations as part of its promotion of high-level opening up.It would not be difficult for China to meet the requirements of the CPTPP and the DEPA as the exceptions within those agreements would allow China to do what it wants.With more than 600 pages of legally binding rules in the CPTPP,it is better to have China in the agreement than not,if China can meet the requirements to join.Still,it could be politically difficult for some members to agree with Chinas entry into the CPTPP and the DEPA,and it may be a much tougher task for China to join the DEPA than to join the CPTPP as the DEPA is a very young agreement(it entered into force in 2021),and there is significant risk if China joined on the ground floor since the DEPA is more a venue for shared values and norms,which are different in China.There are also political considerations that will play an important role.With either a weak or not very effective agreement or no regional agreement,the world would go back to a reinforcement of three different data or digital realms of the United States,the European Union and China,with everyone else in between.This is not really a solution.Data Governance in ChinaChinas Data Governance FrameworkData has become a critical part of economic,social and governance policy making in China in recent years.In the development of Chinas data governance system,data was first defined as a factor of production,a source of value or productivity on par with land,labour,natural resources and so forth,which gives data an enormous economic value.This is a key to understanding Chinas data governance system as it is obviously different from the data protection framework in Europe,which is mainly focused on protecting individuals privacy.It is also different from data governance practices in the United States,which focus on regulating private law relationships between economic players as well as protecting individuals from certain forms of government intervention.Today,Chinas data protection framework has evolved into a comprehensive two-pillar system.The first one is the PIPL,which builds on a longer trajectory of data-related regulations that emerged in the early 2010s and has now matured into a full-fledged legislative framework.The PIPL bears a clear family resemblance to Europes General Data Protection Regulation(GDPR)in the objectives that it tries to achieve and the legal tools by which it tries to achieve them.In short,the PIPL is aimed at preventing harm to individuals arising from the abuse of personal information such as through telecom fraud and data theft.It is primarily concerned with data by which individuals can be identified,but it is not a legal framework that deals with any kind of data and does not regulate all possible uses of information.4Conference Report Virtual Workshop,November 28,2022 The PIPL covered stipulations related to business models(for instance,how do large private companies use data in a way that might impact the economic rights and interests of users,the competition with and between platforms themselves,and third-party merchants operating on those platforms).It also contains fairly strict provisions on personal information exports,which demonstrates a growing concern in China about how information on Chinese citizens is being exported.The second pillar is the Data Security Law,which makes China unique among major digital players as it essentially protects national security,the public interest and the collective against harm that might arise out of the misuse of any kind of data.It covers potentially all data,and it seeks to prevent public harm rather than private individualized harm.To that extent,it divides data into three categories:ordinary data;important data;and core national data with increasing security requirements,reporting and auditing standards,and limitations on the collection,processing,and trade and export of that data.The problem with both laws is that much of the implementing regulations have yet to be made,especially the Data Security Law,which remains very vague,with broad mandates of charging ministries and compiling catalogues of data to be categorized under the three categories mentioned above.There are obviously technical difficulties associated with this process and also political steps to be made,as any form of regulation will create massive winners and losers.Progress has been achieved in some priority areas,such as the broad pharmaceutical regime,as well as the development of smart vehicles,including self-driving vehicles.Chinas digital and data governance framework has two outstanding features that persist following the CCPs 20th National Congress.First,data security is clearly regarded as a very important part of Chinas national security strategy,and this trend will definitely continue after the partys 20th National Congress.The national security crackdowns on digital and data regulations will continue because China overly focuses on national security.In addition,Chinas internet regulator,the Cyberspace Administration of China(CAC)that oversees data and digital regulation,does not have any corresponding responsibility for the development of the sector,which is the jurisdiction of the Ministry of Industry and Information Technology(MIIT)and the Ministry of Commerce.Data was mentioned only once in the 20th National Congress report and it was mentioned as part of the section on Chinas security strategy,where the report emphasized the need for strengthening the construction of security systems for the economy,major infrastructure,finance,networks,data,biology,resources,nuclear energy,space and the ocean.Second,China is building its own version of a digital economy to integrate with the real economy or the industrial sector.This type of digital economy is different from that of the United States,which is home to digital giants such as Google,Facebook,Twitter and so on.Under President Xis direction to build China into an industrial power,Chinas digital giants such as Alibaba and Tencent refocused from online payment services such as food and grocery delivery and online games and tried to move into industrial sectors,such as AI and IT,to bolster high-tech innovation using Chinas digital and data capacity.Although this is a clear focus,whether anything will materialize from it is another question.Digital Platform GovernanceMost of Chinas big digital platforms are based on transactions,not innovation.They include e-commerce platforms such as Taobao(owned by Alibaba),JD.com and Pinduoduo;online services platforms such as Meituan and ele.me;social media platforms such as WeChat and Xiaohongshu;and digital content platforms such as ByteDance,Bilibili and so forth.Benefiting from Chinas demographic dividends,these platforms grow very fast and have a large number of users and massive amounts of personal data.With the PIPL and Data Security Law coming into effect and the introduction of implementation rules,including the Measures for Security Assessment of Outbound Data Transfer and Measures for Cybersecurity Review,an era of tough data regulation has begun after a period of rapid growth of these platforms.The drafted amendment for the Cybersecurity Law released in 2022 increased fines for violations of cybersecurity obligations.As for digital platform governance,the balance between security and development and between domestic and international dimensions are worth noting.5Digital Governance in China:Data,AI and Emerging Technologies,and Digital TradeThese platforms have faced the risk of severe punishment for violating data-related regulation since last year.The CAC strengthened enforcement efforts in areas such as cybersecurity data,security and personal information protection,and increased exposure of typical cases such as the massive RMB8 billion fine imposed on ride-hailing giant DiDi for data violation.On the one hand,platforms are taking more responsibility to protect data security and personal information as the legal framework becomes more robust.On the other hand,China has stressed the need for data-driven economic development.Both the Data Security Law and the PIPL promote data utilization while regulating data-processing activities.The laws put aside some contentious issues such as data ownership and focus on rights and obligations related to data processing and data utilization to maximize the value of data.In this sense,Chinas approach is far from what is being called a regulatory crackdown.Most of the Chinese digital platforms are doing business in domestic markets,with only a few overseas users.For example,the vast majority of WeChat users are in China.ByteDance has many overseas users but has separate entities operating independently at home(Douyin)and abroad(TikTok).The differences in entities and where they operate may be one explanation for why and how China tends to be more conservative toward cross-border data flows;the recent international competition and confrontation in digital is another.Cross-Border Data Flow RegulationsA significant effort has been made to build a protective wall in China to shield the economic value of data through its export and accessibility as well as to address national security as“securitization”has become a leading economic objective under President Xi.At the same time,the data-driven economy has matured rapidly in China.And contrary to what some may believe,it has experienced an enormous expansion of cross-border data transfers since it is integrated into global manufacturing,probably more so than any other economy.Further,with the Digital Silk Road initiative,China also has had a chance to capture global economic rents in the data space.Its moves to accept data commitments on the free flow of data and no data localization in the Regional Comprehensive Economic Partnership(RCEP)and its application to join the CPTPP make sense in that context.The future of outbound data transfers from China is obviously in a state of flux.On the one hand,the Chinese government has no intention to ban everything or to localize all data and stop outbound flows of data across the board,and its PIPL includes a clause indicating Chinas willingness to negotiate cross-border data transfer agreements with other jurisdictions.There are mechanisms such as standard contractual clauses or a certification mechanism for the transfer of personal data in its latest draft regulation from summer 2022.The CAC has released the cross-border rule for data transfer,which clarified the process through which the CAC reviews outbound data transfer requirements.This means that regulations are becoming increasingly clear when it comes to cross-border data transfers.Obviously,regulators still retain a lot of leeway.The CAC still mandates an outbound data transfer assessment and blocks data export whenever it is deemed necessary.On the other hand,the vague terminologies on data governance still exist.There is a need to clarify further what constitutes important data and what constitutes core national data,which obviously raises questions for other jurisdictions and companies as well.There are concerns about inbound data transfers to China.The debate in the European Union and the United States on how to regulate TikTok reflects the concern of how much the Chinese state is codifying and accessing privately held data sets that contain personal data.This complicates inbound data transfers to China to the extent that other jurisdictions may not trust Chinas government in keeping data secure.To some extent,the world digital market is being divided into two separate markets:the global market without China and the Chinese market,which stands in contrast to the global nature of the digital economy.At the same time,as digital globalization is moving forward,traditional economic globalization is standing still or even going in reverse.Only by integrating into the global market can China seize the opportunities of digital globalization.Building a rules-based order for the digital economy comes with many complications,but perhaps negotiations can be used to achieve this goal rather than unilateral actions such as harsh bans on the export of data in China or the United States.6Conference Report Virtual Workshop,November 28,2022 Policy Trade-Offs in Chinas Data Governance PracticesMuch like other jurisdictions,Chinas government is balancing different policy objectives in data governance between data as an economic resource and security concerns over the uses of data.This is important to highlight as it contrasts with the popular Western perspective that views data issues in China as an either/or scenario:either totalitarian surveillance or personal information protection,either data localization or a competitive digital economy.Regulators in China are pursuing multiple goals at the same time and trying to balance these different trade-offs,which are quite difficult to achieve for China or any other jurisdictions.The Chinese government has no intention of protecting everything or excluding all types of data from domestic and cross-border exchange and trading,which is where the data classification process under the data security law comes in.Digitalizing the real economy and unlocking the potential of data is a top priority in China.In this case,the term“crackdown”on the digital economy is misleading.Collecting,analyzing,processing and sharing data effectively and productively is a precondition to achieving that objective.In Chinese policy terms,this is called“informatization,”meaning to digitalize everything,which entails several approaches with respect to data.First,there is a policy trade-off in the creation of a state-led national data market.The Chinese government is trying to create a functioning market where companies can buy and sell their data sets and make a profit.The problem is that companies do not have the incentives to participate in data markets,put their data sets to use and share them openly via data exchange platforms.The central government is now starting to work on a new batch of data exchanges to try to persuade market actors to use them.The trade-off here is between state control and marketization:To what extent is Beijing willing to push for these state-led marketplaces to become the default for data trading in China?Considering that one objective is to fight monopolies,to increase economic productivity and public welfare,tension between the state and market actors may continue to be part of this process.Second,a policy trade-off exists between the CCPs obsession with mass data collection of its citizens to maintain security and stability and the high standards of data protection and data security the party wishes to achieve.Chinese leaders believe data-driven governance is the key to social stability and regime security.The CCP aspires to have data-driven,AI-enabled predictive products to keep tabs on any perceived threats to its rule,for example,protests.However,data silos that have hindered the achievement of data-driven governance are a big problem.For example,the government has tried for years to close data silos in the public security sector to better merge different pools of data such as surveillance data or police data(for instance,facial recognition footage from surveillance cameras).The work is still in progress,and officials continue to complain about the issues with data silos.More generally,Chinas data governance regime is developing along a dual-track trajectory.On the one hand,data abuses by tech giants are severely punished.On the other hand,state organizations have mostly unfettered access to collect and harvest citizens information,even against their consent,as the states security-motivated exemptions are written into all key laws,including in the PIPL.Third,there is a policy trade-off between digital transformation and environmental protection.Data governance in China is not only accomplished through laws and regulations but also through industrial policy.Processing and storing data requires a huge amount of energy.China,like other countries,faces this major environmental challenge in advancing its digital transformation.In 2020,Chinas data centre power consumption was projected to grow by 65 percent until 2023,which is equal to the carbon emissions of a mid-sized country.The campaign to roll out digital infrastructure or new fifth-generation networks,data centres,cloud computing,AI facilities and so forth can be at odds with Chinas lofty ambitions for its green transition.China is working to improve the layout of national data centres,trying to transfer data from coastal areas of China to more resource-rich provinces in the west to improve energy efficiency.And the MIIT has also further raised its requirements for data centre power usage efficiency to try to solve that problem.7Digital Governance in China:Data,AI and Emerging Technologies,and Digital TradeConvergence of Regimes for Data Governance in the European Union,United States and ChinaTechnology should be driving convergence toward a structure that is efficient for the economy.To the extent that new technologies open up a major new source of economic rent,the rivalry to capture those rents inevitably leads to frictions.This applies to digital transformation and data governance.It was not necessary to have one uniform regime for data governance in the pre-digital era.This was the starting point for regimes in Europe,the United States and China.In the absence of national champions,which are able to commercially exploit data,the European Unions natural incentives were to regulate data abuse,protection of personal privacy and antitrust measures.The European Union has since moved toward a system that emphasizes data,sovereignty and strategic autonomy,and then moved to engage in industrial policy with its digital single market exercise.It is now developing its own internal market to capture some of these rents.The United States has national champions and the data-driven economy,so the scope for data for global rent capture for the United States naturally led to concepts such as the free flow of data and no data localization and light-touch regulation domestically.These incentives reflect the starting points for the United States.They are not necessarily the endpoint for a mature system of data regulation.Chinas trajectory has more or less followed a similar path as the United States,where it started with no general regime but has now moved toward an EU GDPR style.Although these regimes have very different starting points and different emphasis on specific areas such as data privacy versus national security of data versus rent capture in industrial policy,what can be seen is the general convergence of all three regimes toward a structure that features all three areas.The antitrust actions that are being taken by Europe,the United States and China,as well as the fact that they all heavily engaged in industrial policy to capture rents,are two important technological conditions that are driving the convergence.In the short run,as the digital economy matures and competition erodes the rents,there will be no economic peace or a rules-based order.But in the long run,governments move in the direction of the most efficient path.There are practical ways to deal with these three major areas,and governments are discovering their way forward.China will likely be moving in ways that ultimately will be compatible with other major jurisdictions.Governance of AI and Emerging Technologies in China AI Governance in China:Status and Future DirectionIn recent years,China issued three data governance laws that include measures related to AI governance,as well as regulations to strengthen the ethical governance of science and technology while promoting the development of the AI industry as part of the global wave of AI governance.To better regulate AI and algorithms,the China Academy of Information and Communication Technology under the MIIT issued a comprehensive framework on AI governance that includes the idea of trustworthy AI and built test platforms to demonstrate what trustworthy AI means.At the industrial level,some big enterprises such as Alibaba and SenseTime have established technology ethics committees consisting of reputational scientists,economists and researchers from public administration to foster better AI governance and create an inner synchronized assessment pipeline to avoid the potential risks of AI applications and the delivery of products and services.It is very clear that AI governance regulations and practices in China have borrowed extensively from the European Union,especially the risk-based AI classification system.This similarity can also be seen in Chinas Data Security Law and the PIPL.In local-level regulations in Shenzhen,more discretion is given for experiments on what are known as low-risk scenarios.For example,if something goes wrong with a test product or service provided by an AI start-up,and it poses no threat to national security,the public interest or citizens personal safety,no punishment would be applied.The risk-based AI classification system is important because AI technology is generally defined and can be applied widely.Even at the central level,8Conference Report Virtual Workshop,November 28,2022 the government has also mentioned that AI regulations should create classifications to deal with different scenarios and different levels of risk.In the future,China will focus on building an AI governance mechanism following these steps:First,form a value consensus that consists of the principles of inclusiveness,sharing,prudence and responsibility.Second,complete the division of value in AI governance,or build interactive and collaborative mechanisms between regulators and governance subjects,such as AI technology users and providers.Third,keep the interactive and collaborative AI governance mechanism agile,adaptive and exploratory as required by the rapidly evolving AI technology and changing preferences and governance demands of AI governance subjects.China can contribute to global AI governance using its rich experiences with AI applications in a variety of fields.Chinas experiences,including the challenges it faced,could benefit other parts of the world in terms of developing AI governance,as shown in the“Position Paper of the Peoples Republic of China on Strengthening Ethical Governance of Artificial Intelligence(AI)”that China issued in November 2022,which is based on its AI governance practices and related challenges.Chinas Emerging Algorithm Governance RulesChinese regulators have done a lot of work on AI ethics to create foundational ideas about ethical AI principles.Algorithm regulation has become a hot topic in China in recent years,especially in areas such as online delivery services and social media platforms.The Internet Information Service Algorithmic Recommendation Management Provisions that came into effect in March 2022 had broad implications for the internet in China.This policy is designed to regulate a specific use case of algorithms known as recommendation algorithms.A recommendation algorithm looks at content that a user has viewed in the past and then recommends an advertisement based on that content or data,or it looks at what is in a users shopping cart and what they purchased in the past and then offers product recommendations based on that data.This regulation takes a slightly broader view of what a recommendation algorithm is and looks at things such as maximizing the efficiency of delivery driver schedules.On the one hand,the policy increased state control over the dissemination of information and the way that algorithms work,and one of the ways that state control is increased is through vague definitions that are included in the policy.Article 6 of this rule essentially states that any recommendation algorithm must uphold mainstream values or positive energy,but there is no legal definition of what“positive energy”is or what“mainstream values”are.This lack of clarity leaves those rules up to state interpretation and gives regulators a lot of discretion over what kind of information recommendation algorithms are allowed to disseminate,and what kind can be cracked down upon.The policy also forbids algorithms from engaging in activities that harm national security or the public interest.The fact that“national security”and the“public interest”are not defined means that anything could potentially fall into the policys scope.The policy also states that any algorithms that have“public opinion attributes or social mobilization capabilities”must register with the CAC,Chinas internet regulator,and must submit to a security risk assessment by the CAC,and algorithm providers are responsible for ensuring machines do not spread illegal and politically sensitive information.By doing so,the state is essentially requiring big tech companies that run these algorithms to decide what kind of content the public is going to consume,and what kind of products the public is going to buy.The CAC even required tech companies to submit basic information about their algorithms and created a searchable public database of the algorithms to make it convenient for regulators looking at how those algorithms could be regulated.On the other hand,the rules have also tried hard to protect worker and consumer rights.Under this policy,Chinese internet users now have more rights related to algorithms than users anywhere else in the world.These rules essentially go much further than the European Union at this time in terms of protecting the rights of internet users who are being targeted by recommendation algorithms.Under the policy,Chinese internet companies are required to inform users when they are being targeted with algorithm-driven recommendations 9Digital Governance in China:Data,AI and Emerging Technologies,and Digital Tradeand let them opt out and choose to see only generic content that does not take their personal data into account.The policy also forbids algorithms from tagging users with illegal or discriminatory keywords.For example,users cannot be tagged based on their ethnicity or religion.The policy also requires internet companies to show users which keywords are being used to target them and delete those keywords.It also seeks to clamp down on misinformation around prohibiting algorithmically generated news.This rule can prevent internet companies from using a program or an algorithm that goes into a users search history,looks at keywords and then cobbles together news content designed to manipulate the users thinking.The policy also forbids algorithms from faking likes,comments,forwards or real human engagement,and prohibits the use of algorithms that violate labour rights,spread harmful content to minors,scam people(especially the elderly)and impose differential trade conditions(such as prices).Contrary to the view that there is nothing to learn from Chinas tech policy,this particular regulation can set an example for the West on how to regulate algorithms and tech companies.The biggest concern is what happens if this regulation restricts tech company income and the development of the tech sector and digital economy.The key question for the far-reaching policy and incredibly ambitious regulations is whether they can be implemented.Some of these rules can be enforced easily and others cannot.An interesting observation is that Chinese regulators behave like start-ups,failing fast and early.Under Chinas one-party system,the government does not have to argue with too many other parties in order to implement and update policy.Regulators will see what works and what does not,and then release a series of policy updates and supporting regulations that define some of the more ambitious and vague rules that have come out of a particular regulation.Nevertheless,China can be an example of what to watch for regarding the implications of these regulations as algorithms are regulated more heavily.There will likely be lessons that other jurisdictions can draw on in their own regulation.Developing Emerging Technologies in China under US Export Restrictions:The Venture Capital Perspective The dilemma for China is its long-term goal of playing technological catch-up with the United States by focusing on tech applications and global sourcing,which is no longer sustainable given the stricter US export restrictions at a time of plateauing free trade.A lot of industries,global products and services may not be available to China anymore,therefore the country is basically entering a period of forced import substitution.The policy dilemma for China in developing emerging technologies is that leading technologies have been financed by venture capital,which is profitability driven and growth-stage investment oriented and not well suited to the current geopolitically uncertain global environment.China now needs to support high-risk,early-stage small and medium-sized tech enterprises and transition to longer-term state venture funding.The Chinese government has supported initiatives that are not necessarily profitable,whereas the private sector is focused mainly on profitability.At this stage,the government and private sector have to collaborate whether they like it or not.In response to stricter chip restrictions from the United States,a lot of private venture capital funds and government guidance funds have flowed into Chinas semiconductor industry.This trend picked up in 2021 following the ban on Huawei.But Chinas biggest problem is that it needs more patient capital in financing emerging technologies.There is a lot of money in emerging technology because of foreign import substitution.But it is not yet clear whether the investment is sustainable.On average,venture capital funds usually have a 10-year life cycle plus a two-year possible extension.But in China,the life cycle is typically three years plus five years,sometimes even less.Perhaps China can learn from its industries in solar photovoltaics and electric cars,where government support was gradually withdrawn.Western Countries Cooperation with China on AI R&DAlthough China is trying to produce a lot of AI R&D,US companies and universities remain the driving force behind most of the game-10Conference Report Virtual Workshop,November 28,2022 changing breakthroughs,especially in recent years.There exists cooperation between China and the United States and its allies such as the European Union and Canada on AI R&D,and this collaboration can be identified by five indicators.First,international students account for very significant majorities across all graduate-level science and engineering programs at US universities.Chinese students enrollment in graduate-level computer science programs at US universities was second only to Indian students in 2017 and 2018.Chinese engineering graduate students outnumbered Chinese computer science students,and at the Ph.D.level,China leads in the cumulative number of US doctorate recipients over the last 20 years or so.China has become the largest global source of top AI research talent,followed by the United States,the European Union and India,which certainly had an enduring impact on AI R&D outside of China.Most of these Chinese students choose to attend graduate school in the United States.The vast majority(about 89 percent)of Chinese researchers who attend US graduate schools stay to work in the United States and publish cutting-edge research.This pipeline of research talent is expected to decline due to the negative impact of COVID-19 and the chilling effects caused by a policy during Donald Trumps presidency to restrict access of Chinese students with any involvement in Chinas military civil fusion strategy.Second,China led all countries in the number of AI papers published in 2020,but only 12 percent of them are co-authored AI publications,which usually received significantly higher citation counts.From the US perspective,Chinese researchers are the top collaborators on AI papers,followed by those from the European Union,Canada,Australia,Japan and Singapore.The third indicator is the publication of AI research and the fourth is the number of AI conferences hosted by country,which is an important pathway for dissemination of information.The United States leads by a wide margin,with half of the 16recent and future major AI conferences scheduled in that country,followed by Canada and China.The fifth factor is the number of US private labs overseas.American big tech companies such as Amazon,Apple,Facebook,Google,IBM and Microsoft have about 70 percent of their AI labs outside the United States.Most are in Europe,mainly the United Kingdom and France;there are also labs in Israel and China.About 10 percent are in China.Chinese AI company Baidu has a significant lab outpost in Silicon Valley in the United States.But with the growing ethical,competitive and geopolitical concerns about China,these types of interconnections have come under increasing scrutiny.With China facing the US export control on high-end chips,including AI chips,there is not much it can do in the short term,but it is very difficult for American tech companies to give up the huge market in China.To date,Chinese nationals studying and working in the United States have not been caught up in this rule,and collaboration on AI R&D with non-US nationals will continue.Chinas Participation in Digital TradeChina and the Governance of International Digital TradeA trade agreement can help focus attention,limit the actions that governments may take,provide more certainty and lower risks.It can also create more opportunities for companies that demonstrate profitability,competitive advantage,market leadership,good management and so forth.But the challenge facing any trade agreement is that it does not constrain big players who do not want to follow the rules of the trade agreement,as can clearly be seen in the World Trade Organization(WTO)system.But small players break the rules as well.The challenge always is how to hold them accountable and how often to hold them accountable.There are no global rules for digital trade.There are some regional rules in data and digital agreements,but they have many loopholes and exceptions.The global rules are unlikely to be easily reached in the digital space because even the governments that are enthusiastic about signing agreements are unclear about what those rules should look like,and how they should be implemented.11Digital Governance in China:Data,AI and Emerging Technologies,and Digital TradeChinas position on digital trade agreements is that there should be no duties on e-commerce,and it supports the WTOs moratorium on imposing duties,tariffs and taxes on electronic transactions.This position can be seen in the WTO Moratorium on Customs Duties on Electronic Transmissions and also in the RCEP and in Chinas free trade agreements with Australia,New Zealand and others.The likelihood of whether an international agreement on digital trade is reached or not depends on if there is enough common ground among the three data realms:China,the European Union and the United States.But even if there is an agreement,it will be very weak,like the version of the data draft for trade-related aspects of e-commerce at the WTO.It is probably along the lines of the e-commerce chapter in the RCEP,in which a country such as China would be able to use national security to ultimately impose legitimate restrictions on cross-border data flows that cannot be disputed.An agreement like this would not foster or support digital trade and cross-border data flows.With a weak or not very effective agreement or no regional agreement at all,the world would go back to the reinforcement of three different data or digital realms,which is not really a solution.The United States makes it more difficult by creating the Global Cross-Border Privacy Rules Forum as part of its Indo-Pacific Economic Framework,trying to pull the cross-border privacy rules out of the Asia-Pacific Economic Cooperation forum.This would make it more incompatible with the European Unions GDPR and creates more challenges for countries in between,such as Australia,Canada or Japan.For China,there is substantial unrealized potential with respect to the digital economy as some capacity constraints are still impeding its engagement in this sector.The constraints also apply at the border and to Chinas embrace of digital trade agreements.The Organisation for Economic Co-operation and Development has developed an indicator for digital services trade restrictiveness,which considers discrimination against foreign supply and market access with respect to infrastructure,connectivity,electronic transactions,payments,IP rights in the digital realm and other barriers to digitally enabled services,such as access to cross-border digital trade,downloading and streaming.Chinas trade restrictiveness score as of 2021 indicates that it is four times more restrictive than a typical advanced economy.This constraint will have a negative impact on innovation.The indicator of private R&D expenditures is important since R&D is an input for innovation processes.The annual data on R&D expenditures among the top 2,500 firms since 2014 shows a highly significant and negative relationship between digital trade services and trade restrictiveness.If the source of most technologies around the world is imported,barriers to market access would affect innovation,and impediments to digital inputs would limit Chinas capacity for its own technological development.Chinas Prospects for Joining the CPTPP and the DEPAChina is very serious about joining the CPTPP and the DEPA as part of its promotion of high-level opening up,and it is willing to meet the obligations when it comes to the digital trade sector.From Chinas perspective,the top leadership would try to relax data regulations such as restrictions on cross-border data flows to meet the rules and requirements for joining the CPTPP and the DEPA to promote economic development and Chinas model overseas.The gap between the new obligations in both the digital trade chapter in the CPTPP and the DEPA,and Chinas existing obligations in the RCEP,is not that wide.That is not the most challenging issue.The main reason why it would not be that difficult for China to meet the requirements to join the CPTPP and the DEPA is the exceptions within those agreements that would allow China to do practically whatever it wants.The CPTPPs rule on data flows and data localization has many exceptions that are broad and unclear,which makes it hard to hold any country accountable.For example,the fact that it is not clear what a legitimate public policy objective means as an exception to applying restrictions on data could enable China to claim that restricting data flows and requiring permission for data to leave China is in the pursuit of a legitimate public policy objective.Further,the language in the RCEPs digital trade and e-commerce chapters is built on the CPTPP,but it dilutes or weakens the language in the CPTPP.Chinas push for that kind of language in the RCEP is a strong indication that the country ultimately wants to be allowed to impose whatever exceptions it wants on cross-border data flows.12Conference Report Virtual Workshop,November 28,2022 At the same time,there is no alternative to these rules in trade agreements such as the CPTPP and the DEPA.With more than 600pages of legally binding rules in the CPTPP,it is better to have China in the agreement than not if it can meet the rules and requirements.The DEPA is slightly different and more challenging for China to join than the CPTPP as the DEPA is not just about the rules and how to follow them but much more about how to create rules for the future.It is more about shared values and norms,which would be at risk if China joined on the ground floor because of the countrys different values.One of Chinas motives for joining the DEPA is to try to get into organizations through multilateral trade frameworks and shape these frameworks.However,China could still join the DEPA as the agreement has some exceptions from the commitments that are particularly important.Whether China can join the CPTPP and the DEPA also depends on how other member countries such as Canada and New Zealand see the issue.It could be politically challenging for some members to agree on China joining.For example,it would be difficult for Canada to accept China into the CPTPP in the current political context.Furthermore,Chinas lack of diplomacy in seeking to join the DEPA was not helpful:the country announced that it would join the DEPA when none of the three founding members of the agreement were present.ConclusionThree distinct features stand out in Chinas digital governance.First,digitalizing the real economy and unlocking the potential of data is a top priority in China.Second,China has moved first in some key areas of digital governance such as digital platform and algorithm regulations,but whether these regulations can be implemented remains uncertain.Third,data security is clearly regarded as a very important part of Chinas national security strategy.However,it is fair to say that China,like other countries and regions,is struggling to find that balance between cybersecurity,privacy,economic development and innovation in terms of digital governance.Technology should be driving convergence toward a structure that is efficient for the economy.In the long run,there is a general convergence moving toward a structure that features data privacy,data security and datas economic value in China,Europe and the United States.But in the short term,there will be many frictions along the path to building a rules-based order for the digital economy.The participants of the workshop agree that there is a lot of work left to do in research on digital governance in China and its implications for the world,and discussion on these issues should continue to explore constructive and compatible ways to build a rules-based global digital economy.13Digital Governance in China:Data,AI and Emerging Technologies,and Digital TradeAgendaNovember 28,20229:009:10 Introduction Bob Fay,Managing Director of Digital Economy,CIGI Opening Remarks Paul Samson,President,CIGI9:1010:10 First Panel:Data Governance in China:Platforms,Competition,Standards Moderator:Henry Gao,Law Professor,Singapore Management University;Senior Fellow,CIGI Rogier Creemers,Co-founder,DigiChina;Assistant Professor,Leiden University Mosi Li,Professor,Shanghai University of International Business and Economics Rebecca Arcesati,Analyst,Mercator Institute for China Studies(MERICS)Dan Ciuriak,Director and Principal,Ciuriak Consulting;Senior Fellow,CIGI Round Table Discussion and Q&A10:1010:15 Health Break10:1511:15 Second Panel:Governance of AI and Emerging Technologies in China Moderator:Rohinton P.Medhora,Distinguished Fellow,CIGI Zheng Liang,Professor,School of Public Policy and Management,and Vice President,Institute for AI International Governance,Tsinghua University Kendra Schaefer,Head of Tech Policy Research and Partner,Trivium China Anton Malkin,Assistant Professor,Chinese University of Hong Kong,Shenzhen;Fellow,CIGI Joshua P.Meltzer,Senior Fellow,Global Economy and Development,Brookings Round Table Discussion and Q&A11:1511:20 Health Break14Conference Report Virtual Workshop,November 28,2022 11:2012:20 Third Panel:Chinas Participation in Digital Trade:Data Flows,Privacy,IP Moderator:Susan Ariel Aaronson,Research Professor,Elliott School of International Affairs,The George Washington University;Director,Digital Trade and Data Governance Hub;Senior Fellow,CIGI Henry Gao,Law Professor,Singapore Management University;Senior Fellow,CIGI Patrick Leblond,Associate Professor,University of Ottawa;Senior Fellow,CIGI Deborah Elms,Founder and Executive Director,Asian Trade Centre;President,Asia Business Trade Association Douglas Lippoldt,Senior Fellow,CIGI Round Table Discussion and Q&A12:20 Closing Remarks Bob Fay,CIGI15Digital Governance in China:Data,AI and Emerging Technologies,and Digital TradeParticipantsSusan Ariel Aaronson Research Professor,Elliott School of International Affairs,The George Washington University;Director,Digital Trade and Data Governance Hub;Senior Fellow,CIGI Aya Adachi Analyst,Mercator Institute for China Studies(MERICS)Daniel Araya Senior Partner,World Legal Summit;Senior Fellow,CIGIRebecca Arcesati Analyst,MERICSVeronika Blablov Data Analyst,Association for International AffairsVincent Brussee Analyst,MERICSGreg Cederwall Senior Trade Policy Officer,Global Affairs CanadaEugene Cheah Graduate Student,Peking Universitys School of International RelationsShenjie Chen Director of Economic Research,Government of CanadaDan Ciuriak Director and Principal,Ciuriak Consulting;Senior Fellow,CIGI Rogier Creemers Co-founder,DigiChina;Assistant Professor,Leiden University Deborah Elms Founder and Executive Director,Asian Trade Centre;President,Asia Business Trade Association Paul Evans Professor,School of Public Policy and Global Affairs,University of British ColumbiaBob Fay Managing Director of Digital Economy,CIGISridhar Ganapathy Senior Associate,Artha GlobalHenry Gao Law Professor,Singapore Management University;Senior Fellow,CIGI Tommaso Giardini Associate Director,Digital Policy AlertMichel Girard Senior Fellow,CIGIAnita Gurumurthy Executive Director,IT for ChangeAlex He Senior Fellow,CIGIGurumurthy Kasinathan Director and Lead,Education and Technology,IT for ChangeMark Kruger Opinion Editor,Yicai Global;Senior Fellow,CIGIPatrick Leblond Associate Professor,University of Ottawa;Senior Fellow,CIGI Mosi Li Professor,Shanghai University of International Business and Economics Zheng Liang Professor,School of Public Policy and Management,and Vice President,Institute for AI International Governance,Tsinghua UniversityDouglas Lippoldt Senior Fellow,CIGI Anton Malkin Assistant Professor,Chinese University of Hong Kong,Shenzhen;Fellow,CIGI Akshay Mathur Senior Fellow,CIGIRohinton P.Medhora Distinguished Fellow,CIGIJoshua P.Meltzer Senior Fellow,Global Economy and Development,Brookings Paul Samson President,CIGI16Conference Report Virtual Workshop,November 28,2022 Kendra Schaefer Head of Tech Policy Research and Partner,Trivium China Shreeja Sen Research Associate,IT for ChangeVikram Sinha Head,Data Governance Network,IDFC Institute67 Erb Street West Waterloo,ON,Canada N2L 6C2www.cigionline.org

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麦肯锡：抓住不断发展的英国储蓄和退休市场的增长机会 (2023)（英文版）（6 月 11 日）.pdf

Insurance PracticeCapturing growth in the evolving UK savings and retirement marketCompanies in the UK savings and retirement market can consider targeting four high-growth segments to create a competitive advantage and to boost their resilience in challenging times.March 2023by Sid Azad,Rajiv Dattani,Jonathan Deakin,and Leda Zaharieva piranka/Getty ImagesTodays rapidly evolving macroeconomic conditions are creating considerable uncertainty for both consumers and companies participating in the UK savings and retirement market.In the near term,inflation is posing significant challenges for UK households and is likely to lead to a further reduction in the real value of total savings and the savings rate.It is not yet clear just how deep an economic downturn might be,the effect it might have on employment,the extent to which rising interest rates might offset a lower savings rate,and how customer needs and preferences regarding products with guarantees or downside protection will evolve.These are just some of the uncertainties that will shape consumers savings behavior and their need for financial advice and support in the years ahead.Already,companies throughout the industry are responding with a variety of balance sheet actions and revenue and cost actions intended to protect margins and support customers through this challenging period while investing to meet consumers future needs.Managing through this volatile period will require companies to build resilience,1 maintain their strategic courage,2 and take a through-cycle view.Those who do so will not only meet their societal obligations but also build a competitive advantage,delivering leading shareholder returns.Analysis of historical revenue growth data for more than 200 large companies around the world indicates that a companys growth is driven largely3 by market growth in the industry segments where it competes and by the revenues it gains through mergers and acquisitions.These two elements explain almost 80 percent of the growth difference among the companies we studied;whether a company gains or loses market sharethe third element of corporate growthexplains just 20 percent of the difference.(Capturing growth 1“Somethings coming:How US companies can build resilience,survive a downturn,and thrive in the next cycle,”McKinsey,September 16,2022.2 Michael Birshan,Ishaan Seth,and Bob Sternfels,“Strategic courage in an age of volatility,”McKinsey Quarterly,August 29,2022.3 Mehrdad Baghai,Sven Smit,and S.Patrick Viguerie,“The granularity of growth,”McKinsey Quarterly,May 1,2007.4 Ariel Babcock,Sarah Keohane Williamson,and Tim Koller,“How executives can help sustain value creation for the long term,”McKinsey,July 22,2021.by gaining market share requires a nuanced understanding of the trends and competitive dynamics at the complex intersection of products,channels,value chain segments,and consumer wealth bands.)With this analysis in mind,it behooves industry players to consider investing in the most attractive high-growth market segments.Todays period of uncertainty represents a distinct opportunity to get ahead of the curve while competitors are prioritizing short-term defensive moves over long-term growth.In this article,we examine the trends shaping the UKs savings and retirement market and their impact on companies and customers.These trends include a shift to capital-light products,rising technology-led customer engagement,and greater choice and responsibility among individual consumers for generating and managing their savings.We identify four market segments that could enable through-cycle growth opportunities and the factors that might govern decisions regarding which segments to prioritize.We also explore what it will takefor example,capability shifts,cultural and organizational changes,and M&A dealmaking to help meet customers channel and product needsto successfully serve customers in prioritized segments.Three trends in the UK savings and retirement marketStrong revenue growth is well established as being critical to long-term returns.An analysis of public companies4 showed that those in the top third of their industries in revenue growth generated total returns to shareholders that exceeded those of their bottom-third peers by six to eight percentage points per yeara difference of 80 to 110 percent over a ten-year period.2Capturing growth in the evolving UK savings and retirement marketMarket segments in the UK savings and retirement market are growing at different rates as structural macroeconomic,regulatory,demographic,technology,and consumer preference trends transform the supply of(and demand for)personal financial products.Three trends stand out.A shift to capital-light products.At the product level,asset flows are shifting from traditional guaranteed products to capital-light products,including defined-contribution(DC)workplace pensions,that give consumers more power to manage their overall wealth.Guaranteed retirement income products have become significantly less attractive for providers and consumers alike,given historically low interest rates(despite recent rate increases)and the significant capital burden placed on the provision of policyholder guarantees because of Solvency II requirements.At the same time,an aging population with evolving protection and savings needs and the rollout of auto-enrollment pension schemes are increasing demand for accumulation and decumulation solutions.And there is a growing customer need for hybrid products that offer capital appreciation with downside protection and stable income,especially given the prolonged period of uncertainty due to the COVID-19 pandemic and ongoing macroeconomic volatility.A push for technology-led engagement.Both customers and companies are pushing for technology-led engagement in traditional adviser and workplace channels,with digital platforms and improved technology enabling lower cost propositions.A small but fast-growing digital-first and mobile channel is emerging,particularly in direct-to-consumer(D2C)distribution,driven by changing customer preferences and technological developments.Creating business models built on a hybrid of human and robo-advisers is now a key agenda item for most wealth managers.So far,however,few participants in the UK market have made it work,and robo-advice offerings have focused more on asset allocation than on deep financial engagement that nudges customers to act.Traditionally distinct channels are converging as participants increasingly view customers lifetime financial needs holistically across multiple channels,thus blurring the lines between workplace,D2C,and advisory channels.Meanwhile,technological developments are driving commoditization and consolidation in asset administration.A shift to the responsibility of individuals for savings.Within this increasingly complex product landscape,there has been a shift in responsibility for generating and managing retirement savings from government and defined benefit pensions to individuals.From a value chain perspective,the need for financial advice is on the rise;however,a significant“advice gap”remains,driven by a shrinking adviser base and a lack of affordable advice offerings.As a result,consumers are finding a shortage of simple and affordable asset management products and advice.These trends have profoundly transformed the market dynamics within and across segments and the nature of companies relationships with their current and prospective customers.In the next section,we explore the impact of these trends on four segments that offer significant growth potential,focusing on a segmental view(channel or product)because this is how participants have Creating business models built on a hybrid of human and robo-advisers is now a key agenda item for most wealth managers.3Capturing growth in the evolving UK savings and retirement markethistorically organized themselves.In the closing section,we cover the broader implications for market participants,given the growing importance of adopting a customer-focused mindset through their life cycle.Four segments offer significant growth potentialAs certain segments of the industry rise in value and potential,others are declining as the trends discussed above take hold(Exhibit 1).While overall savings and retirement assets in the UK have grown at a healthy 7 percent annually since 2015,heritage life products,for example,are in runoff and closed to new business.And after UK pensions deregulation,annual sales of new retail annuities collapsed by more than 50 percent,although rising interest rates have recently resuscitated the segments growth.The 7 percent growth in defined-benefit(DB)pension assets has been a function of market forces and the need for schemes to meet funding requirements.In fact,active membership in private DB schemes has fallen from about 2.1 million in 2012 to less than 1.0 million in 2021.DC membership,on the other hand,has increased from about 1.0 million people in 2012 to more than 26.0 million today.Looking forward,four segments in particular offer attractive growth opportunities:bulk purchase annuities(BPA),DC workplace,direct-to-consumer(D2C),and advised channels(Exhibit 2).The BPA and D2C channels have strong tailwinds supporting continued historic growth rates.DC workplace is expected to see continued growth following auto-enrollment.The increasing need for financial advice will drive attractive opportunities in advised Exhibit 1Total UK personal fnancial assets under administration by segment,trillions CAGR,201521e,xcludes cash,property,and private-banking assets.2Bulk purchase annuities.3Direct to consumer.4Defned contribution.5Individual savings account.6Self-invested personal pension.7Defned beneft.Source:ABI;expert interviews;HMRC;Investment Association UK;McKinsey UK PFA distribution model;Platforum;ONS The UK pensions market grew by an estimated CAGR of 7 percent from 2015 to 2021.McKinsey&CompanyBPAD2COccupational DC pensionsOverallAdvised(on-platform,ISA,SIPP,drawdown)Heritage(life)AnnuitiesDB pension20152021e1.50.30.60.80.30.23.80.12.20.50.61.20.60.40.277079132275.74Capturing growth in the evolving UK savings and retirement marketchannels.And several of these segments offer the potential to grow through M&A.Bulk purchase annuities Despite the overall shift toward sales of new capital-light products,BPAs have been a major growth segment due to the large number of corporate pension schemes derisking and transferring their liabilities to the insured market.There is approximately 1.7 trillion in DB pension scheme assets on UK companies balance sheets.The growth in BPA is likely to increase in the near term as rising rates make transactions more feasible for pension fund trustees,with their funding ratios increasing by 12 percentage points on average in the 12 months preceding September 2022.5 Up to 300 billion of transactions is expected in the next four years,compared to approximately 125 billion in the past four years.65 WTW Global Pension Finance Watch.6 Risk transfer report 2022,Hymans-Robertson,February 17,2022;Insurance enters a new phase:A skyrocketing market,Lane Clark&Peacock(LCP),October 2022.Internal rates of return in the midteens remain attractive for BPA players today,a function of the healthy balance between the desire on the part of pension schemes to transfer risk and the limited supply of capital(including reinsurance)available to participants.However,the volume of BPA deals is projected to peak in the next three to five years.High investment returns and stable long-term cash flows have already attracted new entrants to the market,including established life insurers and private capital-backed players aware of the current window of opportunity.They are setting the standard for the capabilities needed to drive returns.These capabilities include specialist investment capabilities(such as illiquid asset origination and infrastructure);increasingly sophisticated technology and operational capabilities(including Exhibit 2Low competitive intensityHigh competitive intensityLimited growthSignifcant growthWeb Exhibit of 1Direct contribution.2Direct beneft.3Bulk purchase annuities.4Direct to consumer.5Individual savings account.6Self-invested personal pension.Source:McKinsey analysisThe potential for growth in the UK pensions market varies considerably by segment.McKinsey&CompanyChannelWorkplaceD2CAdvisedOccupationalDC pensionsDB pension(including BPA)On-platform ISA,SIPP,or drawdownISA,SIPP,ordrawdownHeritage(life)AnnuitiesCore productsValue chain segmentAdvice orguidancePlatform oradministrationInvestmentsolutionsAssetmanagementProjectedasset growth N/AN/ANo competition for assets;focus on operational improvementN/AN/AN/A5Capturing growth in the evolving UK savings and retirement markettechnology-enabled policy administration systems);and deep deal experience.All companies looking to participate meaningfully must meet this capabilities bar and create value across multiple levers.7Defined-contribution workplaceDriven by the shift from DB to DC pensions and the rollout of auto-enrollment schemes,DC workplace is one of the largest asset accumulation channels today.With about 17 million active consumers in the UK market,the segment has been growing at about 8 percent annually since 2018 and is expected to continue to do so through 2025.However,revenue and operating margins for DC are lower than in other segments;average fee levels are about 50 basis points,compared with 150 basis points for D2C pensions.And these margins are under constant pressure for several reasons:The market is highly commoditized,with low marginal costs.Pension trustees whose role is to constantly push for better value for members continue to put pressure on prices.And the level of competition is increasing,particularly as employee benefit consultants enter the market.The top six players now account for 80 percent of the market.Given the DC markets sheer competitive intensity,companies looking to participate in its growth will need to build scalea critical factor given its platform-like economicsand develop deep customer relationships,which can unlock access to a greater share of a customers assets and extend the relationship into and through decumulation.Recent developments in the UK and US markets offer evidence of meaningful growth opportunities in this segment:In one recent UK consumer survey,8 half of DC workplace customers indicated they would consider seeking financial advice from their current provider or purchasing savings or investment products.7“Running up on runoff:Strategic options for life closed books,”McKinsey,February 10,2021.8 McKinsey consumer survey,July 2022,n=1,000.9“From saving to spending:A second front emerges in the US retirement challenge,”McKinsey,July 29,2022.Our recent US survey9 of about 9,000 households showed that providers who hold a customers primary relationship manage six times the assets of any of their other providers.By contrast,in the United Kingdom,the average person maintains two or more pension pots and does not hold broader savings and investments with their DC provider.By focusing on a specific growth opportunity(potential transfers of assets from DC accounts),one US asset manager has successfully built a leading wealth and retirement offering,capturing 60 percent of rollovers from its DC accounts into individual products.However,developing deep customer engagement is hard,even for incumbents that benefit from scale and a large base of existing customers.And it has become more competitive as new digital-first consumer-focused companies and others providing financial advice in the workplace enter the market.Regulatory change will soon lead to the arrival of a pensions dashboard,an online portal providing customers with an integrated view of all pension pots,increasing consumer awareness and making consolidation of assets more likely.With the right capabilities and proposition to effectively engage consumers,those holding a customers primary wealth relationship will be well positioned to capture this growth opportunity.If they are to maintain their position,leaders in the DC workplace segment must build distinctive capabilities in line with these new market entrants.Strong analytics will be needed to target the most promising potential customersboth those most likely to engage and those offering the highest valuecombined with targeted customer service outreach capabilities across channels,including call centers and web,mobile,and in-person channels.Players must be able to provide a dynamic combination of financial advice,guidance,and education,and could learn valuable lessons from 6Capturing growth in the evolving UK savings and retirement marketsuccessful companies in the United States and the United Kingdom(see sidebar,“Good advice”).They must also offer a broad range of product offerings,such as individual savings accounts,self-invested personal pensions,and brokerage accounts.Finally,a strong brand is critical to build trust among consumers.Given the DC markets high degree of consolidation and the challenges surrounding integration,the potential for growth through consolidation among the major DC pension platforms is extremely limited.At present,the most viable M&A lever for driving revenue growth involves master trusts.Single trusts will continue to be consolidated into master trusts,and the master trust market,which has already shrunk from 82 trusts in 2017 to about 30 today,will likely consolidate further in the next two to four years.As a result,DC providers looking to capture growth through M&A will have to take advantage of this limited window of opportunity to participate in the markets consolidation.Successfully pursuing M&A in the master trust market requires strong integration capabilities,deep industry relationships,and attractive participant propositions,including a broad range of investment options,strong customer service,and expert financial education and advice offerings.Some of these capabilities can be developed internally or acquired in the market.For example,one top-five pension provider recently acquired a financial-education business that it plans to use to drive greater customer engagement across its workplace offerings.Direct-to-consumer The dynamics of the D2C segment are complex and challenging.The market has been growing at about 13 percent annually since 2015,but it is Good adviceWorkplace pension providers have taken a variety of approaches to offering cost-effective advisory services to their customers and building stronger customer relationships,often making use of technology to boost their presence and accessibility.One UK advice provider has been looking to use workplace pensions as a conversion channel for capturing broader financial assets by working directly with employers to engage employees through seminars,educational materials,and connections to advisers to build relationships and trust with consumers through workplace channels.A US workplace pension provider paid$1 billion for a robo-adviser that allowed it to expand its digital offerings in retirement pensions and create a leading workplace wealth management franchise.Differentiating capabilities include a financial-wellness platform with tools and advice offerings,a more complete financial snapshot beyond the retirement plan(previously not possible within the workplace context),and a financial adviserfirst digital solution for high-net-worth clients(which helped reduce channel conflicts).The goal:to build long-term customer relationships,retain plan participants into retirement,and extend customer lifetime value.Another US retirement and wealth manager has successfully applied digital and analytics to revolutionize its decumulation offering.This bespoke income product uses an algorithm-based robo-adviser to automate investment strategies and withdrawals across asset pools to meet customers financial goals,optimizing risk and tax considerations.The product is supported by a hybrid advice offering with an AI-powered mobile assistant,which provides simple servicing needs and offers access to phone-based financial advisers.In hopes of driving additional product sales and improving retention of existing customers and assets,another US retail savings company recently built a range of customer-focused financial education and automated advice capabilities,including financial-planning calculators,credit improvement advice,budgeting worksheets,and spending analysis tools.Thanks to the new app-based resource,the company captured more than five million users in its first year and increased assets by more than$35 billion.7Capturing growth in the evolving UK savings and retirement markettop-heavy.Three major players have captured about 70 percent of direct platform assets.The rest of the market consists of a long tail of small,typically loss-making competitors that struggle to gain the scale required to be profitable in the face of intense price pressure from the market leaders.This includes multiple new entrants in recent years,both privately funded and as part of larger savings and retirement groups,which have not yet generated stand-alone stable profits.Moreover,while the segments revenue margins are higher than in the workplace segment,margin pressure is increasing as participants compete for scale.A number of the new entrants in the market,including several large players from the United States,hope to build a competitive advantage through their lower cost base,while a new breed is emerging that offers a differentiated customer proposition such as free share dealing.Given these dynamics,there are essentially three archetypes of successful participants in the D2C market:those that have or could generate the stand-alone scale to drive profitability;those that could act as an acquisition channel for other areas of a business,such as advised or workplace,with no requirement to achieve the scale needed to be profitable as a stand-alone entity;and those that could act as a simple self-service offering aimed at less-wealthy customers under a hybrid advice model.The critical capabilities needed to develop a leading customer value proposition include a strong consumer brand,a low-cost platform built on scalable technology,and the right customer engagement tools for this strategy.The sophistication of the technology and engagement tools needed will depend on the platforms strategic role,whether stand-alone or part of a broader offering.The requirement to develop winning capabilities is increasing as at-scale international players enter the UK market,so continuing to invest in these capabilities remains vital.Recently,many companies taking an organic approach to growth have struggled to bridge the capability gap and attract requisite talent.There is an opportunity to acquire point solutions to gain some of the niche capabilities needed for market leadership.And given the long tail of smaller platforms,there is also an opportunity to acquire scale,which is critical,given that platform administration is largely a fixed-cost business.Indeed,large wealth and asset management players have recently been acquiring digital platforms to increase their market presence.For example,a large UK asset manager acquired a top-five D2C investment solutions company to gain an at-scale position.Current market conditions could provide opportunities for those with the capital and operational capacity to invest.AdvisedSince 2015,advised assets have grown at about 7 percent annually to a total of about 1.2 trillion today.As in the D2C market,adviser networks and platforms are seeing increasing fee pressure While the D2C segments revenue margins are higher than in the workplace segment,margin pressure is increasing as participants compete for scale.8Capturing growth in the evolving UK savings and retirement marketand M&A activity as the competition for assets intensifies in the drive for scale.In the face of this pressure,participants looking to win in this market are being forced to adopt one of two models:vertical integration or targeted value chain participation.Each requires a distinct set of capabilities.Vertical integration.This model,which covers advice,administration,investment solutions,and asset management,aims to attract assets through advice networks and capture revenue margin across several of these value chain segments.Participants adopting this strategy must develop an at-scale advice network with the potential to extend it into hybrid advice.They will also need a top-quartile adviser platform,with the ability to add adviser tools as needed to improve effectiveness and efficiency,and to focus the declining population of advisers on mission-critical customer interactions while removing their administrative burdens.Finally,they will need to develop a compelling investment solution and asset management offering to maximize asset capture in this high-margin part of the value chain.Targeted value chain participation.In this model,specialists will look to provide a distinctive,targeted offering,whether dependent on excellent service and support or low cost,to serve larger,integrated market players.For example,a specialist could act as a utility provider of platform administration services,acting as an outsourcing partner to vertically integrated companies.In this role,companies need leading capabilities in their chosen value chain segment.Often this requires scalable technology;a fail-fast,agile culture;and strong analytics.One provider of wealth and asset management technology and business process outsourcing was able to radically reduce the costs of servicing and regulatory-related technology upgrades through process automation.This targeted value chain play has enabled it to become a core part of the industrys infrastructure,while leaving the front-end customer-facing layer to individual companies to customize as part of their differentiated proposition.Some players have been successful pursuing M&A in the advised space(for example,rolling up networks of independent financial advisers)but do face challenges with integration,given the significant consolidation that has already taken place and the risk of advisers leaving after the deal is completed.M&A activity in the space is therefore likely to focus on platforms to realize scale synergies and smaller advice networks.Looking forwardAlthough all four segments offer attractive pockets of growth,they also have a high bar for meaningful participation,and established incumbents and specialist new entrants are continually raising it.To compete,players will need to make strategic participation choices based on their current portfolio positioning,their core capabilities,and the attractiveness of the growth areas in which they aspire.Across all market segments,there are common capabilities required to build cost-advantaged scale positions,with efficient and scalable technology notably important.There are also a number of segment-specific capabilities required to win.Companies looking to enter or grow in the B2B,capital-heavy BPA segment must secure their access to capital,reinsurance capacity,and asset origination.The segment will continue to be most attractive to companies with distinctive investment capabilities that can originate long-dated assets,treating the liabilities as a form of permanent capital,or to those with large retail annuity portfolios for whom there are synergies.Companies looking to enter or consolidate their existing positions in the consumer-facing areas will 9Capturing growth in the evolving UK savings and retirement marketSid Azad,Rajiv Dattani,Jonathan Deakin,and Leda Zaharieva are partners in McKinseys London office.The authors wish to thank Raman Bhan,Chien-Teng Chia,Alex DAmico,Sebastian Elliott,Aditi Jain,Nils Jean-Mairet,Ross Macdonald,Sid Pandey,David Rogers,Shrey Sakhuja,Urmila Shenoy,and Archie Sinclair for their contributions to this article.Scan Download PersonalizeFind more content like this on the McKinsey Insights AppCopyright 2023 McKinsey&Company.All rights reserved.likely focus on the capital-light DC workplace,D2C,and advised segments.However,the distinction between these channels is blurring.Successful companies from the United States and from other sectors such as banking have demonstrated the value of reorienting the organization and its mindset on specific customer segments to meet their holistic financial needs through the full life cycle.For insurers,reorienting to a customer-driven approach can help the introduction of hybrid models that sit across D2C and advised channels,offering greater flexibility to consumers looking to access advice for critical decisions and self-serve offerings for their simpler transactions.This path may be open to participants who have a presence in any one of these channels today.Building or extending competitive advantages,however,will require meeting the rising capability bar that incumbents and new entrants have set,whether that means developing compelling customer engagement tools,being at the forefront of new product development,or ensuring operations are built around scalable technology.Companies choosing to operate across multiple segments must bring together their capabilities in workplace,advised,and D2C segments to develop a coherent consumer-focused offering.Success in this effort,however,will require significant investment in bringing together often disparate data and technology platforms and the ability to make the shift away from a product mindset to a customer mindset.All participants must balance a series of competing demands in this period of uncertainty:building short-term resilience,meeting investor dividend expectations,and investing for through-cycle growth.The pace and scale of capability innovation required to capture this growth means that executives must strike a careful balance between investing to strengthen competitive advantage in existing segments and extending into attractive growth segments.Moving quickly is imperative;future market leaders are investing now to set up for long-term success in these fast-moving segments and embracing todays market uncertainty as an opportunity to forge ahead of competitors.10Capturing growth in the evolving UK savings and retirement marketFurther insightsGlobal Insurance Report 2023:Reimagining life insuranceInfusing tech talent into the UK insurance industryFrom saving to spending:A second front emerges in the US retirement challengeContact Sid AzadPartner,LondonSid_AzadMcKRajiv DattaniPartner,LondonRajiv_DattaniMcKJonathan DeakinPartner,London Jonathan_DeakinMcKLeda ZaharievaPartner,London Leda_ZaharievaMcK11Capturing growth in the evolving UK savings and retirement market

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ComScore：2023 年购物者报告（28 页）.pdf

12Κρίσιμες πληροφορίες που σας δίνουν χρήματα Ξεκλειδώστε και προσδιορίστε κοινό, σχεδιάστε καμπάνιες πολλαπλών πλατφορμών, πραγματοποιήστε αναλύσεις ανταγωνισμού και προσδιορίστε μέσα για να προσεγγίσετε το κοινό που σας ενδιαφέρει Πολύτιμο κοινό και ο αντίκτυπος της επωνυμίας αυξάνοντας επώνυμα είδη κοινού αναζήτησης για μεγιστοποίηση της απόδοσης επένδυσης Εξασφαλίστε τη συμμόρφωση με το απόρρητο και την ασφάλεια της επωνυμίας με βιομηχανία - κορυφαία τεχνολογία συμφραζομένων, έξυπνη κατηγοριοποίηση περιεχομένου και ισχυρές επιλογές μέσω προγραμματισμού που συνδέουν δεδομένα με τους καταναλωτές που έχουν μεγαλύτερη σημασία ή την επιχείρηση/διαφημιστή σας. Οι στρατηγικές σας για τη συνεχή μάθηση. Ανακαλύψτε τη λογική πίσω από την κοινωνική δέσμευση και τη σύγκριση των καταναλωτών με τους ανταγωνιστές. Ευθυγραμμίστε τον τόνο της επωνυμίας με την αίσθηση για να μεγιστοποιήσετε την αφοσίωση 243 εκατομμύρια τηλέφωνα/tablet και 192 εκατομμύρια επιτραπέζιοι υπολογιστές. 3Η ψηφιακή ανάπτυξη της ψηφιακής κατάστασης του διαδικτυακού λιανικού εμπορίου παντοπωλείουΚοινωνικό εμπόριοCookies, καταναλωτές και απόρρητο(Ω Θεέ μου!)Η ΑΤΖΕΝΤΑ12344ΨΗΦΙΑΚΑ ΔΕΔΟΜΕΝΑ ΕΜΠΟΡΙΟΥ ΛΗΦΘΗΚΑΝ ΑΠΟ ΤΟΝ ΠΙΝΑΚΑΣ ΚΑΤΑΝΑΛΩΤΩΝ ΤΗΣ COMSCORES ΚΑΙ ΤΗ ΔΙΑΔΙΚΤΥΑΚΗ ΕΡΕΥΝΑ. ΑΥΤΗ Η ΕΚΘΕΣΗ εστιάζει στα δεδομένα των ΗΠΑ. Δολάρια που δαπανώνται διαδικτυακά σε κατηγορίες λιανικής πώλησης εκτός ταξιδιού μέσω smartphone και tablet. Δολάρια που δαπανώνται διαδικτυακά σε κατηγορίες λιανικής πώλησης εκτός ταξιδιού μέσω επιτραπέζιου υπολογιστή ή κινητού. Τα έξοδα ταξιδίου δεν περιλαμβάνονται στη λιανική. ΗΠΑ, 2022 ΠΡΩΤΟ ΟΡΟΣΟΜΟ ΣΤΟ ΔΙΑΔΙΚΤΥΟ: Οι διαδικτυακές δαπάνες λιανικής στις ΗΠΑ ξεπέρασαν το 1 T$. Το υψηλότερο έτος στο ψηφιακό εμπόριο. Το υψηλότερο τρίμηνο όλων των εποχών. 7 Πόσο γρήγορα έχει επιταχυνθεί το ψηφιακό εμπόριο για να φτάσει το ορόσημο του 1 τρισεκατομμυρίου δολαρίων; Πηγή: Comscore Digital Commerce Measurement, ΗΠΑ, 2013-2022. Τα δολάρια που δαπανήθηκαν δεν προσαρμόζονται για τον πληθωρισμό. Οι δαπάνες λιανικής Εξαιρούνται τα ταξίδια L C O M E R C E D O L A R S I N B I L L I O N S8 Η διαδικτυακή λιανική πώληση εκτός ταξιδιού ξεπερνά το 1 τρισεκατομμύριο δολάρια για πρώτη φορά στην ιστορία. Τα δολάρια που εκδόθηκαν το 2022 δεν προσαρμόζονται για τον πληθωρισμό. Οι δαπάνες λιανικής δεν περιλαμβάνουν ταξίδια. 15% 84% 1#! 04.7$38.9$41.2$46.4$58.8$52.1$47.8$57.3$70.1$64.3$67.4$73.9$101.0$81.8 87.5$ 90.5$58.8$52.5$127.5$137.5$1 6,0 173,2 $ 214,7 $ 197,5 $ 209,8 $ 215,8 $ 281,3 $ 240,0 $ 257,2 $ 260,9 $ 332,2 Q12019T220 19T32019T42019Q220Q3220Q220Q 220 21Q32021Q42021Q12022Q22022Q32022Q 42022Y O Y%C H A N G E I N T A L D I G I T A L C O M E R C E$Total Digital Commerce MobileDesktopBILLIONS( $)924%)()22213332464458%Q417Q118Q218Q318Q418Q119Q219Q319Q419Q120Q220Q320Q 420Q121Q22Q24Q21Q22Q ΚΑΤΩ ΑΠΟ 30 ΔΕΥΤΕΡΑ ΜΕΤΑ ΣΕ ΟΛΑ ΤΑ ΧΡΟΝΙΑ ΤΑ ΚΙΝΟΥΜΕΝΑ ΜΕΡΗ ΤΟΥ ΣΥΝΟΛΙΚΟΥ ΨΗΦΙΑΚΟΥ ΔΟΛΛΑΡΙΟΥ ΕΜΠΟΡΙΟΥ ΦΤΑΣΑΝ ΣΧΕΔΟΝ 40% Πηγή: Comscore Digital Commerce Measurement, ΗΠΑ, Τέταρτο Τρίμηνο 2017-4ο Τρίμηνο-2022M ΚΕΦΑΛΑΙΟ ΣΤΟ ΣΥΝΟΛΟ D I G I T A L C O M E R C E D O L A R S1018(%Οκτώβριος 2021Οκτώβριος 2022Η ΑΝΑΚΑΛΥΨΗ ΕΠΙΧΕΙΡΗΣΕΩΝ ΕΙΝΑΙ ΠΙΟ ΣΗΜΑΝΤΙΚΗ ΑΠΟ ΟΠΟΙΑΔΗΠΟΤΕ ΣΤΙΓΜΗ Πηγή: Plan Metrix2 έως Οκτώβριος 2-Οκτώβριος-2022 2022 ΕΠΙΣΚΕΠΤΕΣ ΠΟΥ ΣΥΜΦΩΝΟΥΝ ΜΕ ΤΗ ΔΗΛΩΣΗ «ΤΙΜΗ ΕΙΝΑΙ Η ΚΥΡΙΑ ΣΗΜΕΙΩΣΗ ΑΓΟΡΑΣ» 11 ΛΕΞΕΙΣ-ΚΛΕΙΔΙΑ ΛΙΑΝΙΚΗΣ ΜΕ ΤΗΝ ΠΕΡΙΣΣΟΤΕΡΗ ΔΕΣΜΕΥΣΗ ΑΦΟΡΑ ΟΙΚΟΝΟΜΙΚΑ Comscore Social Powered by Shareablee , Trending Topics,US*Retail & US*Consumer Goods,Facebook,Instagram,Twitter,TikTokuar1202020 December,Top 0 2 1-2 0 2 22 0 2 1-2 0 2 2“B U D G E T““B U L K ” 2 0 2 1-2 0 2 2“B A R G A I N”12AS ΛΙΑΝΠΩΛΕΣ ΣΥΝΕΧΙΖΟΥΝ ΤΗΝ ΠΡΩΗ ΔΡΑΣΗ, Ο ΝΟΕΜΒΡΙΟΣ ΚΕΡΔΙΣΕ ΤΟ ΝΟΕΜΒΡΙΟ ΠΕΡΙΣΣΟΤΕΡΑ ΕΞΙ πυρήνα Digital Commerce Measurement, Η.Π.Α., τέταρτο τρίμηνο από 2018-2022 ΚΟΙΝΟΠΟΙΗΣΗ ΕΚΔΟΣΕΩΝ ΕΚΔΟΣΕΩΝ ΕΚΔΟΣΕΩΝ ΤΟΥ ΚΥΚΛΟΦΟΡΟΥ (ΣΥΝΟΛΙΚΟ ΔΗΜΙΟΥΡΓΙΑ ) ΑΠΟ ΤΗΝ ΚΑΤΑΠΛΗΚΤΙΚΗ ΣΗΜΕΙΩΣΗ ΑΠΟ ΤΗΝ ΚΑΤΑΠΛΗΚΤΙΚΗ ΣΗΜΕΙΩΣΗ ΑΠΟ ΤΗΝ ΚΑΤΑΠΛΗΚΤΙΚΗ ΣΗΜΕΙΩΣΗ ΣΕ ΠΕΡΙΠΤΩΣΗ 24010 (2828(28017) 021202213ΔΙΑΔΙΚΤΥΑΚΗ ΤΡΟΦΙΜΑ ΚΑΙ ΕΝΔΥΣΗ ΕΙΝΑΙ ΧΩΡΙΣ ΑΜΦΙΒΟΛΙΑ, ΟΙ ΜΕΓΑΛΥΤΕΡΕΣ ΚΑΤΗΓΟΡΙΕΣ ΔΑΠΑΝΩΝ Πηγή : Comscore Digital Commerce Measurement, ΗΠΑ, 2021-2022 Τα δολάρια που δαπανήθηκαν δεν προσαρμόζονται για τον πληθωρισμό. Οι δαπάνες λιανικής δεν περιλαμβάνουν ταξίδια. Τα εισιτήρια εκδηλώσεων παρουσίασαν εξαιρετική ανάπτυξη σε έπιπλα και συσκευές μετά την πανδημία ανάκαμψης, εισιτήρια εκδηλώσεων, ψηφιακό περιεχόμενο, ένδυση και αξεσουάρ, βιντεοπαιχνίδια και αξεσουάρ, Σπίτι και κήπος, 2022 ΣΥΝΟΛΙΚΟ ΨΗΦΙΑΚΟ ΕΜΠΟΡΙΟ, 1,09 $, 21 Λιανική ανάπτυξη, 1 $, 5 $, Παντοπωλείο. 11,8 $, 10,1 $, 11,5 $, 11,7 $, 18,9 $, 19,1 $, 21 $, 24,5 $, 30,8 $, 27,7 $, 39,7 $, 30,9 $, 31,4 $, 32,8 $, 34,2 $, 7,3 $, 5,3 $, 5,3 $, 5,3 $, 5,6 $. 1 3,1 13,6 $ 13,1 $ 12,7 $ 12,3 $ 15,4 $ 18,7 $ 17,7 $ 19,7 $ 22,3 $ 29,8 $ 14,8 $ 14,2 $ 17,5 $ 1 $ 7,0 $ 18,8 $ 21,9 $ 32,0 $ 32,7 $ 34,3 $ 37,2 $ 43 , 1 $ 43,1 $ 14,2 $ 58,4 $ 1Q22021Q32021Q42021Q12022 Q22022Q32022Q42022ΤΟ 2020, ΟΙ ΔΙΑΔΙΚΤΥΑΚΕΣ ΠΩΛΗΣΕΙΣ ΕΜΠΟΡΕΥΜΑΤΩΝ ΕΙΧΑΝ ΦΤΑΣΕΙ ΚΟΡΥΦΑΙΑ - Η ακαθάριστη κατηγορία «Ψηφιακό εμπόριο» συνεχίζει να αυξάνεται. Πηγή: Comscore Digital Commerce Measurement, ΗΠΑ, 2018-2022. Τα εκδοθέντα δολάρια δεν διορθώνονται για τον πληθωρισμό. Παντοπωλείο/μωρό/κατοικίδιο - σύνολο, κινητό, επιτραπέζιος υπολογιστής, δισεκατομμύρια ($). 020Q12021Q22021Q32021Q42021Q12022Q22022Q32022Q22022Q32022Q42022Q Ε Ε Υ Ε Υ Ε Υ Ε Υ Ε Υ 42022Από το πρώτο τρίμηνο του 2020, η δαπάνη για κινητά παντοπωλεία συνεχίζει να ξεπερνάει την ένδυση, ΗΠΑ, Τρίμηνο 1 2019, Τρίμηνο 4ο 202 . S A P A R E L (MO B I L E C O M E R C E) ΤΡΟΦΙΜΑ/ΜΠΗ/ΕΝΔΥΜΑΤΑ κατοικίδιων ζώων 29,8 δισεκατομμύρια $ 21,9 δισεκατομμύρια $ 4,1 BQ1 Το 2020 ήταν το πρώτο τρίμηνο που μια κατηγορία λιανικής πώλησης κινητών είχε υψηλότερη δαπάνη από 6 $. ελάτε να ΧΡΗΣΙΜΟΠΟΙΗΘΕΙΤΕ ΚΟΙΝΩΝΙΚΑ ΓΙΑ ΕΙΔΗΣΕΙΣ ΣΤΟ ΜΕΓΑΛΟ Comscore Social με την υποστήριξη του Shareablee, Partnership Explorer, US Consumer Goods & US Singles handel,3 ΙΣΧΥΡΗ ΑΝΑΠΤΥΞΗ ΣΤΟ TIKTOKComscore Social που υποστηρίζεται από Shareablee, Metrics & Trends, Καταναλωτικά αγαθά ΗΠΑ και λιανικό εμπόριο ΗΠΑ, Προσφορές (Συνολική κατηγορία), Tiktok, 2020-2022t και kt i o n s20t i k to k view w s US-am. Σύνολο),TikTok,2020-20222 0 2 02 0 2 221Προσδοκίες καταναλωτή σχετικά με το απόρρητο22ΑΠΟΡΡΗΤΙΚΟ ΓΙΑ ΠΡΟΩΘΗΣΗ ΣΥΝΟΜΙΛΙΑComscore Σύνολο Digital,Facebook,Twitter,Instagram,TikTok,Αναρτήσεις που αναφέρουν "Ανακοινώσεις ή Cookieless" Απόρρητο ' 2 0 1 92 0 2 2CALIFORNIA DATA23ONE TO ATTEND IN 2023Πηγή: Comscore Activation Data|1 Ιανουαρίου 2021 31 Δεκεμβρίου 2022251 ΕΚΤΥΠΩΣΕΙΣ ΠΟΥ ΠΑΡΕΧΟΝΤΑΙ ΜΕ ΤΑΥΤΟΤΗΤΑ ΠΑΡΕΧΟΝΤΑΙ ΣΤΟΙΧΕΙΑ ΠΑΡΕΧΟΝΤΑΙ ΑΝΑΓΝΩΡΙΣΤΙΚΑ ΣΤΟΙΧΕΙΑ ΠΑΡΕΧΟΝΤΑ aways25Η συνολική δαπάνη λιανικής πώλησης στις ΗΠΑ υπερβαίνει το 1 τρισεκατομμύριο δολάρια που δαπανήθηκαν για πρώτη φορά, με επικεφαλής τα ηλεκτρονικά είδη παντοπωλείου, ένδυσης και υπολογιστών/περιφερειακών συσκευών Οι δαπάνες σε κινητές συσκευές συνεχίζουν να διαδραματίζουν ολοένα και πιο σημαντικό ρόλο, αντιπροσωπεύοντας σχεδόν το 40% των δαπανών ψηφιακής λιανικής. συνεχίζει να ηγείται των συνολικών δαπανών. Αυτή η κατηγορία έχει δείξει τη δύναμή της στα κινητά, όπου συνεχίζει να κατέχει την υψηλότερη κατηγορία εσόδων. υψηλή σε σχέση με την ένδυση και τα αξεσουάρ.27 Τα ψηφιακά μέσα και τα μέσα κοινωνικής δικτύωσης γίνονται όλο και περισσότερο κρίσιμα στοιχεία για την τελική μετά τον COVID-19 παρουσίαση καταστήματος Ο καταναλωτής ανακαλύπτει προϊόντα στο Διαδίκτυο, αποτελούν απειλή για τις παλιές επωνυμίες και μια τεράστια ευκαιρία για νέες μάρκες σε έναν συνεχώς μεταβαλλόμενο καταναλωτικό κόσμο.28JCLOUGHCOMSCORE.COMIESSLINGCOMSCORE.COMΕξέλιξη της αγοραστικής συμπεριφοράς και η πορεία προς την αγορά

2人浏览 2023 年 3 月 20 日 28页 5星

Talkwalker：2023年全球最具社交性的足球比赛分析报告（英文版）（22页）.pdf

Επικεντρωθείτε στο ποδόσφαιρο. Ανάλυση του πιο κοινωνικού αγώνα ποδοσφαίρου στον κόσμο. Τίποτα δεν κερδίζει χωρίς οπαδούς. Ανοίγει νέες δυνατότητες για τις μάρκες. Αν το καταλάβετε σωστά, μπορείτε να προσεγγίσετε αυτό το φανατικό κοινό και να κερδίσετε πολλά χρήματα για την επιχείρησή σας. Σε αυτήν την αναφορά, εμβαθύνουμε στο ποδοσφαιρικό κοινό για να κατανοήσουμε τους οδηγούς και πώς οι επωνυμίες μπορούν να επωφεληθούν από τη σύνδεση με τους οπαδούς. Το Talkwalker δεν είναι χορηγός του πρωταθλήματος και αυτή η αναφορά αναλύει μόνο την κάλυψη του γεγονότος στα μέσα κοινωνικής δικτύωσης (ως ένα από τα μεγαλύτερα παγκόσμια αθλητικά γεγονότα) σε σύγκριση με προηγούμενες εκδόσεις. 2Εισαγωγή23ΜεθοδολογίαΗ ανάλυση διεξήχθη χρησιμοποιώντας την πλατφόρμα Talkwalkers Consumer Intelligence και παρακολούθησε τη χρήση μιας ποικιλίας λέξεων-κλειδιών και hashtag που σχετίζονται με τουρνουά σε διάφορα κανάλια κοινωνικών μέσων. Για να συγκριθούν τα τουρνουά του 2018 και του 2022, πραγματοποιήθηκε ανάλυση από το εναρκτήριο παιχνίδι μέχρι τον τελικό (14/06) /18 -Insight.34 42018 vs. 2022 Πολλά μπορούν να αλλάξουν σε 4 χρόνια Πολλά έχουν αλλάξει από το 2018. Μια πανδημία και μια αυξανόμενη κρίση κόστους ζωής έχουν αλλάξει τον τρόπο που ζουν οι θαυμαστές τους. Αναλύοντας τα δύο τουρνουά, κατανοούμε καλύτερα πώς έχει εξελιχθεί αυτό το κοινό με την πάροδο του χρόνου και πώς οι νέες του συνήθειες μπορούν να επηρεάσουν τον αντίκτυπο του μεγάλου παιχνιδιού 0,1 δισεκατομμύρια αφοσίωση Κορυφαίοι χρόνοι1 Γαλλία (12 εκατομμύρια) 2 Αγγλία (4,5 εκατομμύρια) 3 Αργεντινή (3,3 εκατομμύρια) Στιγμιότυπα ομάδες1 Αργεντινή(40,4 εκατ.)2 Γαλλία(13,3 εκατ.)3 Πορτογαλία(12,8 εκατ.) Οι πιο επώνυμοι παίκτες1.Λιονέλ Μέσι(889.000)2.Κριστιάνο Ρονάλντο(780.000)3. Kylian Mbapp(507.000) Οι πιο επώνυμοι παίκτες1.Lionel Messi (32,1 εκατομμύρια) 2.Cristiano Ronaldo (10,1 εκατομμύρια) 3. Kylian Mbapp (8,5 εκατομμύρια) Η πιο επώνυμη μάρκα Coca-Cola (1,6 εκατομμύρια) Η πιο γνωστή μάρκα Coca-Cola (1,2 εκατομμύρια) 7 Κορυφαίες Ιστορίες 2018 Η άνοδος του Kylian Mbapp στο αστέρι ήταν η συζήτηση στο τουρνουά, καθώς βοήθησε τη Γαλλία να κατακτήσει τον δεύτερο τίτλο της. Οι ανανεωμένοι ημιτελικοί της Αγγλίας είδαν τους ποδοσφαιρόφιλους από όλο τον κόσμο να τραγουδούν το «It's Coming Home». Η διοργανώτρια χώρα Ρωσία συνέχισε να παίζει. Η εκπληκτική Σταχτοπούτα έφτασε στα προημιτελικά αφού απέκλεισε την Ισπανία στη φάση των 16. Κορυφαίες ιστορίες 2022 Η Ιαπωνία εξέπληξε τους πάντες εντός και εκτός γηπέδου, αφήνοντας ένα πεντακάθαρο αποδυτήριο μετά τον αγώνα. Μια νίκη-έκπληξη για το Μαρόκο πυροδότησε συζητήσεις σε όλο τον κόσμο. Η Αργεντινή, ως ο τελικός νικητής, οδήγησε τις περισσότερες συζητήσεις.7 Σύγκριση Αναφορών Τουρνουά, 2018 έναντι 20222022 Ανάλυση Τουρνουά89Μηχανές συνομιλίας 2022Ομάδες συζητημένων θεμάτων σε σχέση με το Τουρνουά, Αναγνώριση στοιχείων Nov-Dec. οδηγούς κατά τη διάρκεια του τουρνουά. όπως ήταν αναμενόμενο.10Εκπλήξεις και επιτεύγματα στον αγώνα Το ταξίδι του Μαρόκου στα προημιτελικά, η νίκη της Ιαπωνίας επί της Γερμανίας, η νίκη της Αργεντινής. Οι θαυμαστές απολάμβαναν να σχολιάζουν τις εκπλήξεις που έφερε το τουρνουά. Ιρανική διαμαρτυρία Η σιωπηλή διαμαρτυρία των ιρανικών ομάδων συγκλόνισε το διαδίκτυο στα κοινωνικά δίκτυα. 1011 Αναφορές Podcast 1111 Χρησιμοποιώντας το Talkwalker's Network Analytics, βρήκαμε: Επιπλέον 6.200 συζητήσεις για το τουρνουά. Οι περισσότερες αναφορές προέρχονταν από μη αθλητικά podcasts, υπογραμμίζοντας τη σημασία του παιχνιδιού για ακόμη λιγότερο σκληροπυρηνικούς θαυμαστές. Αναφορές τουρνουά που εντοπίστηκαν σε podcast, Νοέμβριος-Δεκέμβριος 2022.12 Αναφορές ανά περιοχή1212Αν κοιτάξουμε τις αναφορές παγκόσμιων τουρνουά: Μπορούμε να δούμε ότι είναι ένα πραγματικά παγκόσμιο παιχνίδι που κατατρόπωσε τον κόσμο για τέσσερις εβδομάδες. Ακόμη και χώρες που δεν εκπροσωπήθηκαν, όπως π.χ. Η Ινδία και η Ινδονησία συμμετείχαν ενεργά στη σχετική διαδικτυακή συζήτηση. Αναφορές τουρνουά κατανεμημένες ανά περιοχή, Νοέμβριος - Δεκέμβριος 2022. 13Ο Γ.Ο.Α.Τ. Καθ' όλη τη διάρκεια του τουρνουά, υπήρχε μεγάλη συζήτηση μεταξύ των φιλάθλων για το G.O.A.T. (το υψηλότερο όλων των εποχών), με τον Λιονέλ Μέσι να κυριαρχεί στη συζήτηση (74,6%). Στη δεύτερη θέση ο Κριστιάνο Ρονάλντο με 16,1%. Οι επωνυμίες πρέπει να προσέχουν, καθώς ο Κριστιάνο Ρονάλντο είναι αυτή τη στιγμή ο παίκτης του Instagram με τα υψηλότερα κέρδη (και αναμφισβήτητα με τη μεγαλύτερη επιρροή). Αλλά με τις φήμες για πιθανή απόσυρσή της, οι επωνυμίες θα πρέπει να ξέρουν ποιους άλλους θαυμαστές αγαπούν Team Analysis151515A Δείτε πώς απέδωσαν οι 8 ομάδες των προημιτελικών στο διαδίκτυο κατά τη διάρκεια του τουρνουά και με ποιον συνεργάτη ή επίσημο χορηγό τουρνουά συνδέθηκε στενότερα η ομάδα.15ΟλλανδίαΑργεντινήΚροατίαΒραζιλία1,4 εκατομμύρια αναφορές40 4 εκατομμύρια αναφορές2 εκατ. αναφορές10 εκατ. αναφορές34,7 εκατ. αφοσίωση647,3 εκατ. αφοσίωση52 εκατ. αφοσίωση225,4 εκατ. Μέμφις DepayΚορυφαίος παίκτηςΛιονέλ MessiTop PlayerLuka ModriΚορυφαίος ΠαίκτηςNeymarΚορυφαία επωνυμία-Budweiser Κορυφαία μάρκα-adidasTop Brand-adidasTop Brand-Buduarly-Budweiser sis16EnglandFranceΜαρόκοΠορτογαλία3,8M Αναφορές 13,3M Αναφορές 2,9M Αναφορές 12,8 M Αναφέρει 115.6M Engagement254.4M Engagement78.8M Engagement212.1M EngagementΚορυφαίος ΠαίκτηςHarry KaneΚορυφαίος ΠαίκτηςKylian MbappJo Πιο δημοφιλής παίκτηςHakim ZiyechΚορυφαίος παίκτηςCristiano RonaldoTop Brand-BudweiserTopBrand-Top Brand-Budweiser-TopBrand Brand Entiment AnalysisΗ ανάλυση συναισθήματος Talkwalkers βοήθησε στον εντοπισμό θετικών αναφορών από χορηγούς και συνεργάτες τουρνουά. Η αξία της χορηγίας της νικήτριας ομάδας είναι εμφανής εδώ, καθώς η adidas έλαβε έναν σημαντικό αριθμό θετικών αναφορών σε μάρκες στους τελικούς. Ως νέος συνεργάτης για το 2022, η Algorand σημείωσε επίσης κάποιες πρώτες θετικές νίκες για την επωνυμία της. Θετικές αναφορές επωνυμίας κατά τη διάρκεια του τουρνουά τον Νοέμβριο-Δεκέμβριο 2022. Τα 18 πιο συζητημένα δεδομένα ροής αντλήθηκαν από τις κατατάξεις κοινωνικού περιεχομένου: Όλοι ακολούθησαν την πορεία της Αργεντινής στο τρίτο αστέρι της, με τον ημιτελικό και τον τελικό να προκαλούν τις περισσότερες συζητήσεις. Η Telemundo έχει ξεπεράσει κατά πολύ τη συμμετοχή απέναντι Η κάλυψη του FOX. Αν και δεν ήταν ο μεγαλύτερος χορηγός κιτ του τουρνουά (η Nike χορηγεί 14 φανέλες σε σύγκριση με την Adidas 12), η Adidas εξακολουθούσε να λαμβάνει τις περισσότερες αναφορές επωνυμίας. πήρε μερικές νίκες. Ανακοινώθηκε ότι η νικήτρια χώρα θα κρατούσε την μπύρα που υπήρχε στο απόθεμα για το τουρνουά - το tweet δημιούργησε 24.000 δεσμεύσεις. Ο παίκτης του Βραβείου Τουρνουά χορηγήθηκε επίσης από την Budweiser, η οποία βοήθησε την επωνυμία να πετύχει καθαρό συναίσθημα 80% (125.000 αναφορές). Το Spotify ζει τα όνειρα. Το Spotify δημιούργησε καθαρό συναίσθημα 95% με 128.000 αναφορές επωνυμίας που σχετίζονται με τουρνουά. Το "Dreamers" του Jungkook έγινε το πιο δημοφιλές επίσημο τραγούδι τουρνουά όλων των εποχών, συγκεντρώνοντας 4,8 εκατομμύρια streams στο ντεμπούτο του στο Spotify. Η Budweiser σηκώνει το κύπελλο202021Οι οπαδοί είναι οπαδοί2122Ανάλυση κιτ Fabrizio RomanoΈνας από τους πιο αξιόπιστους ποδοσφαιρικούς δημοσιογράφους στον κόσμο, ο Fabrizio Romano είναι ο ειδικός του κλάδου, ιδιαίτερα στη μεταγραφική αγορά. Δημιούργησε περισσότερα tweets για το τουρνουά από τη FIFA και δημιούργησε 17 εκατομμύρια εμπλοκές - 4,5 φορές περισσότερα από τον Elon Musk. Ο Ghanim Al-Muftah Ο Ghanim Al-Muftah είναι YouTuber από το Κατάρ και επίσημος πρεσβευτής του τουρνουά. Συνοδήγησε την τελετή έναρξης με τον Morgan Freeman, με το βίντεο του Ghanim από τα παρασκήνια στο YouTube να έχει προβληθεί πάνω από 800.000 φορές. Ο μεγαλύτερος παράγοντας επιρροής Fabrizio Romano Elon Musk Ghanim Al-Muftah Andy Murrayksi23 Οι τελικές αναφορές του τουρνουά κατά τη διάρκεια του τελικού στις 18 Δεκεμβρίου 2022 Μετά τα τελικά αποτελέσματα, όταν έφτασαν, το πρώτο αποκορύφωμα της συζήτησης ήταν τα συνεχόμενα γκολ του Mbapp στα 80 και 81 λεπτά που διατίθενται. Η δεύτερη κορυφή συνέχισε να πανηγυρίζει την επιτυχία του Mbapps ενισχύοντας το χατ-τρικ του. Και το μεγαλύτερο αποκορύφωμα του παιχνιδιού, το τουρνουά τελείωσε με το πλήθος να πανηγυρίζει τη νίκη της Αργεντινής.24 Η νίκη της Αργεντινής με 2.424 αναφορές ήταν τρελές, με 9,7 εκατομμύρια αναφορές σε μόλις 2 ημέρες. Οι περισσότεροι ήταν θετικοί καθώς οι οπαδοί σε όλο τον κόσμο γιόρτασαν την επιτυχία της ομάδας Χαλαροί και διασκεδαστικοί Οι πιο ενδιαφέρουσες συνεισφορές προήλθαν από το ESPN FC, το οποίο κυκλοφόρησε ένα βίντεο από τα παρασκήνια του αποδυτηρίου της Αργεντινής. Μόλις 2 αναρτήσεις δημιούργησαν πάνω από 1,65 εκατομμύρια αλληλεπιδράσεις και 13,3 εκατομμύρια προβολές. Και ποιος προμήθευσε τα εορταστικά αναψυκτικά; Budweiser, φυσικά. Άλλη μια νίκη για τη μάρκα. Η Αργεντινή γίνεται viral25Η Hyundai τράβηξε την προσοχή όλης της Αργεντινής με μια πρόσφατη ανάρτηση του "Felicidades Argentina" στο Instagram. Αυτή η ανάρτηση τράβηξε την ανοδική διάθεση του κοινού, συγκεντρώνοντας 564.000 προβολές για τη μάρκα. Η Aldi κάνει αντάρτικο μάρκετινγκ Η βρετανική εταιρεία λιανικής Aldi έσπασε την χριστουγεννιάτικη εκστρατεία της στις αρχές Νοεμβρίου, αλλά αυτή τη φορά με μια ποδοσφαιρική ανατροπή. Χρησιμοποιώντας το αγαπημένο των θαυμαστών #KevinTheCarrot, ο Aldi αναδημιουργούσε τη διάσημη διαφήμιση της Nike από την έκδοση του τουρνουά το 1998. Με 71% καθαρό συναίσθημα στα μέσα κοινωνικής δικτύωσης, η διαφήμιση είχε 5.000 αφοσίωση στο Twitter και 2,5 εκατομμύρια προβολές στο YouTube. Η επίδειξη μη χορηγών μπορεί να οδηγήσει σε ποδοσφαιρική επιτυχία. Η Hyundai επικροτεί τους νικητές Η τελική μάρκα κερδίζει 26 Συμπέρασμα 2626 Γιατί έχει σημασία το αθλητικό μάρκετινγκ Όταν πρόκειται για παγκόσμιες αθλητικές εκδηλώσεις όπως αυτή, θα υπάρχει πάντα ένας κίνδυνος. Δεν θα είναι όλοι θαυμαστές, αλλά υπάρχουν ευκαιρίες για κάθε μάρκα. Αναζητήστε συνδέσεις μεταξύ των καταναλωτών σας και της εκδήλωσης και αξιοποιήστε στο έπακρο τη στιγμή. Αυτό σας επιτρέπει να είστε πιο σχετικοί και να δημιουργήσετε όλες τις συνδέσεις που έχουν σημασία. Θυμηθείτε, δεν χρειάζεται να είστε θαυμαστές, αλλά η υποστήριξή σας πρέπει να είναι γνήσια με τον ένα ή τον άλλο τρόπο. Ακολουθήστε τη διάθεση του κοινού σας και αν αυτό σημαίνει ότι θα ξεπεράσετε ένα συμβάν, είναι ακόμα μια συζήτηση που πρέπει να συμμετάσχετε. Ο στόχος είναι να γνωρίζετε το κοινό σας μέσα και έξω και να αναλαμβάνετε δράση βάσει δεδομένων όπου είναι δυνατόν. Αποκτήστε μια δωρεάν επίδειξη. Η κορυφαία εταιρεία πληροφοριών καταναλωτών Ο κόσμος αλλάζει. Οι καταναλωτές είναι πιο απαιτητικοί, επείγοντες και απρόβλεπτοι από ποτέ, και οι μάρκες αγωνίζονται να συμβαδίσουν. Η πλατφόρμα νοημοσύνης καταναλωτών του Talkwalker σάς βοηθά να παραμένετε στην κορυφή μετατρέποντας εσωτερικά και εξωτερικά δεδομένα σε πληροφορίες καταναλωτών που αναπτύσσουν την επωνυμία σας. Περισσότερες από 2.500 παγκόσμιες επωνυμίες εμπιστεύονται την Talkwalker και τη διεθνή ομάδα ειδικών μας για να τους βοηθήσουν να αξιοποιήσουν στο έπακρο κάθε ευκαιρία σε αυτόν τον γρήγορο κόσμο και να επιταχύνουν την ανάπτυξη των επωνυμιών τους.

10 人看过 2023 年 3 月 20 日 27页 5星

Monster：招聘 Z 世代员工指南（16 页）.pdf

HIRINGTHENEWESTWORKERSBRING ONGEN Z Right now in the U.S.,Gen Z represents a fifth of the population and is the most diverse generation in the nations history.1 he convergence of a talent shortage,skills gap and demographics shift is looming.As older generations retire,and Gen Z,(those born between 1995 and 2010)enter the job market,employers are counting on them.Thats because by 2030,the youngest of the Boomers will turn 65,and older Gen Xers will have retirement on the horizon.The bulk of workers left will be Gen Z,along with a smaller millennial cohort.In other words,its not hyperbole to say that Gen Z is the group that is tasked with saving the workforce.But are they up for the job?A profile of Gen Z Pg.4 The COVID-19 impact on the future workforce Pg.5 Industry pain points:Tech,Manufacturing,and Healthcare Pg.7 What Gen Z wants Pg.10 How employers can enable Gen Z to save the workforce Pg.11 4 takeaways to reach todays youngest workers Pg.15PG.2This Ebook will explore:T1.Source:Pew ResearchThe mismatch of talent to jobs is approaching critical mass:A recent report from Korn Ferry estimates that by 2030,more than 85 million jobs could stand empty because there arent enough skilled people to fill the roles.But even with a widening skills gap and Gen Z worrying about what they bring to the table its more of a job seekers game than ever.More than half of employers(57%)say job seekers have the upper hand in the entry-level job market,according to a recent Monster survey.And nearly three-quarters(72%)say theyve boosted salary on entry-level jobs in the last year to attract candidates.Despite being in the drivers seat,60%of college graduates dont feel they can be more selective in their job search,because there are more people vying for jobs.But 4 in 10 Gen Zers admit theyve ghosted recruiters,many because they were no longer interested in the position(32%)or because theyd already accepted another job(30%).Another quarter said they had“a lot going on and forgot to respond,”but 34%said the recruiter or hiring manager was rude or lied about the position.On the employer side,3 in 5 organizations report difficulty in filling middle-skills jobs that is,positions that require more education than a high-school diploma,but less than a four-year college degree,according to researchers at Harvard Business School.2 And 69%of HR execs say the inability to attract and retain middle-skills talent often affects their firms performance.So what needs to change?How can employers help this workforce of tomorrow develop the skills needed to succeed and adapt to emerging jobs?And are we doing enough as a society to tap into the millions of talented workers who are ready to fill skilled roles,but dont have a degree listed on their resumes?PG.37 in 10 HR execsBy 2030,more than 85 million jobs could go unfilled because there arent enough skilled people tofill the roles.say the inability to attract and retain middle-skills talentoften affects their firms performance A profile of Gen ZWhile Gen Zers have lived through shared experiences,its important to remember that theres still a wide spectrum of people in that generation,notes Karen Jones,director,workforce strategies and employment solutions for Adecco Group Foundation US,a nonprofit thats helping addressthe skills gap in the United States through upskilling,reskilling,and apprenticeship programs.“I always get cautious about painting any generation with a broad brush,”she says.There are some data points worth considering,however,when trying to reach this youngest cohort of workers.Other facts:Gen Z is also the first truly digitally native generation.They also grew up during the Great Recession,watching older millennial siblings move back home because of sky-high student loan debt.And now,theyve had to finish out their school years and/or enter into the job market during a pandemic.“Instability has very much been the Gen Z norm.Over the course of the pandemic,things have been ever-changing,and they dont have the same foundation or reference point,because this represents their whole lived experience,”says Emily Schaffer,managing director,Year Up,a nonprofit career training program for young adults 18-24,the majority of whom identify as people of color.“Instability has very much been the Gen Z norm.”Emily Schaffer“Our social contract of the 90s through 2010 was that a college degree was the greatest insurance policy you can have against poverty.This is the path.”Unfortunately,that contract was broken for many,she adds.The trend that emerged was leaving college with debt,but not the degree.And even among those who graduate,the promise of a high-earning job doesnt always pan out.Graduates in the class of 2021 with degrees in engineering or business saw salaries just 1.6%higher than their 2020 counterparts,according to the National Association of Colleges and Employers(NACE).Chemistry majors and math majors saw a 3%to 4.5%drop.About 1 in 5 college grads arent confident in finding the right job fit,and almost half say thats because they lack experience.For non-grads,the prospects are worse.Projected job growth for the period of 2019-2029 is just 1.5%for those with a high school level education(and close to zero once the pandemic impact is factored in),according to the BLS.“Non-grads need a point of entry into a job with a wage that can sustain them,”says Schaffer,which is what her organization,Year Up,is trying to provide.Gen Z is college-bound Raised by more educated parents,more Gen Zers are pursuing higher education,according to the Pew Research center,with 57%enrolled in a two-or four-year college.Because theyre so education focused,fewer teens are working.However,4 in 10 enter the workforce as soon as they leave high school.PG.4 The COVID-19impact on thefuture workforceThe introduction of vaccines and boosters and the return(for many)of in-person work has led to a boost of energy for the job market.Employers this spring are projecting to hire 26.6%more college graduates from the Class of 2022 than they hired from the Class of 2021,according to the latest report from the National Association of Colleges and Employers(NACE).And the Staffing Industry Association(SIA)projects 12%growth in U.S.industrial temporary staffing in 2022 as the economy recovers.Meanwhile,the work landscape has changed.More workers expect flexibility,the ability to work remotely,the opportunity to work from anywhere.Three in 10 job seekers(32%)would need to see opportunities for remote or hybrid work options to entice them to apply for a job.And 59%of employers hiring for remote or hybrid entry-level positions focus on candidate quality and their ability to join the company quickly versus a local candidate who could work in-person if needed.“Theres an expectation from Gen Z that if they perform,they should be allowed to work from wherever they want,”says Ryan Craig,managing director of Achieve Partners,an investment firm focused at the intersection of education and employment.“Their organizations should be able to accommodate that,and those that cant will be more limited in their ability to attract talent.”“Theres an expectation from Gen Z that if they perform,they should be allowed to work from wherever they want,”Craig saysWhile candidates expect to be able to work autonomously,however,not all employers are fully on board.Only about half of employers say they have“complete”or“a great deal”of trust in the ability of their entry-level hires to excel in a remote working environment.“It obviously means different and additional sets of skills,”Craig says.“Gen Z is going to need to be more autonomous and professional.”Job candidates will be doing some judging of their own,too,says Sarah Ikhianosen,vice president of business development and strategic operations at The Fountain Group,a professional staffing firm specializing in contingent workforce solutions.“How employers handled COVID will be something people will discuss,”she says.“If employees did not feel supported,that will be a reason for turnover.Well start to see that now that more jobs are happening,and that will become the reputation of the company.”This is particularly true as companies lift restrictions and many workplaces return to something that feels more“normal.”“Theres definitely a question of,Is there a mask policy?and Is there a vaccine requirement,and if there is,is a booster required?”says Bill Nichols,practice director for Robert Half.“It does affect their decision making.”On the positive side,the pandemic might have afforded Gen Z some credibility within multigenerational workplaces.Until COVID shut down offices in 2020,a huge amount of communication was oral and in-person,says Steven Rothberg,president and founder of College Recruiter,a job and internship site for students and recent grads.Now,he says,“managers seem to be less frustrated with their youngest co-workers,probably because those youngest co-workers have or were able to quickly develop the digital communication skills necessary to succeed in a remote work environment.”PG.5 Along those lines,Gen Z may also benefit from the surge in video interviewing and other digital hiring platforms that are remaining in many workplaces since they have an inherent comfort level with those types of platforms.“Theyre used to more video chatting and talking to people.They want to see people that theyre interacting with,and they can sniff out an AI bot quickly.They want to feel like their time is respected by knowing a real person is behind the scenes,”says Jones.One other dynamic to emerge is that some young people may be rethinking their future aspirations.“The pandemic presented a lot of options for Gen Z folks.There are more online options at many colleges,and youve got greater geographic flexibility,”Schaffer says.“I think young people continue to question what is going to get them where they want to go,and with more options available,I think more young people are looking to professional certifications and different pathways of learning,not just college alone.”It could partially explain why undergraduate enrollments declined another 3.1%this fall,and the countrys freshman class was 9.2%smaller than the freshman class of fall 2019,according to the National Student Clearinghouse Research Center.With the younger half of this generation potentially less interested in a four-year degree,what might that do to the workforce in the next five years?There was already a looming skills gap in everything from technology to trades to soft skills.So who will take on that training burden if fewer young people decide to enroll in college?PG.6 Industry pain points:Tech,Manufacturing,and HealthcareIn case you havent heard,95%of business leaders say its very or somewhat challenging for their company to find skilled professionals,according to a Robert Half survey.This is an issue across the board,but here,we take a closer look at the technology,manufacturing/light industrial,and healthcare sectors.Tech/ITKorn Ferry research estimates that by 2030,the U.S.technology sector could lose out on$162 billion worth of revenues each year if it doesnt find a way to fill roles with high-tech skilled employees.And the top in-demand roles listed in World Economic Forum Future of Jobs Report are tech-loaded:Data Analysts,AI and Machine Learning Specialists,Robotics Engineers,and Software and Application developers.And on the horizon are emerging roles like Process Automation Specialists,Information Security Analysts and Internet of Things Specialists.Add to that the fact that even non-techie jobs are requiring more and more digitally-driven skills,and you can see why recruiting professionals are worried about a tech talent shortage.Four in 10 college graduates say the hardest part of looking for a job is that ads call for multiple years of experience.“The digital skills that employers are seeking,particularly in entry level jobs,are becoming more numerous and much more specific,”says Ryan Craig,managing director of Achieve Partners,an investment firm focused at the intersection of education and employment.So much so that he says the concept of an entry-level position has become an oxymoron,where many job postings actually require around three years experience.Think about an entry-level sales position,”Craig says.“Anyone with a college degree would be considered,but today there are software and SAS platforms and experience youre expected to have for those roles,so entry-level has become an oxymoron for millions of employers.”Entry-level has become an oxymoron for millions of employers.Ryan Craig,manager director,Achieve PartnersPG.7By 2030,the U.S.technology sectorcould lose out on$162 billion worth of revenueseach year if it doesnt find a way to fill roleswith high-tech skilled employees Craig predicts that in the next decade,millions of young people will start their careers through apprenticeship-like pathways that are providing them with these specific digital skills and business experience that employers arent willing to provide and educational institutions cannot provide.Manufacturing/Light Industrial“With the rise of Amazon mega-centers popping up,there are more people interested in manufacturing type positions,”says Baksh.But the perception of the industry is still evolving,and it requires new messaging to attract the next generation of skilled workers.“We have to say,if you want the ability to turn a job into a career,this is a pathway for you,”she says.Her company is actively making improvements to its leadership development program,which serves as a pipeline for plant managers,for that very reason.“When I took ownership of that program,the average turnover was three years,”says Baksh.In the past,because a lot of engineers may not go to school with the intention of becoming plant managers,some who wound up in the program discovered it wasnt what they wanted to do.Baksh and team are now putting more focus on making sure they are“fishing in the right pond,”and reaching a level down in the process,including revamping their internships.“We want to make sure participants figure out if this is what they want to do early on,and so we have created a tiered approach so a good mix of people are coming in to try things out,”she says.Though these initiatives are in their infancy stages,theyve seen some promising early results.PG.8“The manufacturing industry requires new messaging to attract skilled workers.We have to say,if you want to turn a job into a career,theres a pathway for you,”Lauren Baksh,senior manager of talent acquisition for Graphic Packaging Healthcare“Due to the nationwide shortage of RNs occurring pre-pandemic,we are experiencing even greater shortages of RNs,nursing support roles,and other critical healthcare roles such as Respiratory Therapists,”says Robert Shaw,manager of talent strategy and digital analytics at AdventHealth Corporate,a non-profit health care system that operates over 130 facilities across nine states.To help meet the demand,AdventHealth created a nurse residency program to support recent nursing graduates as they transition into their first RN role.“We are also piloting a transition nursing program dedicated to nurses that are interested in working in an acute care setting with little to no experience in this area,”he says.They are challenged when it comes to sourcing talent for select facilities in rural or non-metropolitan areas,he says,but are using various talent and digital strategies to increase awareness of these opportunities.PG.9 What Gen Z wantsGen Z is not unlike other generations in wanting a competitive salary and benefits package.But they also crave the opportunity for advancement and job security.This generation is future-minded,and therefore more willing to stay loyal to companies that invest in them.The Monster survey data supports that notion,with 37%of job seekers saying they want to see career advancement expectations for the position in thejob posting,and another 30%looking for verbiage on career or leadership development programs.“This is a generation that is risk averse,”says Craig.“Theyve experienced a high cost college,student loan debt,theyve seen their big brothers,sisters,older friends suffer through under employment andunemployment now with COVID,and they want a pathway with some guarantees.”For employers,that means realizing that entry-level hires are not necessarily looking for the highest offer,but rather a secure pathway.Thats not to say that you can get away with not offering a living wage.Salary range still topped the list of what Gen Z needs to see in a job ad before they apply.“Employers who hire someone for$15 an hour and then provide no opportunities to advance shouldnt be surprised when those people jump ship for another$1 or$2 from the employer across the street,”says Rothberg.of job seekers want to see career advancement expectations for the position in the job postingPG.10 37%How employerscan enable Gen Z to save the workforce33%of college grads say they wouldntaccept a job at a company that doesnt havea diverse workforce PG.11As your workforce turns over and new roles emerge,Gen Z is ready to take the wheel.But just like new drivers,theyll need some training and practice before they can confidently hit the road.Employers who find creative ways to identify and invest in candidates who have the potential to go the extra mile will be better off for it in the long run.Here are some strategies for attracting and retaining Gen Z candidates:Prioritize diversity and healthFully a third of college grads say they wouldnt accept a job at a company that doesnt have a diverse workforce.Another quarter say they wouldnt work for an organization without women(26%)or diversity(25%)in leadership roles.Job seekers are also keenly interested in their health mental and otherwise.Nearly half(48%)of candidates said healthcare is the benefit theyre most interested in,even above flexible schedule options.And 1 in 10 workers named free access to mental health services as another important perk.Get back to the human sideof recruiting More than a quarter of job seekers(27%)say one of the most difficult parts of the job search is tailoring their resume to the unique keywords in the job ads.Translation:Getting around the bots.Companies need to get away from candidate screenings that only scan for keywords,says Jones.“Gen Z can bridge the talent gap,but companies need to change.They need to look for potential.Instead,its been very prescriptive were not going to consider people unless they have this,this and this.Humans are not even reviewing applications.”But while the human touch is important,its also essential that companies are using the online tools at their disposal.More job seekers are using job boards and career networking platforms to look for positions than career services provided by their college,Monster found.And 11%to 16%of candidates are also looking to social media platforms like YouTube and TikTok.Theyre also looking to social media for job advice:46%of college graduates are going to YouTube or TikTok with their job search questions.Rethink the four-yeardegree requirementEspecially this past year with remote schooling,this generation has realized that they can learn things on their own.“They have an entrepreneurial spirit,”says Jones.Theyre also not afraid to go on YouTube to learn a software program or how to complete a DIY project.“Theyre saying,dont discount me because I dont have it on my resume.I can learn it.”Relying on campus recruiting alone is 20th century thinking says Craig.But nearly nine in 10 employers admit that they are rejecting qualified high-skill candidates if they dont match the exact criteria in the job posting,such as a college degree,according to a Harvard Business School study.Just relying on campus recruiting alone is 20th century thinking,says Craig.On the other hand,the acceptance of skills-based hiring provides an entryway to young people who dont choose the college route.“In the State of the Union address,Joe Biden talked about the work-based learning experience and skills-based hiring,”Schaffer says.“I think that was a big moment for people who look for skills-based hiring and creating pathways based on someones ability to do their job,rather than a degree that may or may not position them well to do a job.”says Schaffer.Though some roles at Graphic Packaging require a four-year degree,Baksh is really hoping for an influx of community college applicants to meet some of the talent demands.“Some of our skilled tradespeople make more with an associate degree than those coming out with a four-year degree,”she says.“Its more important for companies to get in early with technical schools so they know who the immediate employers are,and develop a solid bridge.”Invest in training and upskilling solutions to close the skills gapTheres a whole group entering the workforce that dont have a degree,says Jones,and they are primed to be trained for some key trade skills.“Lots of companies are looking for CNC operators,powered forklift drivers,or maintenance technician positions,and theyre having a difficult time filling those jobs,”she says.The problem is organizations feel they dont have the time and bandwidth to do the training themselves.I see more and more work-based learning experience programs and I think more companies are seeing them as an important pathway to strategic hiring,says Schaffer.PG.12“Work-based learning experiences and work partners within organizations who are helping to build talent pipelines continue to be a really robust way to get to know an employee,to have the try-before-you-buy experience,”Schaffer says.“Both for the talent,who gets the opportunity to experience a company culture and working with a team firsthand,and for the company who gets to see how quickly they learn.I see more and more work-based learning experience programs and I think more companies are seeing them as an important pathway to strategic hiring.”Craig believes that what he calls“last mile training”can help make those connections between entry-level hopefuls and organizations facing skills gaps.He predicts that“Talent as a Service”providers will emerge to deliver purpose-trained,entry-level talent at scale on a“try before you buy”basis.In addition,expect to see a resurgence of apprenticeships.“There are these third parties who essentially come in and operate turnkey apprenticeship programs for you,and they run the training,and they help with the recruiting,and the onboarding of it,”says Craig.Until such solutions are mainstream,however,companies may need to take on at least some of the responsibility of training their future workforce.“Non-college workers are the population we think needs the most help in upskilling,”says Jones.“Companies want someone who has experience,but if youre not going to give them a shot,they cant get there.Companies need to be more willing to train people.”As far as what that training should look like,consider leaving behind the boring,recorded training sessions that Gen X and some Millennials tolerated,says Jones.“Gen Z is different in that theyre avid multitaskers.Theyre used to stimulation from multiple sources and would benefit from training that involves multiple platforms.They need different types of interaction to keep them engaged,”she says.Talent as a Service providers will emerge to deliver purpose-trained,entry-level talent at scale on a“try before you buy”basis,predicts Craig.PG.13 Invest in long-term retentionBringing on entry-level talent is challenging enough,which is why it can be frustrating to invest the time and money to train them just to have them leave in a couple of years.“Id love for companies to really think about this as a career-exploration phase,”Schaffer says.“For people who are just starting out,theyre going to need to get their feet wet in a variety of different kinds of roles in order to understand what theyre great at and what they love to do.So I think Gen Zs early career talent needs to be in a position where they can try things where they can get into a role,learn it and also have some mobility into other roles.”One program at Hyster-Yale Group having success is called Raise Your Hand,in which employees can volunteer to work on projects outside of their core job or functional area.“It provides additional resources to a given project,but its also an opportunity for that employee to work with different people,be exposed to different perspectives,and build different skills as well as contributing their own strengths to that project,”says Brown.“For people who are just starting out,theyre going to need to get their feet wet in a variety of different kinds of roles in order to understand what theyre great at and what they love to do”,Schaffer says.Give them opportunities to network“We see networking and building ones network as something that is really important for early career talent,and its challenging to do that in the pandemic environment,”Schaffer says.“The pandemic put a damper on a lot of the loose-tie relationships the folks you connect with and know but who arent your closest friends.Thats often who we think of as part of our professional network.”Creating opportunities for informal networking will take creativity,and companies will have to think about strategies to help employees branch out.“When folks arent running into each other at the water cooler in the way they once did,there needs to be alternative means of doing this.”Luckily,much of Gen Z is still willing to be in the office at least part of the time.Half of college grads and 7 out of 10 non-graduates want an in-person job,according to Monsters data.While they appreciate the ability to work remotely,this is a generation that hasnt worked much on site,and they still want to meet people and be in an office environment.“If someone is looking at a company based out of Boston,they still want that interaction with people their age and that social aspect,”Nichols says.“Coupled with that now is the expectation that they can work from home a couple of days a week.Young professionals are looking for something hybrid.”To connect with this audience,be authentic and transparent As previously noted,Gen Z will do their research and theyre not easily fooled.They want security,and that means they want to work for a company they can rely on.These candidates may wantto know salary details that older seekers wont(even when it comes to the C-suite).They may want to understand the racial makeup of your executive leadership team,and if its not diverse,theyll want to know that youre working on improving things.They want to know what youre going to give them for their loyalty and their talent,and they may not wait for an interview to hear if first-hand.Thats where having a truly transparent,dynamic employer brand is key.You want to establish your employer value proposition and create a strategy to communicate your values and offerings to candidates before they even apply.PG.14PG.15 alent shortages,skills gaps,and post-pandemic uncertainty do make for a challenging hiring environment.But by recognizing the potential and passion of Gen Z and approaching them with career pathways and opportunities to grow and learn even if theyre initially lacking each of the skills you deem essential you can fuel your talent pipeline for years to come.Be transparent Demonstrate that theyve got a futureat your companyHelp them connectShow themthe moneyTGen Z wants to know about salary,benefits,work/life balance and how your companyhandled COVID-19.Todays entry-level workers want to see a tangible career pathway,so present them with specific plans to train them,and show them a promotion path ahead.A thriving network is just as important as growth opportunities,so its up to you to provide ways for young workers to interact with colleagues and mentors.They know the pandemic may have impacted their salary potential,but if youve got challenging roles to fill,know that you might have to bump their salary.takeaways4to reach todays youngest workers1-800-MonsterWere ready to partner with you.See Monsters Gen Z Hiring Solutions

7 人看过 2023 年 3 月 20 日 16页 5星

Strategie&：DTC 时尚消费品牌转型白皮书 2023（40 页）.pdf

0Enlighten Fashion Brands Routes to the DTC ModelBuilding eight pillars to enable DTC transformation for continued growth1Editorial Board:Tiger ShanLead Partner,PwC Strategy&ChinaEmail:Steven JiangPartner,Digital Growth Services,PwC Strategy&ChinaEmail:Jerry HuaPartner,Consumer Markets,PwC Strategy&ChinaEmail:Contact us:Contributors:Ryan Ding,Rose Chen and Patrick Pan,Senior Associates of Strategy&ChinaConsumer Markets Leadership:Michael Cheng Asia Pacific,Mainland China and Hong KongConsumer Markets Leader,PwC ChinaEmail:Jennifer YeMainland China Consumer Markets Leader,PwC ChinaEmail:Jane WangLead Partner for Consumer Markets,PwC Advisory ChinaEmail:1Strategy&|Enlighten Fashion Brands Routes to the DTC Model2ContentsForeword03I.Key success factors for DTC fashion brands to achieve profitable growth06II.Five constraints to growth during DTC transformation16III.Eight pillars for DTC fashion brands to unleash growth23Conclusion37Enlighten Fashion Brands Routes to the DTC Model|Strategy&23The way people socialize and work has beenreshapedduetotheepidemicandotheruncertainties,leading to dramatic shrinkage ofpopulation flow and offline shopping.It bringsnegativeeffecttobricks-and-mortarretailindustries in terms of consumer flow dropped,offline shopping flumped,and social activitiesdecreased.Thus,unprecedented challenges arepresented to fashion brands for business growth,especiallyinthefootwear,apparel,andcosmetics sectors.Meanwhile,given that China has a vast marketand complex distribution systems,traditionalplayersoffashionconsumergoodsoftenconnect to terminal retailers or final consumersvia regional distributors.In the past,this couldreduce inventory and capital pressure,as well asthecomplexityandinvestmentneededforexpanding the sales network and managingsales in different regional markets.However,alongsidea backdropofupgradeddemandamong the main customer segments,intensifiedindustry competition,and digital transformationof the value chain,the drawbacks of relyingsolely on distributors to reach the market areconstantly exposing.Typical challenges includelagging response to market competition andchanges in consumption,long process to launchnew products,brand damage by hunting short-termyield,inflatedterminalpricesandimbalance in consumer valueperception.The pandemic has made those worse,butconsumers demands still need to be met,so theclick-and-mortar retail model,whereby offlinestoresserveaswarehousesanddeliverycentresandonlineonestakeorders,hasbecomemorepopular.Benefitingfromthismodel,some brands are embracing the Direct toConsumer(DTC)model.Strategy&subscribesto the view that,unlike traditional direct retail,DTCconnectsthebrandandconsumersdirectly.By delivering personalized products,services,experiences,communication and valuetransfer via digital insights on customers,DTChighlyfacilitatesconsumersacquisitionandretention,as well as market expansion.It should be noted that Covid-19 is just one ofthe factors that make DTC model under heateddiscussion.Many of Chinas leading fashioncompanies had plans for DTC transformationbeforethepandemic.Byanalyzingtheperformance in the past three years(2019-2021)of 19 major DTC fashion brands(including DTC-oriented ones)in China and North America,wespotted an increasing number of Chinese brandsachievinghighnetprofitmarginswhilemaintaininghigh revenue growth.In summary,many fashion companies haveencountered unprecedented challenges underthe post-pandemic era.Therefore,it is of highsignificance to dig into the early adopters of theDTC model that have sustained healthy growth.This white paper aims to analyze the keysuccess factors for fashion brands who adoptthe DTC model,as well as the five challengesfor growth-seeking players.Finally,it proposeseight pillars for DTC transformation to unleashgrowth potential.ForewordStrategy&|Enlighten Fashion Brands Routes to the DTC Model34DTC model has developed for a long time inEuropeandAmericafashionindustries,while several new DTC brands sprung uprecently.Some traditional worldwide brandshave announced transformation strategies,striving to boost their DTC revenue to half,oreven 60%of the total revenue in the next 3to 5 years.“DTC revenue over60%Against the backdrop of the pandemic,it is meaningful to analyze how typical DTC brands(includingcompanies for which DTC accounts for the majority of revenue,hereinafter referred to as DTC brands)at home and abroad have performed in the past three years,and summarize the useful experience ofoutstanding players.This white paper singles out 19 fashion DTC brands,of which 9 are in China and10 in North America,covering 6 sub-industries,including apparels,footwear,skincare,jewellery anddesigner toys(see Figure 1).Source:Strategy&analysis711352ApparelsDesignertoyJewelrySkincareHomesFootwearFigure 1:Sub-Industry and geographic distribution of the sampled DTC fashion brandsChinaNorth America47S%Enlighten Fashion Brands Routes to the DTC Model|Strategy&4Sub-industry distribution of the sampled DTC brands in China and North America N=19Geographic distribution of the sampled DTC brands in China and North AmericaN=195The sampled companies have managed to re-construct their relations to consumers as directconnections through digital technology and data insight applications,enabling them to capture usersneeds and meet them perfectly,to deliver differentiated consumer experiences.Figure 2 shows thedifferences between the traditional retail model and DTC models in terms of consumer insights,business model,marketing,and distribution channels.Figure 2:Traditional model versus emerging DTC model*Note:Spray and Pray here means to randomly send out a large amount of marketing information,praying to get orders.Source:Strategy&analysisConsumer InsightsData-driven,real-time insights about individual consumers through digital technologiesBusiness modelProduct,price and promotion determined at an individual customer level(or micro-segments)MarketingMarketing across multiple digital media,but increasingly targeted at individual consumers based on insight and preferencesChannelsIncreasing use of several direct channels Owned e-commerce,owned physical retail,1-to-1 social selling,in-store shopsEmerging DTC ModelConsumer InsightsAd-hoc research(focus groups,panels,surveys)dominated by third-partyagenciesBusiness model Product,price and promotion determined at a general customer level MarketingOnline advertisement driven.Spray and Pray model*with no clear approach for customer acquisition,conversionChannels Reliance on retailers to sell products to the consumer.Limited direct interaction with consumersTraditional ModelStrategy&|Enlighten Fashion Brands Routes to the DTC Model56I.Key success factorsfor DTC fashion brandstoachieveprofitablegrowthEnlighten Fashion Brands Routes to the DTC Model|Strategy&67To identify high-performance DTC fashion brands,Strategy&tracked these 19 sampled companies inChina and North America in the past three years.We constructed a two-dimension performance matrixwith two core indicators,i.e.,the Compound Annual Growth Rate of Revenue(CAGR)and the netprofit margin(using 2021 figures as a baseline),between 2019 and 2021.Based on the median of thetwo indicators,the matrix was divided into four quadrants,i.e.,high-performance quadrant,high-growthquadrant,high-profit margin quadrant,and relatively low-performance quadrant.As shown in Figure 3,about two-thirds of the samples have sustained both high revenue and positiveprofitability.More importantly,within the high-performance quadrant,i.e.,the range with revenue growth and profitmargin both above the median,China has more companies than North America does(red dotsrepresent Chinese brands,and grey dots represent North American brands).It indicates that duringthe pandemic in recent years,China has more DTC brands with higher revenue growth and higherprofit margin.Now the question is why they stand out.Figure 3:Revenue growth and profit margin in recent 3 years of the sampled DTC fashion brands*in China and North America117-16-14-2-15101015160125133142920116-117-412018-619-713021 220230-10-8-54-9-320630-104050-1160708-12140-27150-132019-2021 Revenue CAGR2021 Profit MarginDABLCChinaNorth AmericaMedian=6.9%Median=19.7%N=19(%)(%)High PerformanceHigh GrowthHigh Profit MarginRelatively Low PerformanceNote:Brands in the above diagram are 19 sampled DTC-oriented brands,which are desensitized as A,B,C,D,L,etc.Sources:Annual Reports,Strategy&analysisStrategy&|Enlighten Fashion Brands Routes to the DTC Model78It was not easy for the top performers to make achievements in the past three years,as the overallbusiness environment in China was experiencing uncertainties and weak growth.Here,take apparel&footwear sub-industry and the skincare sub-industry as two examples.Since the end of 2019,the twosegments had dropped to the bottom of the MoM growth rate at least twice,in January 2020 andFebruary 2022 respectively.But January 2021,the MoM growth rate witnessed a high peak in nearly adecade,quickly rebounding from the first trough with a booster of the recovery of the pandemic.Puttingthese extremes aside,the two sub-industries endured lower growth during the pandemic,comparedwith the pre-covidlevels(see Figure 4).Figure 4:Month-to-month sales growth rate of apparels&footwear and skincare in ChinaNote:Jan to Feb data for 2012 and subsequent years are not disclosed by the National Bureau of Statistics,thus not includedin this figure.Source:National Bureau of Statistics-40-30-20-100102030405060702014.122011.12011.122013.122012.122016.122015.122017.122018.122019.122020.122021.122022.7MoM Growth Rate(%)SkincareApparels&footwear2011.1-2022.7Enlighten Fashion Brands Routes to the DTC Model|Strategy&89In this context,it is even more valuable to further analyse andidentify how these outperformers sustained growth.Analyzing thefourChineseDTCbrandswithexcellentperformance,andeliminating covid-related factors(such as business disruptions dueto social isolation policies,non-habitual buying in e-commence dueto blocked shopping in stores and etc.),we summarize three keyfactors for their success:Even negatively impacted by COVID-19,both online and offlinestores of outperforming DTC players have experienced double-digit growth,whereas online stores have achieved much highergrowth.ThosechannelsintheDTCmodeldonotoperateindependently.Offline stores function as experience centersandprovideexcellentexperience,whichencouragesconsumers to share posts on social media for word-of-mouthcommunication.Then,these user-generated contents(UGC)will guide potential customers to online stores.01Offline brand-owned stores guide potential customers to online storesThis white paper will dig deeper into the above three key factorsfrom the perspectiveof data insights.Consumers of outperforming DTC brands are more willing torepurchase.High consumer retention rate is not only driven by the superiorexperience and customer satisfaction from both online andoffline brand-owned stores,but also by membership systemsand operation targeting existing customers.02Repurchase contributes more to the sales growth High-performance DTC brands have balanced product portfolio,which providesa more obvious long-tail effectin sales.Assisted with direct consumer connection,DTC brands candynamically perceive consumers preferences and feedback,torespond to consumers needs,iterate new products,andupgrade existing products at a faster pace.03Product portfolio driven by real-time market insights contributes to balanced sales growthStrategy&|Enlighten Fashion Brands Routes to the DTC Model10As shown in Figure 3,four of the nine DTC fashion brands in China arewithin the high-performance quadrant,and the rest are distributed acrossthe other quadrants.These four companies will be referred to as the“outperformers”(desensitized as A,B,C and D)and the rest as“othercompanies”(X1,X2,X3,X4 and X5)respectively.In comparison,wetrack the changes in their revenue CAGR in the recent three years of theDTC channels,including brand-owned stores online and offline.Ouranalysis shows that,for the four outperformers,both online and offlinestores have sustained revenue growth(except for company B,a lateadopter of DTC,whose offline stores were under self-adjustment),andonline stores have maintained a rate much higher than offline storesdoes.For the other companies,the revenue growth rate of online andoffline stores is different.For example,the offline stores of company X1record a much higher growth rate than its online stores does.So,are there synergies between the revenue growth of online and offlinebrand-owned stores of the outperformers?From the perspective of thecustomer journey,more and more fashion goods consumers,especiallythe younger generation,wont buy a product without being deeplyattracted to it at first.Frankly speaking,if there are no effectivetouchpoints for a fashion brand or new product to establish consumerrecognition,consumers are likely not to purchase.We also notice thatthe brand-owned stores of outperformers have both merchandising andexperience functions,and there are many posts related to theirexperience centers on social media.Based on the number of posts in a leading lifestyle social mediaplatform,outperformers have on average more than twice of posts as theother companies.Besides,not all of these posts are released by thebrands official account,instead,most are created by users after theyvisited experience stores,i.e.,user-generated contents(UGC).Eventhough such stores are usually located in a few first-and second-tiercities and a large number of consumers in other cities cannot becovered,these online contents are able to attract online customers anddrive potential customers to make purchases online.This business loopis creating greater opportunities for brands to improve user conversionon e-commerce platforms.Similarly,considering the popularity of shortvideos,we also look into the user traces of a well-known short-videoplatform and find out a similar result.The offline experience centersignite numerous UGC short videos,and these contents attract morepotential consumers to watch and give a like.We count the number oflikes,and find out that outperformers receive more than four times ofpositivereviews than the other companies.1.Offline brand-owned stores guide potential customers to online storesEnlighten Fashion Brands Routes to the DTC Model|Strategy&1011Therefore,it can be seen that the outperformers online and offline channels do notoperate separately;bricks-and-mortar stores are no longer solely for sales,but alsodouble up as key touchpoints that offer interaction,experience,service valueextension,digital perception and application to consumers.Meanwhile,to make thestores popular on social media to attract more users,outperformers often designinteractions,activities and integrated experience to target users demands and usingscenarios.In addition,they produce banners,slogans or visual hammers to resonatewith users based on their value proposition.In this way,they could acquire newcustomersorpurchasesthroughusersrecommendations.Inconclusion,outperformers achieve growth in both offline and online stores,while the formerprovidesleverage valuefor the latter.A fashion clothing brand leverages its offline stores to directtraffic to its online.In 2021,the brand opened the firstexperience store that integrated coffee customization clothing retail in a popular business district in Beijing.Combining clothing products with coffee,the store allowedconsumerstotastespecialcoffeeanddessertswhileshopping,creating a fashionable lifestyle.The newly opened store quickly attracted a large number ofpotential customers.Within a month,more than 300 postshave been posted on a leading lifestyle social platform,andreceived more than 10,000 likes,favorites and comments intotal.A large number of non-Beijingers asked how to buy theproducts via comments,and the bloggers replied to them,telling them that the items could be bought in the brandsonline flagship store.According to sales data,in the first month when the storeopened,the online flagship store reported a double-digitgrowth in sales compared with the previous month,and sawsustained growth of this scale in the following months.Itdemonstrates how offline store is valuable in the surroundingarea,as well as how offline store boosts online exposure ande-commerce conversion as the young generation has apreference for online shopping.“Case study:A fashion brand opened a strong experience store to boost e-commerce salesStrategy&|Enlighten Fashion Brands Routes to the DTC Model1112By tracking the performance of the 9 Chinese DTC companies self-owned flagship stores on animportant e-commerce platform in China,we identified two noteworthy dimensions of data:one is thetotal sales in the past 12 months,and the other is the number of the stores existing fans.We tried toillustrate the retention rate through the linear relations between these two dimensions.It should benoted that flagship stores fans are usually more than actual customers,which means that it is almostimpossible to have each fan purchase at least once.As shown in Figure 5,axis X notifies the numberof fans”and axis Y refers to the total sales in the past 12 months“.If YX,i.e.,the intersection of Xand Y is on,or in the upper left of,the line Y=X(the slope=1),it means a fan-converted customermakes multiple purchases on average.It is worth noting that three of the outperformers(A,B,D)fall on or in the upper left of the line Y=X,while most of the other companies(X2,X4,X5)fall in the lower right of the line.It indicates that theoutperformers attracted more repurchasers(defined as those who made two or more purchases in thepast 12 months),reflectinga higher rate of customer retention.2.Repurchase contributes more to the sales growthFigure 5:Linear relationship between the number of fans of self-owned flagship stores and the total sales in the past 12 months of DTC fashion brands in ChinaNote:The total sales in the past 12 months refer to those of the Tmall flagship store of respective brands between July 2021and June 2022;and the number of fans is based on the data of the Tmall flagship store of respective brands in early July 2022Source:Tracker of e-commerce flagship stores,Strategy&analysis05,000,00010,000,00015,000,00020,000,00005,000,00010,000,00015,000,00020,000,00025,000,00030,000,000X3Number of fansTotal sales in the past 12 monthsX1X2ADBX4X5Y=xJuly 2021-June 2022;N=9Dots on or in the upper left of the line Y=X(the slope is 1)represents a higher repurchase rate(since the number of fans the number of e-commerce customers,if Y X,it means that existing customers made multiple purchases)CEnlighten Fashion Brands Routes to the DTC Model|Strategy&1213Given the completely different performance results as described above,why does repurchasecontribute more to the sales growth at the high-performance DTC brands?According to our analysis,itcould be attributed to two factors:First,outperformers attach great weight to the experience of non-member users.They provide betteruser experience perception around products,retail touchpoints,integrated services,etc.Specifically,they not only provide products that match personalized needs based on customers characteristicsthrough user insights,but also build online and offline retail stores to improve consumers shoppingexperience in all aspects.Therefore,with better experience regarding products,online and offlineshopping and customer services,consumers are more likely to stick to the brand,and are more willingto recommend them to others.Second,they emphasize membership systems and operation strategies targeting existing customers.Traditional fashion brands usually use membership point systems to motivate engagement andspending(i.e.,brands allow consumers to redeem points for gifts,thereby encouraging them to makerepurchases and continue to earn points).Compared with them,outperformers know how to betterretain high-value users in a differentiated way.Instead of offering extra benefits like discount couponsor special discounts for members,outperformers forge an emotional connection with consumersthrough interest circles and lifestyle circles,and provide exclusive experiences throughout theconsumer journey,thus creating a sense of belonging and value identity among members.Therefore,consumers can interact with the brand,connect with other members,and attract more potentialcustomers,which in turn drivesrepurchases and sales growth.A designer toy brand has transformed its membership system under the DTCmodel in recent years.In 2017,it had only about 300,000 members.The poorlydesigned membership system failed to attract and engage members,andmembership-based operation created little value.In 2020,the brand decided toupgrade the existing membership system,with the aim of improving customerretention and value contribution through circles of interest.The company startedwith WeChat official account,mini program,storefront and social media to pursueexposure and establish online communities,and set up a community operationdepartment in 2021.With more than 800 online groups,it gathered more than100,000 like-minded designer toy lovers,forming a foundation for customeracquisition and retention.Therefore,the brands number of members hasincreased by tens of millions since 2020;and,by 2021,members contributed 92%of its total sales,with a repurchase rate of 56%.“Case study:A designer toy brand re-designed its membershipsystem to drive repurchasesStrategy&|Enlighten Fashion Brands Routes to the DTC Model1314We tracked the sales of the above-mentioned 9 DTC companies Standard Product Units(SPUs)fromtheir self-owned online flagship stores,trying to identify how the sales contribution of SPUs differs fromoutperformers and other companies under the DTC model.We divided the SPUs of flagship stores intothree groups based on their sales:the top 5 SPUs,the top 5 to the top 5%SPUs,and the bottom 95%SPUs.According to statistics(see Figure 6),more than half of the other companies rely heavily on afew of hot selling products that their top 5 SPUs account for more than 50%of the total sales;whileoutperformers are with obvious long-tail effect,that their non-top 5 SPUs contribute a large share ofsales.Here outperformers C and D are taken as examples.Each of them has more than 2,000 SKUs.Among these SKUs,their top 100 SKUs contribute 50%and 51%of total sales respectively,and thetop 500 SKUs contribute 83%and 85%respectively.Compared with the other companies,theoutperformers are better at creating popular products.Instead of relying on a few hit products,theyusually scale up the sales with variousproduct portfoliosto balance SPUs sales contribution.Abundant SKUs are required for a brand to scale up.But if they are not recognized by the market,thestock of long-tail SKUs will pile up,resulting in a waste of resources and costs.Therefore,companiesneed to make more popular products,to achievesales synergy and driverevenue growth.3.Product portfolio driven by real-time market insights contributes to balanced sales growthFigure 6:The outperformers versus the other companies-Sales contribution of SPUs at online flagship storesSource:Tracker of e-commerce flagship stores,Strategy&analysis27QQiT)8A&B%9D9PIIaE7Top 5 SPUsCBottom 95%SPUs100%X5DX1X2X3X40%The high-performance DTC brands havemore balanced product portfolios in terms of sales contribution,achieving a long-tail effectMore than half of the other DTC brands overly relied on a few hit products-the top 5 SPUs contribute more than half of salesJune 2022;N=950%Top 5 totop 5%SPUsEnlighten Fashion Brands Routes to the DTC Model|Strategy&1415As mentioned above,an important lever for companies to create a morebalanced product portfolio is to better understand and respond to changes inmarket trends and demands,so that products can be converted to revenuerather than become useless stock.Then,how to realize that?We find thatoutperformers attach more weight to their capability of grasping market trends,and try to improve their products marketability from the perspective of users(outside-in)rather than the designer(inside-out).More specifically,the DTCoutperformers are better at perceiving changes in market trends and consumerdemands using big data,the Internet of Things and other digital technology.They can understand the market performance and consumer feedback of theirnewproductsmoreefficiently.Accordingly,theycanimproveproductportfolios,adjust clothes design and materials,andoptimize customerexperience,thus,driving sales synergy via product portfolios.These explainwhy outperformers can maintain strong competitiveness despite their variety ofSPUs and the complexityof the business.Lets look into the womens apparel industry.By trackingthe popular trends of silhouette dresses in the spring andsummer of 2022,we find that X-shaped and A-shapeddresses account for a relatively large share of sales,while S-shaped,T-shaped and O-shaped dresses salesalso grow rapidly at a rate of 30P%.It indicates thatthesetypesaremorepopularinthemarket.Outperformers tend to perceive the latest trends in time.For example,a womens wear brand launched a varietyof silhouette dresses in this years product portfolio,especially A-shaped,S-shaped and T-shaped dresses,each of which accounted for about 30%of the totalnumber of SPUs.This move was largely consistent withmarket trends.In contrast,its competitors relied more onthe designers experience and value proposition whendesigningproducts.Theirportfoliowasmainlyconcentrated on A-shaped and H-shaped dresses,whoseSPUsaccountedfor80%and20%respectively.Unsurprisingly,due to the difference in their ability toperceive changes in market demand,their sales werevery different-the womens wear brands top 1 SPU atthe flagship store sold nearly 10,000 pieces per month,and other SPUs also achieved good sales results.Incomparison,the top 1 SPU of its rivals only sold 200pieces in the same period,let alone other SPUs sales.“Case study:A womens apparel brand usedmarket insights to improve marketabilityStrategy&|Enlighten Fashion Brands Routes to the DTC Model1516II.Five constraints togrowthduringDTCtransformationEnlighten Fashion Brands Routes to the DTC Model|Strategy&1617Figure 7:Five typical factors challenging fashion companies DTC transformationHomogeneous user operations:Undifferentiated management of existing customers/membershipLack of synergy:Online and offline channels compete with each other and compromise profitsPoor experience:Separated design and management of online and offline experienceSingle data source:Focusing on internal data only and ignoring exterior data analysisUnresponsive supply chains:Failure to coordinate design,procurement,manufacturing and distributionFive typical factors challenging fashion companies DTC transformationOffline brand-owned stores guide potential customers to online stores01Product portfolio driven by real-time market insights contributes to balanced sales growth03Repurchase contributes more to the sales growth02Key success factors of the high-performance DTC brandsSource:Strategy&analysis12345To realize DTC transformation,fashion companies not only need to possess the three successfactors of outperformers mentioned above,but also overcome the challenges caused by differencesin business and operation models,managerial and digital capabilities,etc.There are five typicalchallenges:lack of synergy,poor experience,homogeneous user operation,single data source,andan unresponsive supply chain(see Figure 7).Strategy&|Enlighten Fashion Brands Routes to the DTC Model1718Companies often face conflicts when distributing product portfolios bothonline and offline.Some may adopt a very simple business logicmoveoffline best-selling products online in the hope of maximizing sales.Asonline stores often have to reduce prices under the pressure of e-commerce platforms for promotion,a product may sell for different priceson online and offline channels,leading to competition between the twochannels and limitedprofits.Here a womens shoe brand is taken as an example.The overlappedSPUs between its online and offline are up to 72%;half of the best-selling SPUs online can be found in offline stores;among the overlappedSPUs,nearly 70%also sell well offline.Furthermore,as the brands self-own e-commerce channel adopts the low-pricing strategy to attractpotential customers,the average difference between online and offlineprices is up to 42%.In this case,rational consumers prefer to“kick thetires offline and purchase online,which has caused huge profit losses tocompanies.In other words,the more the brand sells online,the greaterthe overall profit loss will be.Therefore,the lack of synergies betweenonline and offline channels and the“same product with different prices”strategy is obviously bad for companies.In the long term,it would bedifficult for them to maintainmarket competitiveness.Will a company be competitive if it adopts the“same product with sameprice”strategy?If a product sells for the same price everywhere,price-sensitive customers may choose where to buy more randomly.Forexample,they may buy a product in offline stores because of thechances to try it out,or go online considering the efficiency of delivery.However,it is worth noting that Chinas online and offline consumershave fundamentally different profiles,preferences and needs.For onlinebuyers,women,especially those women aged under 30,make up alarge share.Online buyers are more likely to make their own judgmentsand decisions based on product reviews given by other consumers oreven strangers,while offline buyers are more willing to talk with shopassistants and accept their recommendations.Therefore,adopting the“same product with same price”strategy alone is unlikely to improve theattractiveness and drive synergistic growth between online and offlinechannels.Here the scene of buying cosmetics is taken as an example.There is asignificant demographic difference between people who like shoppingoffline and those who prefer shopping online.Users in different channelsmay have fundamentally different preferences and needs in terms ofbrands,categories,packaging,andproductcombinationswhenpurchasing cosmetics.1.Lack of synergy:Online and offline channels compete with each other and compromise profitsEnlighten Fashion Brands Routes to the DTC Model|Strategy&1819Different from the first-hand experience”provided by brick-and-mortar stores,only second-handexperience such as fine-tuned pictures or videos is available for online shoppers.As a result,how toimprove potential customers awareness of the brand before they make a purchase decision isparticularly important for companies,especially for fashion categories such as clothing&shoes,andhome furnishing.However,many companies do not have effective means of managing userexperience and online and offlinecoordination.With the example of underwear products,when shopping online,consumers may wonder whether thesize is suitable or whether there are differences in size between different brands even if the brandsadopt the standard size measurement.Bad experiences such as size issues and mismatches cause alarge proportion of underwear return orders,which is one of the core pain points for online sales in thisindustry.Some brands have solved this problem to a certain extent by opening offline experiencestores,allowing users to try on them and find the most suitable size.But not all online users will visitofflinestores for this purpose.Apart from product selection,a big gap also exists between traditional brands and DTC brands inconsumer experience management.A typical example is the unboxing experience.Before receivingthe delivery,the users awareness of the brand and product is virtual(often gained through pictures,videos,etc.).The moment when the user opens the package is the first time consumers establishphysical perception,so the experience is very important.However,this point is ignored by manybrands,which dents the users value perception and satisfaction.Therefore,users will be less willing topost pictures of the product and recommend the brand to others.Some might even give a negativereview.Moreover,the consumer journey is becoming more and more randomized.In the past,consumersoften had a clear idea of what to buy,such as a pair of shoes and a piece of clothing.They often askedfriends for recommendations or searched for related information in forums,and then bought theproducts in department stores,shopping malls or other offline channels.However,as Gen Z andmillennials have become the main consumer group,they can be very random when choosing where tobuy,online or offline.Besides,they wont buy a product without being deeply attracted to it at first.Iffashion companies can not manage these user touchpoints well,they will be unable to providedifferentiated experiencesfor consumers,and,as a result,likely to lose potential customers.2.Poor experience:Separated design and management of online and offline experienceStrategy&|Enlighten Fashion Brands Routes to the DTC Model1920Although many fashion brands have increasingly valued customer repurchases and introducedmembership programs,they often fall into a homogeneous competition.Many brands set up pointaccumulation and redemption rules with basic membership levels and benefits.These membershipsystems are roughly similar and are often separate for online and offline stores,which fails to attractcustomers.In the absence of a differentiated loyalty program,the customer retention rate and the share ofrepurchase sales decline(see Figure 8).If a brand simply labels its customers based on basic userprofiles,and pushes coupons and point redemption notifications accordingly,it barely boosts theincrease in customer repurchase.3.Homogeneous user operation:Undifferentiated management of existing customers/membershipFigure 8:Number of repurchase consumers and repurchase sales contribution of brands without differentiated user operation 42%Customers52%SalesCustomerdistributionSales distributionCustomer and sales distribution of Tmall stores for a certain brand in the Year X 1Customer distributionSales distributionCustomer and sales distribution of Tmall stores for a certain brand in the Year X305%ExampleLabel customers by user profilePush coupons and point redemption notifications based on label screening What do customers expect from a brand?How to interact with customers based on their expectations?Is there continuous improvement in product and customer experience?More than onepurchaseOne purchaseMore than onepurchaseOne purchaseCustomersSalesSource:Strategy&analysisEnlighten Fashion Brands Routes to the DTC Model|Strategy&2021As most fashion companies relied on distributors for sales in the past,who only recorded point-of-sale(POS)data,details such as customer purchase behavior,customer profile and customer preferencewere often unavailable.Meanwhile,since brand-owned channels are new to most brands,they are stillunable to systematically acquire,integrate and utilize the data from these channels,resulting ininsufficient understanding of final consumers.Quite a number of brands collect the POS data andproduct category data from major e-commerce platforms,and use them to analyze owned businessesand competitors.However,due to requirements on data asset protection and data desensitization,thebrands cannot obtain detailed basic user data.Therefore,even if the brands have comprehensive data analysis teams and tools,they can hardlyperceive in-depth consumer insights and accurate demand forecasting due to the limited data sharedby the distributors or e-commerce platforms.In other words,knowing what customers have purchasedand how often they purchase is not enough for the brands to engage customers,meet their demandsand retain them.Furthermore,for self-owned channel or private traffic,brands can hardly leverage data to boostsustainable sales growth from products upgrade if they only focus on their own products and salesdata,and ignore market and competitor data.For example,designers and consumers often have different tastes in Martin boots.Designers tend tomake masculine Martin boots with sharp lines,in a way different from the ideal boots for women usersof e-commerce platforms.Martin boots that sell well have small and round toes,and are streamlinedrather than angular heels.In summary,only brands that utilize both internal and external data canrealize data-driven valuecreation.4.Single data source:Focusing on internal data only and ignoring exterior data analysisStrategy&|Enlighten Fashion Brands Routes to the DTC Model2122Traditionally,the supply chain of apparel&footwear is driven by order-placing conferences andpersonal experience instead of the market.In a typical supply chain lifecycle of this industry,forexample,the preparation for the launch of new spring products in February-March of 2023,often startsin August-September of 2022.At first,the designer needs to decide new products to be developed(e.g.,selecting 300-500 prototypes from 1,000 proposed ones).Then,the brands will hold order-placing conferences with distributors,sales teams and operation teams in advance where participantsselect new products based on their understanding of user preference,popular trends and customercharacteristics in their own sales areas.After that,the brands decide which new products to launchand how many quantities to produce based on distributors and regional sales teams order placement.Finally,the brands inform procurement and manufacturing departments to initiate their work.It takesabout 5-6 months for the new products to be officiallylaunched(see Figure 9).5.Unresponsive supply chains:Failure to coordinate design,procurement,manufacturing and distributionFigure 9:Four stages of typical supply chain lifecycle in the apparel&footwear industryCurrentfashion trendStoreStoreStore.About 170 daysDesign and development90-120 daysProcurement15-20 daysManufacturing60-90 daysDeliveryabout 7 days20-30 days for inventory replenishmentAbout 80 days for reproductionHow to deal with stockout during the short online hot-selling period?Typical supply chain challengesIn case of offshore outsourcing production,the preparation needs to start earlier to ensure sufficient shipping time(e.g.around 1 month is required from China to the United States by ocean shipping)Source:Strategy&analysisOn theone hand,competition is getting fiercer on the supply side.To win the competition,brands haveto stand out both in efficiency and differentiated product innovation.On the other hand,fashion trendsvary according to market dynamics on the demand side.For example,weak economic growth leads tothe“lipstick effect”,and the colors of new smartphones may affect the fashion trend.It is incredibly hardto forecast fashion trends or hot-selling elements in a relatively distant future.Therefore,it is verychallenging to boost sales by taking the DTC model only as a way of changing sales channels,if thefashion industry fails to build shorter supply chains that are more responsive in terms of speed andflexibility.Enlighten Fashion Brands Routes to the DTC Model|Strategy&2223III.Eight pillars forDTC fashion brands to unleash growthStrategy&|Enlighten Fashion Brands Routes to the DTC Model2324Figure 10:Eight pillars for building new capabilities of DTC fashion brandsPrioritize user segmentationLeverage key cities as retail touchpointsCoordinate online and offline product portfoliosDeliver superior customer experience and interactionFront-end strategies of DTC modelBack-end coordination of DTC modelReshape business processUtilise digitalsystems and toolsHarness computing power and algorithmsRejuvenate organizationsReach more customers with fewer touchpoints:leverage the metropolitan areas role in driving consumption of surrounding areas,achieving synergistic growth in DTC model through fewer experience stores in central citiesMeet the demands and preferences of different online and offline customers,make online and offline products complement each other,and balance product portfolios salesMake the most of data insights to further segment target customers,both online and offline,and identify their divergent demands,preferences,as well as expectations on value propositions“Surpass customer expectations”:brand owned stores need to provide not only excellent product and service experience,but also deliver surprises in the customer journeyFor example,the DTC model of the apparel&footwear industry requires more accurate understanding of customer demand,more intelligent decision-making process and quicker responses,which will reshape the traditional OTC processAdvanced Internet-of-Things(IoT)applications and application management systems(e.g.,ERP and MES)are necessary for the front end to connect with users and perceive their needs,and for the supply chain at the back end to respond and collaborate effectively.As business complexity and response speed increase,computing power and algorithm need to be upgraded via cloud computing,big data and AI.To enhance market insights perception,response speed and seamless collaboration,enterprises should break internal and external boundaries,ensure high flexibility and vitality in decision-making and implementation,and reform organizational structures12453687Based on our practice of empowering fashion companies,we suggest that DTC fashion brands rollout a slew of consistent business strategies to enable organic growth.Furthermore,efforts should bemade in coordinating the 8 key factors through front-end strategies and back-end coordination.As forthe 8 key factors of building new DTC capabilities,we call them“eight pillars”(see Figure 10).Enlighten Fashion Brands Routes to the DTC Model|Strategy&2425Pillar 1:Prioritize user segmentationEven in an era of personalized and diversified consumption,the rule of birds of a feather flocktogether remains unchanged,especially in the fashion industry.Fashion consumption represents thepursuit of specific popular elements and value propositions shared among a particular group of people.For DTC retail,consumers of different channels,online or offline,are diverging.Yet,it is impossible forenterprises to use digital technologies to satisfy the unique needs of every customer,considering thesubstantial operation cost and the inherent collectivity of fashion consumption.Therefore,to realize DTC transformation,fashion brands should further segment existing and potentialcustomers to developdifferentiated strategies and tactics(see Figure 11).1.Front-end strategies of DTC modelFigure 11:Examples of user segmentation at different marketing levelsStrategic perspective(4-16 segments)DemographyRegionCustomer valuexxxTactical perspective(16-70 segments)Attitude/psychologyPraxiologyMicro perspective(10-100 segments)Adoption of several methods togetherMacro perspective(2-6 segments)Enterprise and consumerOpportunity related to wealthOne-on-one perspective(100 1,000,000 segments)Individual customer Business strategy Branding/mass marketing Retail/consultancy Overall marketing strategy Business and resource allocation Direct mail marketing campaign High-level product development Typical product development Direct marketing via low/medium-cost channels“Pocket”behavior identification Product differentiation/customization Direct marketing via low-cost channels Marketing driven by realtime reasoning High-value/highly interactive activity Supply and marketing of highly automated/large-scale customized productsLevel of wealthLevel of wealth:Rich,fairly well-off,average,etc.Categories of investable assets or financial assetsTendency to increase or decrease financial assetsGeographyRegion:continent,country,state,community,etc.Scale of metropolitan cityDensity of population:downtown,suburb,rural area,etc.Population statisticsAge,generationGenderFamily sizeMarriage statusFamily informationIncomeOccupationEducationAttitude/psychologicalcharacteristicsActivity/interestOpinion/demandAttitudeValueProfitability/customer valueRevenue,cost,profitability,customer lifetime valueProfit contribution of individual customers or familiesTendency to increase profit margin/or valueEach segment can be defined from aspects below:Prefered purchase/interaction channelsPreference for online or offline purchaseKnowledge sharing platformShort video platformSocial media platforms such as WeChatTypical segmentation:Source:Strategy&resource libraryStrategy&|Enlighten Fashion Brands Routes to the DTC Model2526For example,when evaluating market opportunities and positioning anew self-owned store for market entry under DTC model,enterprisesare more concerned about macro factors such as regional demographiccharacteristics,consumption level and demand.However,from the pointof brand marketing,it is impossible to impress all target groups identifiedby marketing strategies.Therefore,enterprises should further segmentconsumers from the perspectives of attitude,motivation,etc.,therebylocating further segmented customers that highly identify with their brandvalue propositions.Then,it is much easier to acquire a wider range ofconsumers with the influence of these precisely reached and deeplyimpressed groups of consumers.As mentioned above,online and offline consumers of DTC brands aredifferentiated and diversified.It is inevitable that online and offline storeshave overlapped customers in regard to customer convenience andcoordination between channels.However,considering complementarityand differentiated competition,online stores need to target differentcustomers from offline stores.In particular,to avoid the phenomena ofprice is everything or online stores compete for offline hot products,itis crucial for the brands to engage differentiated and segmented onlinecustomers,and closely connect them with brands valuepropositions.Overall,to meet granularity requirements for customer segmentation atdifferent business levels,the brands should collect multi-dimensionalcustomer data for DTC transformation by leveraging digital technologiesand direct connection with customers.This requires the brands to collectand update the data through more customer interactions.Furthermore,on the premise of data security and privacy protection,the brandsshould effectively integrate and utilize the data to explore segmentedand extended consumer behavior insights.Enlighten Fashion Brands Routes to the DTC Model|Strategy&2627Pillar 2:Coordinate online and offline product portfoliosMany offline shoppers have turned to online stores due to the recurrent outbreaks of Covid-19.In thethird year of the pandemic,these new online customers have become regular ones.Therefore,theDTC channels have seen a growing number of customers shopping both online and offline,besidesthose that switch between online and offline channels for price differences.In light of this,fashionbrands should provide a certain proportion of SPUs to sell both online and offline to meet the demandsof overlappedcustomers,considering trafficdirection,availabilityand convenience.In 2022,there were over 840 million online shoppers in China,of which Millennials and Gen Z made upthe majority.They are willing to pay premiums for the appearance,experience,quality and reputationof products.Meanwhile,young online shoppers are more willing to evaluate products through variousonline social platforms,search engines and e-commerce platforms.Then they can make independentpurchase decisions rather than just take the advice of salespeople at physical stores.This brings newopportunitiesfor DTC brands to develop online SPUs with differentiatedexperience and quality.To build more responsive supply chains,it is practical and effective to provide a certain portion of thesame SPUs for all channels,and develop differentiated product portfolios for different channels.Interms of traditional procurement and production,scale is a top priority.Keeping an appropriateproportion of SPUs to sell both online and offline can expand production scale,improve capacityutilization and reduce unit production cost.Moreover,the scale of differentiated online SPUs will berelatively small,hence,more flexible production and inventory management are required.Althoughflexible production and inventory might increase the overall cost of the supply chain,these productshigh gross profitsrate can cover the extra cost of the supply chain,making sustainable profits.In conclusion,brands should meet the demands and preferences of differentiated online and offlinecustomers with product portfolios for complementarity and differentiated competition,and balanceproduct portfoliosfor sales growth according to market trends.Strategy&|Enlighten Fashion Brands Routes to the DTC Model2728Pillar 3:Leverage key cities as retail touchpointsTo leverage the consumption-boosting effect of city clusters(metropolitan areas),fashion DTC brandsoften open a limited number of experience stores in first-and second-tier cities to drive theconsumption of surrounding areas and the sales growth of online channels.Unlike linear growthachieved by adding the number of stores,this model helps to gain strong growth momentum and ahigh conversionrate.PwC recently released Cities of Opportunity 2022.The report analyzed 47 cities,covering central andnode(“radiated”)cities of Chinas major city clusters in the Beijing-Tianjin-Hebei region,the YangtzeRiver Delta,the Guangdong-Hong Kong-Macao Greater Bay Area,the Chengdu-Chongqing economiccircle,the middle reaches of the Yangtze River,the central Henan province,the Guanzhong Plain,etc.Three noteworthy features of city clusters strongly support us to leverage key cities for consumption-boosting effect:cities within the cluster are closely linked in terms of economy and infrastructure(about1-hour travel by high-speed railway between cities);culture and customer preferences are similar in theregion;the brands of central cities have dominant advantages in leading and driving the consumptionof surrounding cities.Leveraging key cities as retail touchpoints,the DTC brands can invest resources for stores in centralcities and rely on these stores to reach customers of surrounding cities.But if the brand operates astore in the central city with a traditional model,the store cannot deliver a leverage effect.As previouslymentioned,more and more high-performance DTC brands are opening experience stores,so as torealize multi-dimensional interactionwith customers.We have summarized the major functionsof experience stores as“RCES”:Diversified interactions in the store will further enhance customer acquisition and conversion.Meanwhile,user-generated content(UGC)and media communication will strengthen the role of centralcities in driving surrounding cities:on the one hand,a rising number of visitors from satellite cities willbe attracted to visit the offline experience stores;on the other hand,more online followers can beconverted into fans and purchasers directly through the shortest link”(i.e.,DTC e-commerce stores).Therefore,brands should stick to enhancing customer acquisition and conversion by establishingtouchpoints for a close-loop business,so as to provideleveragefor the DTC retail model.Retail:Customization:Experience:Service:Sell core products and their spin-offsProvide offline body-measurement service,booking fortailored and personalized product customizationProvidebrand,product and lifestyleexperienceProvide fashion outfit advice,personalized productselection,membership service,etc.Enlighten Fashion Brands Routes to the DTC Model|Strategy&2829Pillar 4:Deliver superior customer experience and interactionWe have described the importance of experience and interaction for self-owned stores.The storesshould deliver not only products and experiences with high quality,but also surprises in the customerjourney,so as to outperform their competitors.Above all,we suggest that brands“build omni-channel service platform”(see“a”in Figure 12).Onlineand offline stores are not separate but sharing customers.It is essential for these stores to renderconsistent online and offline DTC experiences,e.g.offline store pickup for online orders,delivery fromnearby stores,online booking for in-store fitting,and other services.Even the simplest coordinatedservices require the brands to realize system integration,enable data sharing and align salesmanagement at front-and back-ends(we will discuss it from the aspect of back-end coordination later).Otherwise,no progress will be made.Figure 12:How to deliver consistent DTC experienceDifferentiated online customer journeyLocalized content for the homepage of brand and storePersonalized search resultCustomized online productAR/VR(virtual fitting room,etc.)AI(personalized recommendation,chatbot,virtual agent,etc.)Differentiated offline store experienceUnique characteristics of the storeAR and 3D holographic product categoryIntelligent in-store fitting room mirrorCustomized product displayScanning by mobile APP to add to favorites,search,buy and shareBooking for in-store fittingIn-store experience of presale itemsDigital service areaHome delivery for in-store purchaseOmni-channel retail platformAdequate in-store stockIn-store return and replacementHome deliveryLoyaltyReal-time customer supportBuild omni-channel service platformbaDeliver differentiated and customized experienceStrategy&|Enlighten Fashion Brands Routes to the DTC Model2930Moreover,brands should deliver differentiated and customized experience for online and offlinecustomers(see part“b”in Figure 12).The key is to overcome the limitations of online and offlineshopping experience.For example,virtual reality(VR)and augmented reality(AR)technologies,suchas virtual fitting rooms,can provide highly immersive and multisensory customer experiences andfacilitate more informed decisions.A home-furnishing retailer integrates AR technology into its App tohelp shoppers visualize products in their homes,which contributes to positive consumer reviews and ahigher conversion rate.Digital technologies can also be used by brick-and-mortar stores to improve product selectionexperience and service efficiency.On the one hand,due to the limited shelf space of traditional fashionshops,most of the products are stacked on the shelves instead of being fully displayed to attractconsumers.Also,apart from product appearance,consumers are increasingly concerned about detailssuch as fabric,material source,design philosophy,etc.If users can scan the display shelves and seethe 3D presentation of related products via AR technology,they will get extraordinary experience anddetailed information for product selection.On the other hand,processes such as payment,productreturn and replacement in fashion shops used to be handled manually.At peak hours,customerscannot be served in time,resulting in long waiting time.Based on the application of radio frequencyidentification(RFID)and other smart label technologies,brand-owned stores can install self-servicecashiers,which can improve payment and packaging efficiency and collect user profiles and dataseamlessly,leading to further digitalization.Enlighten Fashion Brands Routes to the DTC Model|Strategy&3031Pillar 5:Reshape business processDTC brands need more agile business processes to stay ahead of the competition and meet fast-changing customer demands.For example,to adopt the DTC model,apparel&footwear companiesneed to have more accurate understanding of customer demand,more intelligent decision-makingprocess and quicker response to the market.They should also reshape the core business processregarding the order-placing conferences(i.e.,45 the process from order-placing to cash flowgenerating)to better match the business strategy at the front end.Enabled by digital technologies,DTC brands should establish an agile supply chain that candynamically perceive demands and market changes to optimize product design,procurement andproduction,making product portfolio and production more flexible.Brands can adjust product design and procurement according to the changes in consumer demand,while adopting the flexible production principle of“multiple batches and small quantities”.For hotproducts,brands should follow up existing orders and arrange production for additional orders in atimely manner,while utilizing materials of unpopular products to manufacture popular ones.This cangreatly reduce unsaleable inventoriesand increase the profitsof best-selling products.As is shown in Figure 13,if the business process can be reshaped based on customer demand ratherthan the traditional order placing meeting,the production cycle of the initial order for new products canbe shortened to 1-2 months.Brands can lower the proportion of products manufactured for the initialorder(for certain brands,the ratio is 50 %Digital supply chain 2 monthsTraditional supply chain10%Note:We do not include factors such as brand diversification,product and regional market penetration in the business growthstrategyStrategy&|Enlighten Fashion Brands Routes to the DTC Model3132Pillar 6:Utilise digital systems and toolsEnterprises need systems and tools for continuous DTC empowerment after reshaping businessprocess.Application of IoT applications and management systems,such as ERP(enterprise resourceplanning)and MES(manufacturing execution system),is necessary for the front end to perceiveconsumers demands,and for the supply chain to respond and collaborate at the back end.Notably,the traditional front-end digital systems are fragmented and isolated,as different channels andregional teams may have their own digital systems and platforms.It creates difficulties for front-andback-end coordination.Besides,it is detrimental to business expansion due to the lack ofresponsiveness to market changes,and is challenging to improve operational efficiency due toinsufficient data sharing(e.g.,membership management,inventory,orders and products).Therefore,a digital platform is attached with great importance to utilize digital systems and tools.It canmake data links shorter and operational response quicker,and facilitate efficient and coordinated digitalmanagement,as well as continuous innovation(see Figure 14).Essential functions of a digital platforminclude:Figure 14:The digital platform for DTCFront-endusers:staff and customerDigital systems that support the DTC modelIT systemB2C/B2B e-commerceO OservicePOSIntelligence retail terminalFacial recognitionAPPMini programsTouchpoints across the value chainDashboardROI-based marketingPublic opinionanalysis.Open service|APP registration|Service call|Product serviceInventory serviceOrder serviceMembership serviceReporting service.Business systemBusinessapplicationCRMSCRMDMSTPM.BusinesscenterOrder centerMember centerBenefits centerDistribution centerContent centerProduct centerCustomer service centerPoints centerERPPLMWMS/TMSSCMOAFINMESOthersData systemDataplatformCDPMA.Data integrationData governanceData warehouseAlgorithm modelData lineageOneIDDataassetQuickly adapt to different channels and customer service platformsFlexibly manage business lifecyclesQuickly integrate multi-source heterogeneous and discrete information and share business dataInnovate for flexible expansion,and simplify the logic of back-end developmentBroadly utilize realtime computing,big data analysis and coordinated planningSource:Strategy&analysisEnlighten Fashion Brands Routes to the DTC Model|Strategy&3233Pillar7:HarnesscomputingpowerandalgorithmsIt is impossible for an analyst to constantly generate front-endinsights through one-time data analysis.Instead,algorithms arerequired to discover,respond to and solve problems.In addition,large-scale computing relies on computing power.Due to thecomplexity of business and the demand for quicker response,computing power and algorithm need to be iterated and upgraded,with the help of cloud computing,big data and AI.Fashion brands can use cloud computing,big data and AI to makethe DTC model more intelligent,with respect to users,productsand services.Analyze customer preference and behaviors through big data,segment customers according to brand strategy,and forecastcustomer behaviorsfor products recommendation.Realize data harmonization and integration among differentplatforms,develop360customerprofiles,andidentifycustomers pain points and insights through multi-channelcollaborationfor experience optimization.01User level Track sales of goods,forecast shelf sales ratio and adjustsupply chains in a timelymanner.Develop new products by digging into trending products fromdifferent dimensions such as color,silhouette and fashiontrend.02Products level Deliver excellent in-store experience with technologies.Forexample,use robots to interact with consumers and serve asshopping guides.Realize omni-channel customer interaction,connection andtransfer,such as differentiated membership management,andmutual traffic-direction of customers between online and offlinechannels.03Service levelStrategy&|Enlighten Fashion Brands Routes to the DTC Model3334Pillar 8:Rejuvenate organizationsToenhancemarketinsights,responsespeedandseamlesscollaboration,enterprises should break both internal and externalorganizational boundaries,build flexibility and vitality into decision-making and implementation,and reform organizational structures.Asthe DTC model functions via organizational arrangements,it is crucialfor brands to optimize organizational structure and make it compatiblewith the DTC model to realize cross-sector coordination.Wehavetworecommendationsforcompaniestooptimizeorganizational structure:1Builduser-centricorganizations.Generally,businessunitsaredividedbasedonstaffsfunctionsandspecialization.For a complex business that requirescross-function coordination,it sets positions like productmanagers and brand managers to coordinate differentteams,e.g.product design team,marketing team andsales team(see Figure 15).However,the DTC modelimposes new management challenges.For example,aspecializeduserexperiencemanagementteamisnecessary for the whole customer journey(i.e.,beingattracted purchasing promoting products to others-interacting with brands becoming loyal customers),which is ignored by many brands.Under the DTC model,organizationsneeduser-centricandresults-orientedmanagement across multiple functions.Therefore,a neworganizational structure is needed to promote seamlessinternal coordination and execution.Enlighten Fashion Brands Routes to the DTC Model|Strategy&3435Figure 15:Transform into a user-centric organizationFunctionCapability-based organizationTraditional function-based organizationSenior executivesBoard of DirectorsBusiness units/regionResults-oriented teamSolution developmentHuman resourcesFinanceMarketing.Total quality managementCustomer experience managementInnovation.Business units/regionFunction/shared serviceHuman resourcesFinanceLegalMarketing.Business units/regionBusiness units/region.Senior executivesBoard of DirectorsBusiness units/regionBusiness units/region.Headquarters functionCorporate strategyCorporate financePublic relations.Headquarters functionCorporate strategyCorporate financePublic relations.Focus more on users and marketsto meet customer demands by integrating different capabilitiesNarrow the scope of work and focus more on core functions such as investor relations managementStrategy&|Enlighten Fashion Brands Routes to the DTC Model35362Alignorganizationalgoalswithperformancemanagement.DTCpracticedoesnotmeansimplifyingitsorganizationalstructure.Ifenterprises only divide sales teams based on onlineand offline channels and set separate goals forthem,these teams can easily become potentialcompetitors of each other.DTC brands can setconsistent goals for sales teams and help themgain a holistic view.On the one hand,brandsshould develop a top-down holistic strategy tofacilitatefront-endcoordination,includingthecoordination between product portfolios,touchpointcities,and delivery of the experience.On the otherhand,brands should break the overall goal intoseveralsub-goalsforbettercoordination.Forexample,all the online and offline sales teamsshould have two KPIsthe revenue goal of theirown channel and their contribution to the revenueof other channels.As for performance evaluationand incentive mechanism,brands can evaluatebusiness units and staff based on these KPIs andtheir weights,and use them as key indicators forperformancerewards and other variableincentives.Enlighten Fashion Brands Routes to the DTC Model|Strategy&3637ConclusionFashion brands,and even all consumer goods companies,cannotimprovetheirsalesperformanceovernightviaDTCtransformation.They should respond agilely to market dynamicsregarding emerging consumer segments,consumption paradigms,channels,and marketing approaches,while making trade-offsbasedontheirexistingbusinessmodels,organizationalcapabilities and digital technologies.Therefore,we suggest fashion brands strengthen the top-leveldesign,make a clearer strategic positioning,and transform step-by-step under the guidance of a business roadmap,to betterimplementtheaforementioned“eightpillars”forDTCtransformation.Realize front-and back-end transformation andbusiness coordination at a fast but steady pace;rely on digitaltechnologies,computing power and algorithms;pivot on userexperience management,membership-specific operation and datainsights;andcreatenewcompetitivemoatsbyconstantlyaccumulating and utilizing user pool and data assets.All of theseenable companies to outperform their competitors in the surgingwave of digital transformation.Strategy&|Enlighten Fashion Brands Routes to the DTC Model3738Strategy&is a global strategy consulting business uniquelypositioned to help deliver your best future:one that is built ondifferentiationfrom the inside out and tailored exactlyto you.As part of PwC,every day were building the winning systems thatare at the heart of growth.We combine our powerful foresight withthis tangible know-how,technology,and scale to help you createa better,more transformative strategy from day one.As the only at-scale strategy business thats part of a globalprofessional services network,we embed our strategy capabilitieswith frontline teams across PwC to show you where you need togo,the choices youll need to make to get there,and how to get itright.The result is an authentic strategy process powerful enough tocapture possibility,while pragmatic enough to ensure effectivedelivery.Its the strategy that gets an organization through thechanges of today and drives results that redefine tomorrow.Itsthe strategy that turns vision into reality.Its strategy,made real.Please see for further details.Strategy&Enlighten Fashion Brands Routes to the DTC Model|Strategy&3839 2023 PwC.All rights reserved.PwC refers to the PwC network and/or one or more of its member firms,each of which is a separate legal entity.Please see for further details.Mentions of Strategy&refer to the global team of practical strategists that is integrated withinthe PwC network of firms.For more about Strategy&,see.No reproduction is permitted in whole or part without writtenpermission of PwC.Disclaimer:This content is for general purposes only,and should not be used as a substitute for consultation with

1人浏览 2023 年 3 月 20 日 40页 5星

英敏特：2023“放纵”与理性消费平衡报告（英文版）（10页）.pdf

Ειδικοί στο τι θέλουν οι καταναλωτές και γιατί. Εξισορρόπηση της απόλαυσης και της αξίας για τα χρήματα: Αυστραλία, μια εξερεύνηση του Mintel Purchase Intelligence. Καθώς αυξάνεται η πίεση στο κόστος ζωής, οι καταναλωτές επικεντρώνονται πολύ στις τιμές. Στην Αυστραλία, το 42% των καταναλωτών συμφωνεί ότι η χαμηλότερη τιμή από άλλα προϊόντα είναι ένας σημαντικός δείκτης κατά την αγορά τροφίμων/ποτών. Ευτυχώς, οι κατηγορίες τροφίμων/ποτών πολυτελείας μπορούν να προσφέρουν προσιτές τιμές ακόμα και σε δύσκολες στιγμές. Στο Ηνωμένο Βασίλειο, το 75% των καταναλωτών γλυκών μπισκότων συμφωνεί ότι τα γλυκά μπισκότα είναι μια προσιτή απόλαυση. Ωστόσο, οι καταναλωτές θα κοιτάξουν πέρα ​​από τις αγαπημένες τους μάρκες για να εξοικονομήσουν χρήματα. Στον Καναδά, το 56% των καταναλωτών σοκολάτας/ζαχαροπλαστικής είναι πλέον πιο πρόθυμοι να αντικαταστήσουν τις αγαπημένες τους μάρκες για να εξοικονομήσουν χρήματα. Η μείωση της αφοσίωσης στην επωνυμία προσφέρει στις ιδιωτικές ετικέτες την ευκαιρία να δελεάσουν με επιλογές απόλαυσης που προσφέρουν μεγαλύτερη χρηματική αξία. Η πίεση των τιμών αναγκάζει τους καταναλωτές να γίνουν καταναλωτές πρόθυμοι να αγοράσουν. Βάση: Αυστραλία: 1.000 χρήστες Διαδικτύου ηλικίας 18 ετών. Ηνωμένο Βασίλειο: 2.000 χρήστες του Διαδικτύου ηλικίας 16 ετών και άνω. Καναδάς: 1.777 χρήστες του Διαδικτύου ηλικίας 18 ετών και άνω που έφαγαν σοκολάτα ή καραμέλα τους τελευταίους τρεις μήνες. Πηγή: Dynata/Mintel, Kantar Profiles/Mintel 202275% των καταναλωτών γλυκών μπισκότων στο Ηνωμένο Βασίλειο συμφωνούν ότι τα γλυκά μπισκότα είναι μια προσιτή απόλαυση.2 Στην Αυστραλία, το 30% των καταναλωτών θα αγόραζε περισσότερη ιδιωτική ετικέτα για να εξοικονομήσει είδη παντοπωλείου/ποτά. Υπάρχει μια ευκαιρία για τους λιανοπωλητές να βοηθήσουν τους καταναλωτές να κάνουν μια χάρη στον εαυτό τους που είναι εύκολο με τα ήδη κουρασμένα πορτοφόλια. Η αυστραλιανή εταιρεία λιανικής Coles κυκλοφόρησε τη σειρά Indulgent Mousse με τη δική της μάρκα Coles Finest. Η σειρά περιλαμβάνει SKU: Mixed Berries & Belgian Chocolate Mousse, Alphonso Mango Mousse και Salted Caramel & Belgian Chocolate Mousse. Κάθε SKU κοστίζει 4 $ AUD για τέσσερις μους. Η τιμή του 1 $ ανά μους βοηθά στην ενθάρρυνση της ανταγωνιστικής πρόθεσης αγοράς για τη σειρά. Το 44% των Αυστραλών καταναλωτών λένε ότι είναι πιθανό/σίγουρα να αγοράσουν τη σειρά, σε σύγκριση με το 43% των Αυστραλών καταναλωτών που λένε ότι είναι πιθανό/σίγουρα να αγοράσουν προϊόντα στη συνολική κατηγορία μους. Συγκεκριμένα, η σειρά αρέσει στο 72% των Αυστραλών καταναλωτών, σε σύγκριση με το 70% των καταναλωτών που τους αρέσουν γενικά τα προϊόντα της κατηγορίας μους. Το 57% των Αυστραλών καταναλωτών πιστεύει ότι η ποιότητα της γραμμής είναι σύμφωνη με την αντιληπτή ποιότητα των προϊόντων σε όλη την κατηγορία μους. Πώς διαβάζω αυτόν τον πίνακα; Δώστε στα πορτοφόλια και τις κοιλιές σας την πολυτέλεια μιας ιδιωτικής ετικέτας. Παρατηρήστε πού το μωβ υπερισχύει του μπλε. Αυτό δείχνει μια ισχυρότερη απόδοση για τη σειρά Coles Finest Mousse όσον αφορά τα μεμονωμένα χαρακτηριστικά σε σύγκριση με την κατηγορία μους. Προσθέστε αξία στη δική σας επωνυμία με κορυφαίες συσκευασίες. Οι Αυστραλοί καταναλωτές που περιγράφουν γιατί θα αγοράσουν τη σειρά Coles Finest Mousse αναφέρουν προληπτικά τη συσκευασία ως λόγο αγοράς. Η πιθανότητα αγοράς φαίνεται να αυξάνεται από το γεγονός ότι τα προϊόντα είναι επώνυμα Coles, τα οποία οι καταναλωτές συνδέουν με χρηματική αξία. Βάση: Αυστραλία: Χρήστες Διαδικτύου 16+ (300 βαθμοί Coles Finest Mousse, 1.300 βαθμοί κατηγορία Mousse) Πηγή: Mintel Purchase Intelligence, 2022 "Feels like it belongs." στο MasterChef. Διαθέτει πολύ επαγγελματικό πακέτο. Ως επωνυμία Coles, δεν περιμένω να είναι υπερτιμημένο, καθώς θα αγόραζα απευθείας από την πηγή.» Male, Queensland, 16-34, κριτικές Coles Finest Indulgent Salted Caramel & Belgian Chocolate Mousse «Το υπέροχο πακέτο και η γνώση Being A Coles brand σημαίνει καλύτερη σχέση ποιότητας-τιμής». Γυναίκα, VIC, 35-54, εξετάζει το Coles Finest Indulgent Alphoso Mango Mousse Γνώμη αναλυτή: Γιατί η απόδοση του Coles Finest Mousse είναι ενδιαφέρουσα; Η κατηγορία μους περιλαμβάνει πολλές premium μάρκες που χρησιμοποιούν ποιοτικά συστατικά για να ενισχύσουν τους ισχυρισμούς τους για απόλαυση. Μια νέα σειρά ιδιωτικών ετικετών που θεωρείται ισότιμη όσον αφορά την ποιότητα και την αντιληπτή απόλαυση αποδεικνύει ότι η προσφορά προϊόντων προσελκύει την προσοχή των καταναλωτών για όλους τους σωστούς λόγους. Οι συσκευές αναπαραγωγής FMCG (μάρκες, συσκευασίες) ή κατασκευαστές συστατικών) μπορούν να μάθουν από αυτό ποια στοιχεία αυτής της ποικιλίας απευθύνονται στους καταναλωτές. Σε αυτήν την περίπτωση, η συσκευασία με κορυφαίες συμβουλές σε συνδυασμό με μια επωνυμία σούπερ μάρκετ εγγυάται απόλαυση, ποιότητα σηματοδότησης και χρηματική αξία. 4 Αξιοποιήστε τα ίδια κεφάλαια επωνυμίας για να απολαύσετε συνεργασίες με τη γκάμα Gippsland Dairy Darrel Lea - 3,81 AUD Οι επωνυμίες που επιθυμούν να ανταγωνιστούν τις πολυτελείς ιδιωτικές ετικέτες σε δύσκολες οικονομικές περιόδους μπορούν να χρησιμοποιήσουν τα ίδια κεφάλαιά τους για να ενθαρρύνουν τις δοκιμές μέσω συνεργασιών. Για παράδειγμα, στις ΗΠΑ, το 28% των καταναλωτών συμφωνεί με επιλογές co-branding (π.χ. με M&Ms, Little Debbie). Παρακινήστε τους να αγοράσουν περισσότερες παγωμένες λιχουδιές. Στην Αυστραλία, η Gippsland Dairy συνεργάστηκε με τον Darrel Lea για να λανσάρει μια σειρά από γιαούρτια με το ίδιο σήμα. Κυκλοφόρησαν τρία SKUS: Caramel Craving, Rocklea Road και White Choc Raspberry. Η τιμή είναι 3,81 AUD το καθένα. Το 58%* των Αυστραλών καταναλωτών θα δοκίμαζε σίγουρα/μάλλον αυτή τη σειρά, σε σύγκριση με το 47% που δηλώνει ότι θα δοκίμαζε προϊόντα στην κατηγορία γιαουρτιού με μία μεζούρα γενικά. Η σειρά ξεπερνά επίσης το σημείο αναφοράς της κατηγορίας γιαουρτιού μίας μερίδας όσον αφορά την πρόθεση αγοράς, την αντιληπτή απόλαυση και την αντίληψη της αξιόπιστης επωνυμίας. %*47CTQD%0.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00. Lenut-fermented-related to country perception-perception Dayoyo να εμπειρία γιατί εξηγείτε γιατί πρέπει να δοκιμάσετε Gippsland dary x αναλογίες θα αγόραζε. Η Lea σημειώνει την ελκυστικότητα του να βλέπεις μαζί δύο γνωστές μάρκες. Η αξιοπιστία της επωνυμίας ενισχύει την ελκυστικότητα "Αυτό το προϊόν φαίνεται πολύ νόστιμο και απολαυστικό." .Μου αρέσει επίσης που είναι μια συνεργασία με τον Ντάρελ Λία. Σε κάνει πιο ελκυστικό. . Έχει νόστιμη γεύση.” Ms, Victoria, 35-54, κριτικές Gippsland Dairy x Darrel Lea Caramel Craving YogurtMust Miss Brand Collaboration «Rocklea Road Chocolate with Gippsland Yoghurt and Yoghurt. Πότε είναι η ώρα;» δημοσίευσε? Πρέπει να δοκιμάσω αυτό το προϊόν."Male, Queensland, 35-54, Κριτικές Gippsland Dairy x Darrel Lea Rocklea Road YoghurtΈνας συνδυασμός επωνυμίας παραδείσου"Δύο φανταστικές μάρκες μαζί κάνουν ένα νόστιμο γιαούρτι. Μάλλον θα αγόραζα αυτό το προϊόν. «Γυναίκα, Νότια Αυστραλία, 55, που αναλύει Gippsland Dairy x Darrel Lea Rocklea Road Yoghurt Γνώμη αναλυτή: Γιατί είναι ενδιαφέρουσα η απόδοση της σειράς Gippsland Dairy x Darrel Lea; επικίνδυνο όταν τα οικονομικά είναι στενά. Η συγκέντρωση δύο δημοφιλών εμπορικών σημάτων για μια νέα γκάμα απολαύσεων μπορεί να προσφέρει στους καταναλωτές κάτι νέο για να απολαύσουν, αλλά υποστηρίζεται από μια αίσθηση εμπιστοσύνης που απορρέει από προηγούμενες θετικές εμπειρίες με κάθε μεμονωμένη μάρκα.*Η διαφορά μεταξύ της βασικής ομάδας και της ομάδας αναφοράς είναι στατιστικά σημαντική σε επίπεδο εμπιστοσύνης 95%. Βάση: Αυστραλία: Χρήστες Διαδικτύου ηλικίας 16 ετών (τιμή 300 Gippsland Dairy x Darrel Lea, κατηγορία γιαουρτιού με 2.500 μεμονωμένες μερίδες) Πηγή: Mintel Purchase Intelligence, 2021-22 Βάση: ΗΠΑ: Χρήστες Διαδικτύου ηλικίας 21 ετών (τιμή 100 για κάθε προϊόν) Πηγή: Mintel Purchasing Intelligence, 2022 Αντίληψη: 71% Οι μίνι μορφές μπορούν να προσθέσουν αξία και ευκολία Στον Καναδά, το 49% των καταναλωτών σοκολάτας/ζαχαροπλαστικής προτιμούν οι εταιρείες να μειώσουν το μέγεθος της σοκολάτας/ζαχαροπλαστικής που πωλούν αντί να αυξήσουν τη ζήτηση τιμών. Με τη μείωση του μεγέθους της συσκευασίας, οι επωνυμίες μπορούν να βοηθήσουν στη διατήρηση των χαρακτηριστικών ποιότητας/γεύσης που περιμένουν οι καταναλωτές τους, παρέχοντας παράλληλα οικονομική αξία. Στις Ηνωμένες Πολιτείες, η Baileys κυκλοφόρησε το Minis SKU, το οποίο αποτελείται από τρία μπουκάλια των 100 ml με τιμή 11,99 $ ΗΠΑ. Το 50% των καταναλωτών των ΗΠΑ θα αγόραζε σίγουρα/πιθανότατα το προϊόν, σε σύγκριση με το 38% που λέει ότι θα αγόραζε το μπουκάλι του 1,75 λίτρων (τιμή στα 48,99 $). Οι μίνι μορφές αυξάνουν τη νομισματική αξία, η οποία αντικατοπτρίζεται στην υψηλότερη πρόθεση αγοράς. Λύνουν επίσης ένα πρόβλημα σπατάλης και ανοίγουν νέους τρόπους κατανάλωσης: "Καταρχάς, πολύ βολικό! Μου αρέσουν τα Baileys, αλλά δεν πίνω ποτέ πολλά ταυτόχρονα, οπότε το γεγονός ότι είναι προσαρμοσμένα στο γούστο μου είναι υπέροχο." , 21-34, βαθμολογεί το Baileys Minis "Ωραία συσκευασία. Ποτέ δεν αγοράζω Baileys επειδή έχουν λήξει. Μικρά μπουκάλια όπως αυτό κάνουν πιο πιθανό ότι δεν θα πάνε χαμένα." Άντρας, Νότια, 35-54 ετών, αξιολογεί το Baileys Minis8Γνωρίζουμε ποια νέα προϊόντα θέλουν να αγοράσουν οι άνθρωποι και γιατί. Δοκιμάζουμε διαφορετικές έννοιες πριν βγουν στην αγορά. *Κατανοήστε γιατί το προϊόν σας υπολειτουργεί και πώς να το κάνετε επιτυχημένο. Αποκτήστε ανταγωνιστικό πλεονέκτημα συγκρίνοντας τα προϊόντα των ανταγωνιστών σας με τα δικά σας. 1.233 εκατομμύρια προοπτικές καταναλωτών κάθε χρόνο 30.000 προϊόντα τροφίμων και ποτών για τις ΗΠΑ και την Αυστραλία. Κάθε πάνελ αποτελείται από 100 καταναλωτές. Ανάλυση πριν και μετά την κυκλοφορία στην αγορά. Κατάταξη ανταγωνιστών. Αξιολογήσεις ποικιλίας και διαπραγματεύσεις πωλήσεων. προγραμματισμός καινοτομίας. ΤΙ ΜΠΟΡΕΙΣ ΝΑ ΚΑΝΕΙΣ. Η άμεση ανταπόκριση των Αυστραλών καταναλωτών, η πρόθεση αγοράς και οι αντιλήψεις για τα λανσαρίσματα τροφίμων και ποτών. Διατίθενται λεπτομέρειες προϊόντος, οικογένεια επωνυμίας και επίπεδο κατηγορίας.* Μπορεί να παρέχονται με επιπλέον κόστος9 2023 Mintel Group Ltd. Με την επιφύλαξη παντός δικαιώματος. Σχετικά με την MintelMintel είναι ειδικοί στο τι θέλουν οι καταναλωτές και γιατί. Ως κορυφαίος οργανισμός έρευνας αγοράς στον κόσμο, η ανάλυσή μας για τους καταναλωτές, τις αγορές, τις καινοτομίες προϊόντων και τα ανταγωνιστικά τοπία προσφέρει μια μοναδική προοπτική για τις παγκόσμιες και τις τοπικές οικονομίες. Από το 1972, οι προγνωστικές μας αναλύσεις και οι συμβουλές ειδικών έχουν δώσει τη δυνατότητα στους πελάτες μας να λαμβάνουν καλύτερες και ταχύτερες επιχειρηματικές αποφάσεις. Στόχος μας είναι να βοηθήσουμε τις εταιρείες και τους ανθρώπους να αναπτυχθούν.

8 人看过 2023 年 3 月 20 日 10页 5星

GWEC：发展中国家利用风能的经济机会 2023（英文版）（74 页）.pdf

GWEC.NETCapturing economic opportunities from wind power in developing economiesReport March 2023Capturing green recovery opportunities from wind power in developing economies2Disclaimer Copyright February 2023This document contains forward-looking statements.These statements are based on current views,expectations,assumptions and information of GWEC and the Authors.GWEC,the Authors and their employees and representatives do not guarantee the accuracy of the data or conclusions of this work.They are not responsible for any adverse effects,loss or damage in any way resulting from this work.Permissions and UsageThis work is subject to copyright.Its content,including text and graphics,may be reproduced in part for non-commercial purposes,with full attribution.AttributionCapturing economic opportunities from wind power in developing economies.Global Wind Energy Council.2023.AuthorsThis report was commissioned by the Global Wind Energy Council and authored by BVG Associates.The lead authors of this report were George Hodgkinson and Patrick Browne of BVG Associates.AcknowledgmentsThis report was edited by Reshmi Ladwa and Joyce Lee of the Global Wind Energy Council.We are grateful to the following individuals and organisations for their input to this report:Argentina:CEA(Camara Eolica Argentina)Colombia:SER(Colombia Asociacin energas renovables)Egypt:Infinity Power Indonesia:UPC Renewables Morocco:SGREImage creditsGWEC.NET3ForewordThe window of opportunity to accelerate wind energy for a more resilient and sustainable future is closing fast.We now less than seven years from 2030,a key moment on the energy transition journey.Three years ago,as widespread lockdowns caused a dramatic reduction in carbon emissions,the wind industry joined climate scientists and concerned civil society groups to warn governments that without decisive action to phase out fossil fuels,emissions would quickly rebound to pre-pandemic levels.Post pandemic,in February 2022 the Russian invasion of Ukraine added another layer to the energy challenge,forcing energy security to the front of policymakers minds.The twin crises of climate change and energy security were now joined together by their shared solution.As we enter 2023,we are seeing coal powered generation reaching a record peak,natural gas prices at all-time highs andas predicted emissions rebounding alongside economic recovery.This comes at a time when wind energy has never been more price competitive.There are reasons to be optimistic however,as the policy environment evolves to enable the development in both emerged and emerging economies.This report looks at five countries where a strong policy environment can deliver enormous benefits for the local economy as well as delivering tangible benefits for local communities.Wind energy delivers wide-ranging benefits,from job creations to saving water.That makes wind energy particularly beneficial for developing economies addressing the phase out of fossil fuels alongside economic growth,a growing demand for electricity and the challenge of energy security.Wind projects have shown a significant cost reduction in established markets over the past twenty years.This report shows how support from government,through policy certainty and government commitment,can help new industries avoid the risk of higher potential costs.Wind energy also has the benefit of being predictable,as there are no fuel costs once installed so governments can benefit from that stability.This report looks at five countries Argentina,Colombia,Egypt,Indonesia,and Morocco that have significant and largely untapped wind resource potential.The report aims to demonstrate the huge socioeconomic benefits that wind energy development can deliver alongside the positive environmental outcomes.This report identifies three common hurdles for policymakers trying to accelerate the deployment of wind energy and outlines how to overcome those challenges.The wind industry has demonstrated its pivotal role in supporting thriving local economies through skilled jobs creation and the maintaining of critical infrastructure while dramatically contributing to reducing carbon emissions and delivering clean,affordable and secure energy.GWEC will continue to collaborate with governments to ensure that the world is well equipped to harness the full socioeconomic benefits of the energy transition.GWEC.NET5Contents1.Introduction 132.General barriers to wind energy deployment 15Country study:Argentina 20Current situation 20Case study-PEPE III wind project 24Recommendations for wind acceleration 25Project pipeline scenarios 25Impacts analysis 27Country study:Colombia 30Current situation 30Case study La Guajira wind farm 34Recommendations for wind acceleration 35Project pipeline scenarios 36Impacts analysis 37Country study:Egypt 40Current situation 40Case study West Bakr Wind Farm 43Recommendations for wind acceleration 44Project pipeline scenarios 44Impacts analysis 46Country study:Indonesia 50Current situation 50Case study Sidrap Wind Farm 54Recommendations for wind acceleration 55Project pipeline scenarios 55Impacts analysis 56Country study:Morocco 60Case study Midelt wind project 63Recommendations for wind acceleration 64Project pipeline scenarios 64Impacts analysis 65Conclusion 70Capturing green recovery opportunities from wind power in developing economies6List of figuresFigure 1 Countries examined in this study.17Figure 2 Argentina electricity energy mix by source.21Figure 3 Forecast of installed capacity in Argentina in the two scenarios.26Figure 4 FTE years created in the business-as-usual scenario in Argentina.27Figure 5 FTE years created in the wind acceleration scenario in Argentina.27Figure 6 Gross value added created in the business-as-usual scenario in Argentina.28Figure 7 Gross value added created in the wind acceleration scenario in Argentina.28Figure 8 Colombia electricity energy mix by source.31Figure 9 Forecast of installed capacity in Colombia in the two scenarios.36Figure 10 FTE years created in the business-as-usual scenario in Colombia.37Figure 11 FTE years created in the wind acceleration scenario in Colombia.37Figure 12 Gross value added created in the business-as-usual scenario in Colombia.38Figure 13 Gross value added created in the wind acceleration scenario in Colombia.38Figure 14 Egypt electricity energy mix by source.41Figure 15 Forecast of installed capacity in Egypt in the two scenarios.45Figure 16 FTE years created in the business-as-usual scenario in Egypt.46Figure 17 FTE years created in the wind acceleration scenario in Egypt.47Figure 18 Gross value added created in the business-as-usual scenario in Egypt.47Figure 19 Gross value added created in the wind acceleration scenario in Egypt.48Figure 20 Indonesia electricity energy mix by source.51Figure 21 Forecast of installed capacity in Indonesia in the two scenarios.55Figure 22 FTE years created in the business-as-usual scenario in Indonesia.56GWEC.NET7List of TablesFigure 23 FTE years created in the wind acceleration scenario in Indonesia.56Figure 24 Gross value added created in the business-as-usual scenario in Indonesia.57Figure 25 Gross value added created in the wind acceleration scenario in Indonesia.57Figure 26 Moroccos electricity energy mix by source.61Figure 27 Forecast of installed capacity in Morocco in the two scenarios.65Figure 28 FTE years created in the business-as-usual scenario in Morocco.67Figure 29 FTE years created in the wind acceleration scenario in Morocco.67Figure 30 Gross value added created in the business-as-usual scenario in Morocco.67Figure 31 Gross value added created in the wind acceleration scenario in Morocco.67Table 1 Summary of wind growth impacts in business-as-usual scenario versus wind acceleration scenario for 2023-2027 12Table 2 Argentina targets.21Table 3 Forecast of installed capacity in Argentina in the two scenarios.26Table 4 Colombia targets.31Table 5 Forecast of installed capacity in Colombia in the two scenarios.36Table 6 Egypt targets.41Table 7 Forecast of installed capacity in Egypt in the two scenarios.45Table 8 Indonesia targets.51Table 9 Forecast of installed capacity in Indonesia in the two scenarios.55Table 10 Morocco targets.61Table 11 Forecast of installed capacity in Morocco in the two scenarios.65Capturing green recovery opportunities from wind power in developing economies8GlossaryABEElicaAssociao Brasileira de Energia ElicaANEELNational Electric Energy Agency(Brazil)BAUBusiness as usualBNDESNational Bank for Economic and Social Development(Brazil)COP2626th Conference of the PartiesCO2eCarbon dioxide equivalentCPPACorporate power purchase agreementEPEEnergy Research Office(Brazil)ESKOMElectricity Supply Commission(South Africa)EVOSSEnergy virtual one stop shopFTEFull time equivalentGDPGross domestic productGHGGreenhouse gasesGRSGreen recovery scenarioGVAGross value addedGWECGlobal Wind Energy CouncilIEAInternational Energy Agency IPPIndependent power producerIRENAInternational Renewable Energy AgencyMMEMinistry of Mines and Energy(Brazil)NDCNationally determined contributionNERSANational Energy Regulator of South Africa PDETen-Year Energy Expansion Plan(Brazil)PPAPower purchase agreementPROINFAIncentive Program for Alternative Sources of Electric Energy(Brazil)SAWEASouth African Wind Energy AssociationUNFCCCUnited Nations Framework Convention on Climate ChangeGWEC.NET9EXECUTIVE SUMMARYCapturing green recovery opportunities from wind power in developing economies10An increasing number of countries are recognising the key role of wind energy in supporting a global clean energy transition,in energy security,and achieving stable energy prices.The urgency to scale up clean power generation and shift away from unabated coal power were key elements of the Glasgow Climate Pact,endorsed at COP26 summit in November 2021 by the nearly 200 countries signed up to the Paris Agreement.This was further cemented at the COP27 summit in Sharm El-Sheikh,held in November 2022.Renewable energy is a component of the Nationally Determined Contributions(NDCs)for most of the Parties to the Paris Agreement,and more than 100 Parties have a quantified clean power target within their NDCs.To reach our shared global goal of limiting temperature rise by the end of the century to 1.5C,the volume of annual wind energy installations must scale up roughly four times over the next decade.This is a huge challenge which will require shared vision and collaboration between governments,industry,and society.Given the urgency of the energy transition,it is vital that the deployment of wind energy does not face unnecessary delays due to resolvable challenges,such as bureaucratic permitting procedures and market barriers to investment.The resources and coordination required for this scale of action have been stretched over the last few years,due to the COVID-19 pandemic and recent commodity price increases.This challenge is particularly acute in developing economies,where public spending and policy response have focused on short-term protections of society and economy.As countries learn to manage the difficulties of the pandemic and economic activity returns,it is time to undertake the actions which will benefit society and economy in the long term.Wind energy can play a vital role in improving a countrys energy There is a growing mismatch between energy transition ambitions,net zero targets and market realities,however.Accelerated deployment of renewable energy,and particularly large-scale sources of clean power like wind and solar energy,are needed worldwide to limit the most harmful impacts of climate change.GWEC.NET11security and increasing its energy independence.This has been highlighted by Russias invasion of Ukraine in February 2022,following which many countries have examined their own balance between energy imports and exports.Countries reliant on fossil fuel imports are vulnerable to sudden changes in trade agreements and volatile international pricing markets.Wind energy offers a secure,reliable and affordable long term source of clean power generation.Wind energy also provides a boost to economic activity.Wind energy projects generate significant amounts of capital expenditure and create jobs and other economic benefits for local economies through their construction and operation.The opportunities in developing economiesThere is a growing body of evidence which shows that wind energy can help governments accelerate a green economic growth,and form a bedrock for sustainable economic growth in the future.The benefits of wind energy are wide-ranging and expand beyond clean power generation.They include sustainable job creation,public health cost savings which would be spent redressing the impacts of fossil fuel generation,water consumption savings which would otherwise be used for thermal generation,and a significant capital injection in a local value chain.The sector is particularly attractive for developing economies which need to phase out fossil fuels while maintaining economic growth,meeting fast-growing electricity demand,safeguarding energy security and prices.To decarbonise power,transport and heating is expected to significantly increase electricity demand.For example,the UK has legally committed to achieve net-zero in 2050 and it is expected to have about the same end user demand then as it has now.To achieve net-zero it will require 3 times as much energy supplied in the form of electricity than it is now.Almost all wind projects installed between 2023 to 2027 will still be generating in 2050 and contributing to achieving net-zero.Wind energy has achieved significant cost reduction and technological excellence over the past two decades,establishing it as a proven and market-ready alternative to fossil fuels.While costs might initially be higher in developing economies where the wind industry is new due to factors such as less experienced personnel,start-up costs,initial investment uncertainty and lack of established supply chain these costs can quickly reduce with government commitment,policy certainty and market forces.Wind energy has no fuel costs so once installed its costs remain stable and predictable.This report reflects a study of wind energy potential in developing economies around the world over the next five years,2023-2027,with the aim to highlight the vast and largely unexploited socioeconomic and environmental opportunities attached to wind energy.Accelerated deployment of wind projects will not only support climate action,but help countries to realise a range of benefits from job creation to cleaner air.The study identifies three common barriers facing wind energy deployment in developing economies and provides recommendations on how these barriers can be overcome.Five developing economies in particular were selected as country studies:Argentina,Colombia,Egypt,Indonesia,and Morocco.These were selected because they have significant and still largely untapped wind energy resource.Findings of the study:upsides of accelerated wind deployment in a wind acceleration scenarioThe findings of this study,summarised in Table 1 below,show that a wind acceleration scenario of wind deployment from 2023-2027 would realise tremendous socioeconomic benefits for each country.For developing economies facing the difficult balance of ensuring economic growth while maintaining energy security and resilience,investment in the wind sector offers a pathway to a robust and sustainable recovery.Capturing green recovery opportunities from wind power in developing economies12Table 1 Summary of wind growth impacts in business-as-usual scenario versus wind acceleration scenario for 2023-2027.Country2023-2027New wind installations(MW)FTE jobs created over wind farm lifetimes(jobs)Gross value added to economy over wind farm lifetimes($)Homes powered by clean energy annually from 2027(homes)Tons of carbon emissions saved over wind farm lifetimes(tons)Litres of water saved annually from 2027(litres)ArgentinaBAU1,500112,0003.3 billion1.7 million71 million12 millionWind Acceleration1,965176,0004.7 billion2.2 million93 million16 millionPotential Upside46564,0001 billion 0.5 million21 million4 million%increase31WE001%ColombiaBAU2,700191,0004.9 billion5.5 million233 million15.5 millionWind Acceleration3,900339,0008.1 billion7.8 million336 million22.5 millionPotential Upside1,200148,0003 billion 2.3 million103 million7 million%increase44weCDD%EgyptBAU2,602242,0003.5 billion6.5 million225 million21 millionWind Acceleration3,758406,0005.6 billion9.2 million326 million31 millionPotential Upside1,158164,0002.1 billion 2.8 million101 million10 million%increase45hCEE%IndonesiaBAU45034,0001.2 billion1 million23 million2.6 millionWind Acceleration56551,0001.6 billion1.2 million29 million3.2 millionPotential Upside11517,000400 million 0.2 million6 million0.7 million%increase26P6$&%MoroccoBAU1,50099,0002.1 billion4.7 million77 million8.6 millionWind Acceleration2,138174,0003.4 billion6.6 million110 million12.3 millionPotential Upside63875,0001.3 billion 1.9 million12.3 million3.7 million%increase43vcBC%GWEC.NET13While this report includes only five country studies,similar socioeconomic benefits can be achieved by other countries.A previous report in early 2022 studied this for Brazil,India,Mexico,South Africa and The Philippines,published by GWEC in February 2022.The study analysed international experience of the onshore wind industry and found that typically a 1 GW/year installation rate over 5 years could unlock nearly 157,000 new jobs and$13.8 billion gross value added(GVA)to national economies over wind farms lifetime,among other benefits.Recommendations to support wind growth in developing economiesIn the course of the study and conversations with industry and investment experts around the world(see the Methodology in Appendix A),several barriers to wind energy deployment were identified that are common to developing economies.The most significant common barriers are a lack of clear policy commitment,insufficient transmission system infrastructure,limited investment in grid upgrade and expansion,and complex regulatory frameworks.Addressing these barriers proactively,in coordination with the wind energy industry and other relevant stakeholders,can support accelerated deployment of wind energy and a wind acceleration in developing economies.Policy commitment:provide clarity and ambition for wind energyLack of policy commitment to consistently promote and enable wind energy is a barrier to wind energy deployment common to many developing economies.In many countries,governments remain committed to conventional fossil fuel-based electricity generation,particularly if it is a good source of foreign investment.Even in countries where the government is positive towards renewable energy,there can be a lack of enabling policy frameworks and regulation to adequately support investment in wind energy and other renewables.Invest to expand transmission system infrastructureWind energy projects rely on land availability,wind resource,and grid connection points.This means that projects cant always be developed in areas where the grid is well developed.This is particularly an issue for multi-island nations like Indonesia,in which the countrys best wind resources can be found on sparsely populated islands.In many countries,development of transmission system infrastructure is coordinated by a separate organisation to that for the development and planning for electricity generation.In other countries the governance of the transmission system and generation is split into regions.This fragmentation can lead to the transmission system not being efficiently developed in the optimal areas or at the necessary time for connecting wind energy projects,which can delay the deployment of new capacity,raise investment risk and hamper efforts to meet targets.Greater public and private investment in secure,smart and flexible grids which enable ever-larger shares of renewable energy is necessary to meet the urgent pace of the energy transition.Simplify permitting frameworks for renewable energyToo many countries are unable to leverage the enormous interest from investors to deploy wind energy projects due to inefficient permitting schemes.Frameworks for leasing,permitting,and power procurement can be overly complex and bureaucratic,which can delay wind energy deployment if projects cannot obtain the necessary permits and approvals in a sensible timeframe.These processes can cover spatial planning,environmental and social impact assessment,planning authorisation,grid connection,and legal challenges to project proposals.In many countries,developers must submit documents and applications to multiple national and local agencies.A lack of clarity on procedures and timelines and poor coordination between agencies and jurisdictions leads to delays,uncertainty,and inefficiencies.Capturing green recovery opportunities from wind power in developing economies14Based on industry experience to date,a country which installs 1 GW of onshore wind energy capacity per year from 2023 to 2027 could unlock a range of socioeconomic and environmental benefits*:The resulting 5 GW of wind energy:A total of 130,000 jobs during the development,construction,and installation phase of the wind farms 28.8 million litres of water saved annually from 2026 US$12.5 billion gross value added(GVA)to national economies over the lifetime of the wind farmsPower 4.9 million homes with clean energy per year from 2026 12,000 local jobs annually during the 25-year operations and maintenance phase of the wind farms 240 million metric tons of carbon emissions equivalent saved of carbon emissions over the lifetime of the wind farms Mitigates 240 million metric tons of CO2 emissions over the lifetime of the wind farms,which is the equivalent of:83.5 million return flights from New York to Sharm el-Sheikh Taking 53 million internal combustion engine cars off the road for one yearPlanting and maintaining 6.4 million trees for 10 years*Assuming a cost of 2 million/MW,and 25 years of operation.Assumes all major components are sourced in country,except for the turbine,where we assume only blades and towers manufactured locally.One job is defined as full-time employment for one person for one calendar year.GWEC.NET15Capturing green recovery opportunities from wind power in developing economies16An increasing number of countries have set wind energy targets in the coming decades,recognising wind energys key role in supporting a clean energy transition and achieving Nationally Determined Contributions(NDCs)and net zero targets under the Paris Agreement.The importance of energy security has also been brought into sharp focus in light of February 2022 Russian invasion of Ukraine.It is widely acknowledged that wind energy can play a key role in improving a countrys energy security,increasing self-reliance and providing a sustainable,reliable and affordable source of clean electricity generation independent of future fossil fuel prices and their associated uncertainty.Also in many countries,onshore wind power is the cheapest form of electrical energy.The development of wind energy also can be a major boost to economic activity forming a bedrock for sustainable economic growth.This is particularly critical given the current global energy crisis and volatility of energy markets around the world.The International Energy Agencys(IEA)recent World Energy Outlook 20221 asserts that current events are a reminder of the vulnerabilities of the current global energy system,and will fast-track structural change towards the clean energy transition.This report provides a:Study of wind energy potential in five developing economies around the world over the next five years,with the aim to highlight the vast and largely unexploited socioeconomic,energy security-related,and environmental opportunities attached to wind energy.Discussion of the common barriers facing wind energy deployment in developing economies,and Recommendations on how these barriers can be overcome.1 International Energy Agency,World Energy Outlook 2022,October 2022,available online at:https:/report examines five developing economies,as shown in Figure 1.These countries were selected because they face particular socio-political and economic challenges which threaten to slow down the clean energy transition,as well as for having significant and still largely untapped wind energy resource.A previous report in early 2022 provided likewise for Brazil,India,Mexico,South Africa and The Philippines.2 Since then the relative economics of wind power has increased further,making the transition to wind more cost effective.2 GWEC,Capturing Green Recovery Opportunities from Wind Power in Developing Economies,Feb 2022,available online at:https:/on offshore windGiven the five-year horizon and the countries selected for study,only onshore wind capacity and no offshore wind capacity has been included into the analysis of the countries discussed.While offshore wind makes up zero or a small proportion of the wind capacity in each of the countries discussed,all of the countries have significant offshore wind potential which could be realised in the coming decades.This is particularly the case for Argentina.Many of the broader recommendations made in this document are relevant for offshore wind.1.IntroductionGWEC.NET17Figure 1 Countries examined in this study.Capturing green recovery opportunities from wind power in developing economies18While the benefits of wind energy are great and numerous,there are a number of barriers to sector development which are common to the five countries selected for this study,as well as many developing economies around the world.Lack of clear policy commitmentLack of policy commitment to consistently promote and enable wind energy is a barrier to wind energy deployment common to many developing economies.In many countries,governments remain committed to conventional fossil fuel-based electricity generation,particularly if it is a good source of foreign investment.Even in countries where the government is positive towards renewable energy,there can be a lack of enabling policy frameworks and regulation to adequately support investment in wind energy and other renewables.A clear route to market is needed to decrease investment risk and cost of capital for developers.Similarly,long-term ambitions for wind energy ease pressures on local investment in a supply chain.Governments must increase wind power ambition and reflect this in updated NDCs and targets,comprehensive national climate strategies,and short-and long-term energy plans.The Glasgow Climate Pact called upon all Parties to COP to submit updated and strengthened NDCs by COP27.Beyond NDCs,national visions or policies should include concrete wind energy capacity or generation targets,with a clear,detailed timeline and a roadmap to achieve installation volumes.Insufficient transmission system infrastructure and investmentWind energy projects rely on land availability,wind resource,and grid connection points.This means that projects cant always be developed in areas where the grid is well developed.This is particularly an issue for multi-island nations,in which the countrys best wind resources can be found on sparsely populated islands.In many countries,development of transmission system infrastructure is coordinated by a separate organisation to that for the development and planning for electricity generation.In other countries the governance of the transmission system and generation is split into regions.This fragmentation can lead to the transmission system not being efficiently developed in the optimal areas or at the necessary time for connecting wind energy projects,which can delay the deployment of new capacity,raise investment risk and hamper efforts to meet targets.Greater public and private investment in secure,smart and flexible grids which enable ever-larger shares of renewable energy is necessary to meet the urgent pace of the energy transition.Forward-planning of transmission network expansion and investment in developing the network should be accelerated to increase the potential sites developers will consider for wind projects,as well as to avoid delays and grid congestion in the future.Through pooling expertise among system operators,regulators and utilities,public authorities can undertake long-term forward-planning on grid expansion and reinforcement,electrification of transport,as well as creating regional markets for power export and trading.2.General barriers to wind energy deploymentGWEC.NET19Complex permitting frameworks Too many countries are unable to leverage the enormous interest from investors to deploy wind energy projects due to inefficient permitting schemes.Frameworks for leasing,permitting,and power procurement can be overly complex and bureaucratic,which can delay wind energy deployment if projects cannot obtain the necessary permits and approvals in a sensible timeframe.These processes can cover spatial planning,environmental and social impact assessment,planning authorisation,grid connection,and legal challenges to project proposals.In many countries,developers must submit documents and applications to multiple national and local agencies.A lack of clarity on procedures and timelines and poor coordination between agencies and jurisdictions leads to delays,uncertainty,and inefficiencies.For onshore wind projects,permitting can take more than 8 years in Spain,Italy,Greece,Sweden,Belgium(Flanders)and Croatia,including the time taken by any legal challenges,according to WindEurope.In Japan it can take up to 5 years to complete the complex environmental impact assessment process.Policymakers must ensure that bureaucracy and red tape are not obstructions to achieving energy and climate goals.Lack of a consistent,clear permitting process adds risk for investors and developers and adversely impacts industry confidence in a country.Frameworks related to permitting,leasing,and auctions should be simplified to increase wind energy deployment.Consider establishing a single agency,or one-stop shop,to manage and coordinate all documentation and applications to greatly help simplify processes.Strong coordination between different framework administrators is key.This includes administrators of leasing,permitting,revenue support,and other frameworks,and ministries responsible for energy and environment.This ensures that processes fit well together,and that each can cater for the volumes of projects progressing.Capturing green recovery opportunities from wind power in developing economies20Current situationArgentina has some of the best wind resources in the world,with high wind speeds and extremely high potential capacity factors of up to 70%,as well as large amounts of open space for wind farm development.The largest contributors to Argentinas electricity mix are currently natural gas and hydropower.On average,Argentina produces 500,000 barrels per day(bpd)of oil,of which around 20%is exported.Despite this,Argentina is a net importer of fossil fuels.Inflation in Argentina has been rising for several years and is forecast to average 98%for the year 2023,causing economic uncertainty.These macroeconomic conditions,as well as turbulent financial markets,dampen investor confidence.Appetite for investment is still present,however,due to Argentinas huge technical potential and growing energy demand.The move to renewable energy will reduce the dependence on fossil fuels for power generation and the rising costs associated with natural gas and oil,as well as unleash international investor confidence in the growing renewables sector.Argentina currently has 3,300 MW of installed onshore wind capacity,and is forecast by GWEC to install around 300 MW per year under a business-as-usual scenario from 2023 to 2027.Under an accelerated transition scenario,if barriers to policy frameworks,transmission infrastructure and permitting schemes were resolved,Argentina could install 31%more onshore wind energy capacity in the next five years.Energy mix and targetsArgentina ratified the Paris agreement on the 21st of September 2016.It has an NDC to reach net-zero carbon emissions by 2050.It has set the goal of not exceeding the net emission of 349 MtCO2e in 2030,which is a 19%reduction compared to peak levels set in 2007.In 2015,the Government passed Law 27.191,which sets a non-hydro renewable energy target of 20%by 2025 with the potential of 25%by 2030.Of this,65%will be wind power.Relevant targets are shown in Table 2.COUNTRY STUDY ArgentinaArgentina currently has 3,300 MW of installed onshore wind capacity,and is forecast by GWEC to install around 300 MW per year under a business-as-usual scenario from 2023 to 2027.GWEC.NET21With increased focus these targets are realistic,as wind energy has been steadily increasing as a proportion of the total mix over the past five years.Continuation of this progress depends on the state of the local economy,however.Table 2 Argentina targets.Parameter2030 targetReduction of emissions intensity compared to 2007 levels(NDC as of November 2021)19%Share of non-fossil fuel sources(non-hydro)in installed electricity capacity mix20%(2025)Share of wind power in installed electricity capacity mix13%Argentinas electricity energy mix and dependence on natural gas and oil is shown in Figure 2.In 2020(most recent data available),the share of non-hydro renewables was 7.4%of the total mix.Figure 2 Argentina electricity energy mix by source.040801201602000 090199520002005201020152020Electricty generated(TWh)Share of electricity mixSource:IEACoalOilNatural gasBiofuelsNuclearHydroWindSolar PVTotalCapturing green recovery opportunities from wind power in developing economies22Economic stimulus and laws for clean energyVital to wind development in Argentina is Law 27.191(2015),which established a framework for renewable energy development.Central to this was the creation of the Renewable Energy Trust Fund(FODER)which is used to provide payment guarantees and project finance to renewable energy developers.This law grants multiple tax incentives to wind developers.These include:Accelerated depreciation of assets VAT refunds on pre-COD purchases Tax deduction of all financial expenses Extension of income tax loss credits to 10 years,and 20%tax credit available to local independent power producers that achieve 30%local content.The Ministry of Energy and Mines(MINEM)sets energy sector policies and oversees their implementation.The local wholesale market,Mercado Electrico Mayorista(MEM)is administered by state utility CAMMESA which is owned by MINEM(20%)and private sector companies(80%).To reduce the production of GHG associated with its energy generation,the Government created the RenovAr program in 2016,which aims to increase the development of renewable energy projects through competitive auctions and to establish 20-year power purchase agreements(PPAs)between renewables projects and CAMMESA.This programme seeks to increase the bankability of projects through a few measures:Payment and liquidity guarantee from FODER Provision of dispatch priority to renewables projects,and Issue of PPA tariffs in$USD that are payable in ARS.Since its launch in 2016,the RenovAr program has awarded 244 renewable energy projects,achieving 6.3 GW of installed capacity throughout its auction rounds of which 74%has been wind.In response to recent political and economic uncertainty that saw several large-scale projects fail to reach financial close,and in a bid to better utilise Argentinas medium voltage grid network,Round 3 of the RenovAr aimed at incentivising small-scale decentralised projects up to 10 MW in capacity.GWEC.NET23Current barriers to wind energyGrid development A programme of expansion across the countrys high voltage and medium voltage grid networks is urgently required to support the planned expansion of wind energy.Though proposals have been brought forward by regulators,substantial progress in this area has been slow,mostly due to embedded government bureaucracy and lack of government focus.Investment environmentInflation in Argentina for 2022 averaged approximately 75%and has been over 40%since 2019.This has created an unstable environment for investors.Developers have been able to help account for these inflationary pressures through contracting strategies,but problems are compounded by foreign exchange limitations that are enforced as a legacy of recent financial instability.These limitations prevent investment dollars from being expatriated outside Argentina to preserve the financial strength of the Argentine Peso,and severely dampen investor appetite in the region as any profits or revenue cannot be converted to other currencies.This restricts the amount of foreign investment in the country,the financing options available to developers,and the extent to which equipment can be purchased overseas.It has limited involvement in the market to smaller national power providers and limits the scope for private overseas investment in critical high-voltage network upgrades needed to accommodate future growth.Changes to auction eligibilityLarge wind projects(larger than 10 MW)were excluded from the latest round of the RenovAr programme,which is targeted at small scale de-centralised generation projects.Wind projects are less attractive at this scale as economies of scale during maintenance are not possible.Although large scale wind projects can still find a route to market via the MATER framework,which seeks to incentives corporate PPAs between developers and large users of power with average demand more than 0.3 MW,the rate of project development under this framework has historically been slow.Capturing green recovery opportunities from wind power in developing economies24Case study PEPE III wind project 3 Pampa Energa,Pampa Energa Wind Farm III(PEPE III),available online at:https:/Vestas,New 106 MW order extends Vestas Argentinean leadership,May 2018,available online at:https:/5 Cmara Elica Argentina,Activity,available online at:https:/.ar/?page_id=6076 The PEPE III wind project is the twin to its predecessor PEPE II,located off 3 km from the City of Bahia Blanca,a province of Buenos Aires.This project was commissioned in 2019 and came into operation in 2020.As of 2021 both PEPE II and III are authorised under the International Renewable Energy Certificates(IREC)standard.As of 2020,the installed capacity can generate 243GWh of clean power.3 This generation comes from the 53 MW of capacity produced by 14 wind turbines procured from Vestas.4While the job creation from this exact project is not entirely clear,there has been significant value created,reflected in investment in the wind industry of approximately$4.6 billion since 2016.Argentina being Latin Americas second largest producer of wind this is a positive signal that a significant work force will be required.PEPE III is one of many projects in nine provinces in Argentina which have collectively contributed towards the mitigations of over 5.8 million tonnes of CO2 emissions annually.5GWEC.NET25Recommendations for wind acceleration Allow the expatriation of the revenue and profit of wind projects in dollars.This will greatly improve investor appetite as the chances of wind projects succeeding will not be tied down directly to the local economy.Incentivise the next round of the RenovAr programme to allow for small and medium sized decentralised projects(up to 50 MW).This will continue the best use of Argentinas medium voltage grid network,while increasing the capacity of most projects slightly to further accelerate wind capacity and encourage the shift to a high voltage network.Larger projects will also increase the need and incentive to develop a skills base in Argentina.Improve wind industry visibility by establishing an auction pipeline with at least a 34 year timeframe.This will allow developers time to prepare their bids,increase investor certainty and increase competition in the market by de-risking the market for smaller developers.A longer-term auction framework can also support more efficient coordination with grid planning.Increase coordination between strategic grid development and future energy generation plans,to streamline future grid connection planning for wind energy projects.The planning timelines for grid connection should be aligned with the implementation of grid augmentation,as well as the shift from the current medium voltage grid to high voltage.Construction of additional substations should be prioritised to ensure that renewable energy can be integrated across different regions of the country.Project pipeline scenarios The methodology for these scenario forecasts is in Appendix A.In the business-as-usual scenario we forecast that almost 1.5 GW of wind capacity will be installed between 2023 and 2027.If wind is accelerated and barriers are removed,we forecast a fast acceleration of wind capacity from Capturing green recovery opportunities from wind power in developing economies262025 which would result in almost 2 GW being installed between 2023 and 2027 a potential upside of 500 MW.The greatest difference is seen in 2027,and this trend is expected continue past 2027.0.00.20.40.620232024202520262027Capacity installed(GW)Year of installationBusiness as usualWind accelerationFigure 3 Forecast of installed capacity in Argentina in the two scenarios.Table 3 Forecast of installed capacity in Argentina in the two scenarios.New wind installed capacity(MW)20232024202520262027Business as usual300300300300300Wind acceleration300315375450525Figure 3 shows the forecast pipeline in the two scenarios between 2023 and 2027.Table 3 shows the forecast installed capacity in MW in the two scenarios between 2023 and 2027.GWEC.NET27different segments of an onshore wind farm can be found in the Appendix B.In the wind acceleration scenario,50,000 direct and indirect FTE job years are created from wind energy in Argentina between 2023 and 2027 in the development,construction,and installation phase.In addition,5,000 annual direct and indirect FTE job years are created in O&M,which continues for the lifetime of the wind farms.Figure 5 shows the annual FTE years created in the wind acceleration scenario by supply chain category.There is a potential upside of 64,000 new FTE jobs created in a wind 8.4 9.3 11.5 14.4 12.8-20 40 60 80-5 10 15 2020232024202520262027Aunual FTE years(Thousands)Cumulative FTE years(Thousands)Development and project managementTurbineBalance of plantInstallation and commissioningO&MCumulativeFigure 4 FTE years created in the business-as-usual scenario in Argentina.Impacts analysisIn the business-as-usual scenario,41,000 direct and indirect FTE job years are created by wind energy in Argentina between 2023 and 2027 in the development,construction,and installation phase.In addition,2,900 annual direct and indirect FTE job years are created in OMS,which continue for the lifetime of the wind farms.Figure 4 shows the annual FTE years created in the business-as-usual scenario by supply chain category.Examples of occupations across-20 40 60 80-5 10 15 2020232024202520262027Aunual FTE years(Thousands)Cumulative FTE years(Thousands)Development and project managementTurbineBalance of plantInstallation and commissioningO&MCumulative8.4 9.3 11.5 14.4 12.8 Figure 5 FTE years created in the wind acceleration scenario in Argentina.Capturing green recovery opportunities from wind power in developing economies28acceleration scenario over the lifetime of the wind farms.$1.9 billion direct and indirect gross value added is created from wind energy in Argentina between 2023 and 2027 in the business-as-usual scenario over the lifetime of the wind farms.Figure 6 shows the GVA created in the business-as-usual scenario by supply chain category.$2.4 billion direct and indirect gross value added is created from wind energy in Argentina between 2023 and 2027 in the wind acceleration scenario over the lifetime of the wind farms.Figure 7 shows the GVA created in the wind acceleration scenario by supply chain category,with a difference of$500 million from the BAU scenario.20232024202520262027Development and project managementTurbineBalance of plantInstallation and commissioningO&MCumulative0.4 0.4 0.4 0.5 0.3-1.0 2.0 3.0 4.0-0.2 0.4 0.6 0.8Aunual GVA($billions)Cumulative GVA years($billions)20232024202520262027Development and project managementTurbineBalance of plantInstallation and commissioningO&MCumulative 1.0 2.0 3.0 4.0 0.2 0.4 0.6 0.80.4 0.5 0.6 0.7 0.5 Aunual GVA($billions)Cumulative GVA years($billions)Figure 6 Gross value added created in the business-as-usual scenario in Argentina.Figure 7 Gross value added created in the wind acceleration scenario in Argentina.GWEC.NET29Impacts created in Argentina in the business as usual scenario Impacts created in Argentina in the green recovery scenario A total of 112,000 FTE job years created over the lifetime of the wind farmsUS$3.3 billion gross value added(GVA)to national economies over the lifetime of the wind farms6,570 GWh electricity produced per year from 2027,which is the same as 1.7 million homes powered with clean energy per year 1.8 million electric vehicles powered annually from 202771 million tonnes of carbon emissions saved during the lifetime of the wind farm,which is the same as:15.5 million cars of the road 21.2 million return flights from Buenos Aires to Sharm el-Sheikh Planting and maintaining 1.9 million trees for 10 years12 million litres of water saved annually from 2027 which would otherwise be used for thermal power generationA total of 176,000 FTE job years created over the lifetime of the wind farmsUS$4.7 billion gross value added(GVA)to national economies over the lifetime of the wind farms8,600 GWh electricity produced per year from 2027,which is the same as 2.2 million homes powered with clean energy per year 2.3 million electric vehicles powered annually from 202793 million tonnes of carbon emissions saved during the lifetime of the wind farm,which is the same as:20.2 million cars of the road 27.6 million return flights from Buenos Aires to Sharm el-Sheikh Planting and maintaining 2.5 million trees for 10 years16 million litres of water saved annually from 2027 which would otherwise be used for thermal power generationCapturing green recovery opportunities from wind power in developing economies30Current situationColombia has started to develop an onshore wind industry,with substantial policy frameworks and regulations,and a project pipeline for wind projects of over 2 GW.Colombia has large regions of both untapped onshore and offshore wind potential.Despite government efforts,Colombia is still a large greenhouse gases(GHG)emitter.The largest contributions to emissions come from the transport sector at 41%,with the industrial sector following behind at 28%and electricity and heating at 10%.With an energy mix that heavily relies on hydropower,the system is vulnerable to El Nio weather patterns with drier years causing the country to utilise more fossil fuel combustion for power generation.More renewables in the energy mix will provide greater energy security and less reliance on fossil fuels in drier years.In mid-2022 a new political party came into power with environmental issues at the centre of its campaign and is likely to boost Colombias renewable ambitions further.The public and private sector are working collaboratively to make Colombia a leader in wind power in Latin American markets.Additionally,Colombia has begun enacting policies outlined in its offshore wind and hydrogen roadmaps6,7,signalling political ambition.Colombia currently has 23 MW of installed onshore wind capacity,and is forecast by GWEC to install around 300-800 MW per year under a business-as-usual scenario from 2023 to 2027.Under an accelerated transition scenario,if barriers to policy frameworks,transmission infrastructure and permitting schemes were resolved,Colombia could install 44%more onshore wind energy capacity in the next five years.Energy mix and targetsColombia ratified the Paris agreement on 12 July 2018,and announced its NDC in December 2020 to reduce emissions 51%by 2030 compared to the 2014 levels.This represents a 6 The World Bank,Colombia Offshore Wind Roadmap,2022,available online at:https:/www.minenergia.gov.co/documents/5859/Colombia_Offshore_Wind_Roadmap_VE_compressed.pdf 7 Inter-American Development Bank,Colombia Hydrogen Roadmap,2021,available online at:https:/www.trade.gov/market-intelligence/colombia-hydrogen-roadmap COUNTRY STUDY ColombiaColombia currently has 23 MW of installed onshore wind capacity,and is forecast by GWEC to install around 300-800 MW per year under a business-as-usual scenario from 2023 to 2027.GWEC.NET31maximum of country emissions of 169.44 MtCO2eq in 2030.It has the goal to reach net zero by 2050.Other relevant targets are shown in Table 4.Colombias targets are realistic.The new government installed in 2022 will likely ensure these targets maintain a Table 4 Colombia targets.Parameter2030 targetLevel of deforestation Zero deforestationReduction of emissions intensity compared to 2014 levels(NDC as of November 2021)51%Share of non-fossil fuel sources in installed electricity capacity mix7004060801000 0%Electricty generated(TWh)Share of electricity mixSource:IEACoalOilNatural gasHydroBiofuelsWindSolar PVTotalFigure 8 Colombia electricity energy mix by source.priority,and the country already has a strong track record of expanding renewables generation,mostly via hydropower.Alternative renewable energy should continue to however,to diversify the electricity mix and thus help increase energy security.Capturing green recovery opportunities from wind power in developing economies32Colombia established an overarching legal framework for the development of onshore wind energy in 2014(Law 1517/2014).This has been continually updated and amended in the years since,and grants multiple tax incentives to developers,and is in force until 2051.Incentives include:Exclusion of sales tax on goods and services Exemption of import tariffs The right to discount up to 50%of total investment values from tax revenues over the first 15 years of a projects operational lifetime,and Tax recovery is supported by an accelerated depreciation mechanism,which allows annual depreciation of up to 33.3%to be applied to assets.This allows developers reduce their tax burden.Decree 570 of 2018 established the Ministry of Mines and Energy as the authority responsible for regulating,planning co-ordinating and monitoring the development of wind energy.This includes defining target volumes,as well as developing competitive allocation schemes and the assessment criteria that will be used to develop wind projects.Despite being the largest coal producer in Latin America,only 5%of the total electricity was generated from coal in 2021,as shown in Figure 8.Colombias electricity energy mix has remained remarkably constant over the past two decades,with the proportion of renewables(dominated by hydropower)gradually increasing from 76.4%in 1990 to 76.6%in 2021.Of this,wind comprised 0.1%of the electricity mix in 2021.Economic stimulus and laws for clean energyThe Sustainable and Inclusive Reactivation and Growth Policy(PRCSI),a recovery plan for a just energy transition,was launched in 2020.This focuses on developing Colombias energy infrastructure for better integration of renewables and inter-region connectivity.Additionally,Law 2169/2021,passed in 2021,is inspired by Colombias NDC targets and establishes a goal of reducing Colombias Greenhouse gas emissions by 51%against a 2014 reference.GWEC.NET33Auctions are run by Colombias Mining and Energy Planning Unit(UPME),a technical unit within the Ministry.Colombia has hosted three stand-alone technology neutral auctions since 2019.The first was unsuccessful,as stringent prequalification requirements were not met.These requirements were dropped for subsequent rounds,which were more successful as a result.An additional key reason for the success of subsequent rounds was the enaction of a 10%mandatory renewable energy target in the 2019 National Plan of Development.Renewables auctions have adopted a design that matches pre-qualified buyers and sellers to determine long term PPAs.Current barriers to wind energyLack of auction visibilityColombia has hosted two successful auctions,but these have been issued on an ad-hoc basis.This lack of certainty over the timing and size of future rounds hampers the ability of market players to make long term plans,providing a barrier to supply chain participation and growth.Market schemes have been implemented to encourage the development of corporate PPAs,but volumes are still small.Social and environmental licencingThe social and environmental licencing process in Colombia is supposed to take 110 working days for a project,plus the additional time to deal with any problems encountered during the evaluation of paperwork.Environmental permitting has been a source of significant delay for wind energy projects however,with delays of multiple months.A problematic part of the process is the need for infrastructure developers to establish free,prior,informed consent with indigenous and ethnic groups as a fundamental part of the environmental and social licencing process.This is managed by the Directorate of Prior Consultation and requires significant resources of development teams that struggle to manage multiple applications in tandem.Developers are eager to meet prior consent requirements projects but would like to see clearer regulation to streamline the process and limit development risk.Capturing green recovery opportunities from wind power in developing economies34Grid development One of the least developed areas of the energy transmission system is in the wind-rich region of La Guajira.The lack of transmission development means wind farms struggle to begin operations due to lack of grid connection point availability.The Colombian energy sector is structured and overseen by the Ministry of Mines and Energy,which can intervene to help with expansion of the energy network to remote areas of the country.Case study La Guajira wind farm8 Vestas,Vestas enters new market with an order in Colombia,September 20,available online at:https:/La Guajira,Colombias first wind farm after a 17-year hiatus,came online in January 2022.The Colombian multinational Elecnor and energy generator Isagen formed a partnership to develop this wind farm.This partnership between an electricity utility and an operations and maintenance company can be valuable when looking at synergies for collaboration along the value chain.Vestas was commissioned to supply 10 turbines,which together can generate up to 20 MW of clean energy for the region.8This project alone created over 50 jobs and generated in the region of$75,000 million pesos.As this project is one of 14 in the pipeline,more jobs and further investment can be expected in the region.In 2022,Colombia experienced a record high of investment million in renewable energy investment in the region of$800 million pesos,the positive effects of which will be felt throughout the local economy.GWEC.NET35Recommendations for wind acceleration Improve wind industry visibility by establishing an auction pipeline with a 34 year timeframe at least.This will allow developers time to prepare their bids and increase investor certainty.In addition to the further encouragement of corporate PPAs,this will increase competition in the market by de-risking the market for smaller developers.Simplify the permitting,environmental and social licencing process,especially to streamline the process for achieving informed consent with indigenous and ethnic groups.Expanding the number of staff at the Directorate of Prior Consultation will also allow the faster processing of applications.Increase government spending commitments directed at grid modernisation and expansion to promote a reliable operation and prevent bottlenecks,especially in the La Guajira region,and to help futureproof the system for further low-cost wind additions.Failure to adapt market design to the needs of the future energy system may result in higher long-term costs,higher electricity prices for consumers and systematic integration challenges for clean energy.Continue to strengthen the dialogue between the government and renewable energy stakeholders,including investors in the sector,IPPs and civil society organisations representing community,especially ingenious groups,interests.Limited channels for dialogue can make it challenging to assess investment risk in wind projects,particularly in an environment of policy variability and new institutional frameworks.Establishing a semi-permanent forum for dialogue and consultation between the government,industry and wider stakeholders would allow for more effective responses and contributions to policy changes.Capturing green recovery opportunities from wind power in developing economies36Project pipeline scenarios The methodology for these scenario forecasts is in Appendix A.In the business-as-usual scenario we forecast that 2.7 GW of wind capacity will be installed between 2023 and 2027.If wind is accelerated and barriers are removed,almost 4 GW of wind capacity will be installed between 2023 and 2027 an upside of over 1 Table 5 Forecast of installed capacity in Colombia in the two scenarios.New wind installed capacity(MW)20232024202520262027Business as usual800600500300500Wind acceleration840720800540100020232024202520262027Capacity installed(GW)Year of installationBusiness as usualWind acceleration0.00.51.01.5Figure 9 Forecast of installed capacity in Colombia in the two scenarios.GW of more wind energy installed over the five-year period.The greatest difference is seen in 2027,and this trend is expected continue past 2027.Figure 9 shows the forecast pipeline in the two scenarios between 2023 and 2027.Table 5 shows the forecast installed capacity in MW in the two scenarios between 2023 and 2027.GWEC.NET37Impacts analysisIn the business-as-usual scenario,68,000 direct and indirect FTE job years are created by wind energy in Colombia between 2023 and 2027 20232024202520262027Aunual FTE years(Thousands)Cumulative FTE years(Thousands)Development and project managementTurbineBalance of plantInstallation and commissioningO&MCumulative-20 40 60 80 100 120 140-5 10 15 20 25 3023.6 21.2 24.6 17.3 24.3 20232024202520262027Aunual FTE years(Thousands)Cumulative FTE years(Thousands)Development and project managementTurbineBalance of plantInstallation and commissioningO&MCumulative22.5 17.7 15.4 9.6 12.2-20 40 60 80 100 120 140-5 10 15 20 25 30Figure 10 FTE years created in the business-as-usual scenario in Colombia.Figure 11 FTE years created in the wind acceleration scenario in Colombia.in the development,construction,and installation phase.In addition,4,800 annual direct and indirect FTE job years are created in O&M,which continues for the lifetime of the wind farms.Figure 10 shows the annual FTE years created in the business-as-usual scenario by supply chain category.Examples of occupations across different segments of an onshore wind farm can be found in the Appendix B.In the wind acceleration scenario,92,500 direct and indirect FTE job years are created from wind energy in Colombia between 2023 and 2027 in the development,construction,and installation phase.In addition 9,500 annual direct and indirect FTE job years are created in O&M,which continues for the lifetime of the wind farms.Figure 11 shows the annual FTE years created in the wind acceleration scenario by supply chain category.There is a potential upside of 148,000 new FTE jobs created in a wind acceleration scenario over the lifetime of the wind farms.$2.6 billion direct and indirect gross value added is created from wind energy in Colombia between 2023 and 2027 in the business-as-usual scenario over the lifetime of the wind Capturing green recovery opportunities from wind power in developing economies38Figure 13 Gross value added created in the wind acceleration scenario in Colombia.Figure 12 Gross value added created in the business-as-usual scenario in Colombia.20232024202520262027Development and project managementTurbineBalance of plantInstallation and commissioningO&MCumulative0.9 0.7 0.6 0.4 0.4-1 2 3 4 5 6-0.5 1.0 1.5Aunual GVA($billions)Cumulative GVA years($billions)20232024202520262027Development and project managementTurbineBalance of plantInstallation and commissioningO&MCumulative0.9 0.8 0.9 0.6 0.8-1.0 2.0 3.0 4.0 5.0 6.0-0.5 1.0 1.5Aunual GVA($billions)Cumulative GVA years($billions)farms.Figure 12 shows the GVA created in the business-as-usual scenario by supply chain category.$3.7 billion direct and indirect GVA is created from wind energy in Colombia between 2023 and 2027 in the wind acceleration scenario over the lifetime of the wind farms.Figure 13 shows the GVA created in the wind acceleration scenario by supply chain category.The potential upside in the wind acceleration scenario is$1.1 billion direct and indirect GVA.GWEC.NET39Impacts created in Colombia in the business as usual scenarioImpacts created in Colombia in the wind acceleration scenarioA total of 191,000 FTE job years created over the lifetime of the wind farmsUS$4.9 billion gross value added(GVA)to national economies over the lifetime of the wind farms8,300 GWh electricity produced per year from 2027,which is the same as 5.5 million homes powered with clean energy per year 2.3 million electric vehicles powered annually from 2027233 million tonnes of carbon emissions saved during the lifetime of the wind farm,which is the same as:51 million cars of the road 80 million return flights from Bogot to Sharm el-Sheikh Planting and maintaining 6 million trees for 10 years15.5 million litres of water saved annually from 2027 which would otherwise be used for thermal power generationA total of 339,000 FTE job years created over the lifetime of the wind farmsUS$8.1 billion gross value added(GVA)to national economies over the lifetime of the wind farms12,000 GWh electricity produced per year from 2027,which is the same as 7.8 million homes powered with clean energy per year 3.3 million electric vehicles powered annually from 2027336 million tonnes of carbon emissions saved during the lifetime of the wind farm,which is the same as:73 million cars of the road 115 million return flights from Bogot to Sharm el-Sheikh Planting and maintaining 8.8 million trees for 10 years22.5 million litres of water saved annually from 2027 which would otherwise be used for thermal power generationCapturing green recovery opportunities from wind power in developing economies40Current situationAs country host of COP27 in late 2022,governments worldwide will be looking to Egypt to demonstrate leadership and initiative on climate change,including wind power acceleration and progress towards its NDCs,most recently updated in July 2022.Egypt is currently responsible for over one-third of Africas total natural gas consumption,and has a predicted increase in emissions of 50%from 2022 levels by 2030.The government is committed to renewable energy expansion however,to ensure the countrys continuous energy security and stability of energy supply.Egypt has a long history with wind energy,having first developed projects in the early 1990s.Its wind industry was boosted through the World Bank and foreign government support in 2014,with Denmark and Japan providing wind turbines and expertise.Egypt has a large wind energy potential,with high wind speeds along the Red Sea coast and the Gulf of Suez.Its wind capacity is expected to reach 7 GW by the end of 2022 making it an important contributor to its electricity energy mix.Egypt currently has 1,700 MW of installed onshore wind capacity,and is forecast by GWEC to install around 250-700 MW per year under a business-as-usual scenario between 2023 to 2027.Under an accelerated transition scenario,if barriers to policy frameworks,transmission infrastructure and permitting schemes are resolved,Egypt could install 45%more onshore wind energy capacity in the next five years.Energy mix and targetsThe Paris agreement was ratified by Egypt on 29 June 2017,with targets of net GHG emission reductions of 22%by 2022 and 42%by 2035 conditional on international support,though these vary by sector.Egypt has a target of wind making up 14%of the electricity mix by 2035.Relevant targets are shown in Table 6.It is uncertain whether Egypt will meet these targets,in particular the target of 14%share of wind capacity in the electricity mix by 2035.A sharp increase of focus and resource in expanding wind capacity will be COUNTRY STUDYEgyptEgypt currently has 1,700 MW of installed onshore wind capacity,and is forecast by GWEC to install around 250-700 MW per year under a business-as-usual scenario between 2023 to 2027.GWEC.NET41required by government agencies and the private sector.The share of fossil fuels in the electricity energy mix has increased over the past two decades,rising from 0501001502002500 0%Electricity generated(TWh)Share of electricity mixSource:IEANatural gasHydroWindSolar PVTotalTable 14 Egypt electricity energy mix by source.Table 6 Egypt targets.Egypt 2030 targetsReduction of emissions intensity compared to BAU scenario(NDC as of July 2022)33%(in power generation,transmission and distribution)Share of non-fossil fuel sources in installed electricity capacity mix42%(2035)Share of wind capacity in electricity mix14%(2035)around 77%in 1990 to 88%in 2020.Natural gas use has increased sharply since 2015,replacing oil.Meanwhile,the use of renewable energy sources including hydro has stayed relatively constant in this timeframe.Capturing green recovery opportunities from wind power in developing economies42Economic stimulus and laws for clean energyLaw 203,introduced in 2014 and assisted by the World Bank,has helped encourage private investment in renewables.There remains concerns from foreign investors however,due to the slow and bureaucratic nature of the permitting process.The General Authority for Freezones and Investment(GAFI)issues so-called“golden licenses”.These are single-approval licenses that allow some investors to secure a single document that covers land allocation,building licencing,and operations.Projects eligible for these licences must remain compliant with the usual regulatory requirements but the process spares developers from having to seek individual approvals from different entities.Renewable energy projects are eligible for these projects,as are green hydrogen and desalination projects.Eligibility requirements for projects seeking GAFI licenses include:A 50%local content quota An ability to export 50%of output from the project,and A reliance on financing from foreign funders and investors.Current barriers to wind energyBankabilityWind developers in Egypt have expressed concern that the Government tariffs to support wind projects continue to reduce when global wind energy supply chain costs are rising,making the economics of new projects challenging.Energy over-supplyPeak electricity demand in Egypt stands at around 30 GW,however there is currently 60 GW of generation capacity operational in the country,the majority of which is from dispatchable sources like gas and hydro that can be switched off and on according to market demand.The Government has moved to prioritise the development of renewable energy projects by cancelling the development of non-renewable power plants,however,there is no urgent supply need for the country to increase the size of its intermittent renewables generation capability,which limits incentives for developers and investors.GWEC.NET43Lack of competition in offtake marketThe Egyptian energy sector is largely a single-buyer market.The Egyptian Electricity Holding Company(EEHC)owns almost all transmission and distribution assets.Meanwhile,the state-owned company Egyptian Electricity Transmission Company(EETC)executes power purchase agreements with public and private generation companies,and sells power to the nine main distribution companies in Egypt.Egyptian legislation does not allow private offtake agreements for projects over 20 MW,which means the larger and more economic wind projects can struggle to find a route to market.The government has taken steps to liberalise its energy sector,but progress has been slow.Case study West Bakr Wind Farm9 SGRE,Egypt:Wind brings clean energy,growth and hope,November 2020,available online at:https:/The West Bakr Wind Farm is located 30 km away from the historically oil producing town of Ras Ghareb,Egypt.The areas high wind speeds give the wind farm the potential to produce of 262 MW of energy.Project installation started in 2020 and commercial operation began 2021,an impressive one-year turnaround for construction.Turbines were supplied by Siemens Gamesa Renewable Energy(SGRE).Lekela Power completed the PPA with the Egyptian Electricity Transmission Company and the New and Renewable Energy Authority(NREA)in February 2019.The project created opportunities for local employment and boosted socio-economic activity in the Ras Ghareb and surrounding areas.During construction peak,up to 550 people were employed,with over 25%of the wind farm being constructed by those from the local region.9 In regions where an oil industry once thrived,clean energy jobs have been created,providing a significant boost to the local economy.The West Bakr Wind Farm mitigates 550 MT of CO2 emissions annually and produces 1000 GWh of clean energy per year to the region.Capturing green recovery opportunities from wind power in developing economies44Recommendations for wind acceleration The Government should continue to increase or at least maintain the level of tariffs that support wind energy.This will improve investor confidence that Egypt has the correct economic conditions for continuing to increase wind capacity in the country.Accelerate the electrification of transport and industry,and interconnections between neighbouring countries.This will further increase electricity demand as well as the means to export electricity,and so increase the incentive to increase renewables capacity,which requires more urgency.Allow private offtake agreements for larger wind projects.This will increase the possible route to markets for projects over 20 MW and increase investor confidence and incentives to develop wind capacity.Larger projects will also allow for a greater amount of the wind energy supply chain to be set up in the country,creating further jobs and local investment.Project pipeline scenarios The methodology for these scenario forecasts is in Appendix A.In the business-as-usual scenario we forecast that 2.6 GW of wind capacity will be installed between 2023 and 2027.If wind is accelerated and barriers are removed,we forecast a fast acceleration of wind capacity from 2025 which would result in almost 4 GW being installed between 2023 and 2027 a potential upside of over 1 GW.The greatest difference is seen in 2027,and this trend is expected continue past 2027.GWEC.NET45Figure 15 shows the forecast pipeline in the two scenarios between 2023 and 2027.20232024202520262027Capacity installed(GW)Year of installationBusiness as usualWind acceleration0.00.51.01.5Table 15 Forecast of installed capacity in Egypt in the two scenarios.Table 7 shows the forecast installed capacity in MW in the two scenarios between 2023 and 2027.Table 7 Forecast of installed capacity in Egypt in the two scenarios.New wind installed capacity(MW)20232024202520262027Business as usual250250700700700Wind acceleration26327591010501260Capturing green recovery opportunities from wind power in developing economies46scenario by supply chain category.Examples of occupations across different segments of an onshore wind farm can be found in the Appendix B.In the wind acceleration scenario,96,000 direct and indirect FTE job years are created from wind energy in Egypt between 2023 and 2027 in the development,construction,and installation phase.In addition,12,000 annual direct and indirect FTE job years are created in O&M,which continues for the lifetime of the wind farms.20232024202520262027Aunual FTE years(Thousands)Cumulative FTE years(Thousands)Development and project managementTurbineBalance of plantInstallation and commissioningO&MCumulative 0 20 40 60 80 100 120 1400 10 20 30 40 507.88.123.624.418.8Table 16 FTE years created in the business-as-usual scenario in Egypt.Impacts analysisIn the business-as-usual scenario,70,500 direct and indirect FTE job years are created by wind energy in Egypt between 2023 and 2027 in the development,construction,and installation phase.In addition,6,700 annual direct and indirect FTE job years are created in O&M,which continues for the lifetime of the wind farms.Figure 16 shows the annual FTE years created in the business-as-usual GWEC.NET4720232024202520262027Aunual FTE years(Thousands)Cumulative FTE years(Thousands)Development and project managementTurbineBalance of plantInstallation and commissioningO&MCumulative8.2 8.9 30.6 36.7 33.8-20 40 60 80 100 120 140-10 20 30 40 5020232024202520262027Development and project managementTurbineBalance of plantInstallation and commissioningO&MCumulative0.2 0.2 0.5 0.6 0.4-1 2 3-0.2 0.4 0.6 0.8 1.0Aunual GVA($billions)Cumulative GVA years($billions)Table 17 FTE years created in the wind acceleration scenario in Egypt.Table 18 Gross value added created in the business-as-usual scenario in Egypt.Figure 17 shows the annual FTE years created in the wind acceleration scenario by supply chain category.There is a potential upside of 164,000 new FTE jobs created in a wind acceleration scenario over the lifetime of the wind farms.$1.7 billion direct and indirect gross value added is created from wind energy in Egypt between 2023 and 2027 in the business-as-usual scenario over the lifetime of the wind farms.Figure 18 shows the GVA created in the business-as-usual scenario by supply chain category.Capturing green recovery opportunities from wind power in developing economies48$2.3 billion direct and indirect gross value added is created from wind energy in Egypt between 2023 and 2027 in the wind acceleration scenario over the lifetime of the wind 20232024202520262027Development and project managementTurbineBalance of plantInstallation and commissioningO&MCumulative0.2 0.2 0.7 0.8 0.7-1.0 2.0 3.0-0.2 0.4 0.6 0.8 1.0Aunual GVA($billions)Cumulative GVA years($billions)Table 19 Gross value added created in the wind acceleration scenario in Egypt.farms.Figure 19 shows the GVA created in the wind acceleration scenario by supply chain category,with a difference of$600 million in GVA over the forecast period.GWEC.NET49Impacts created in Egypt in the business as usual scenarioImpacts created in Egypt in the wind acceleration scenarioA total of 242,000 FTE job years created over the lifetime of the wind farmsUS$3.5 billion gross value added(GVA)to national economies over the lifetime of the wind farms11,400 GWh electricity produced per year from 2027,which is the same as 6.5 million homes powered with clean energy per year 3 million electric vehicles powered annually from 2027225 million tonnes of carbon emissions saved during the lifetime of the wind farm,which is the same as:49 million cars of the road 2 billion return flights from Cairo to Sharm el-Sheikh Planting and maintaining 6 million trees for 10 years21 million litres of water saved annually from 2027 which would otherwise be used for thermal power generationA total of 406,000 FTE job years created over the lifetime of the wind farmsUS$5.6 billion gross value added(GVA)to national economies over the lifetime of the wind farms16,500 GWh electricity produced per year from 2027,which is the same as 9.2 million homes powered with clean energy per year 4.5 million electric vehicles powered annually from 2027326 million tonnes of carbon emissions saved during the lifetime of the wind farm,which is the same as:71 million cars of the road 3 billion return flights from Cairo to Sharm el-Sheikh Planting and maintaining 8.6 million trees for 10 years31 million litres of water saved annually from 2027 which would otherwise be used for thermal power generationCapturing green recovery opportunities from wind power in developing economies50COUNTRY STUDY:IndonesiaCurrent situationHome to the fourth-largest population in the world,Indonesia is a large contributor of GHG emissions,with coal being its biggest energy export as well as accounting for over 50%of its electricity mix.This contrasts its stated Paris Agreement commitments,which outline a long-term strategy of peak GHG emissions by 2030 and aims to achieve net-zero emissions by 2060.Indonesia consists of several large land masses and islands.As a result,an interconnected national grid system would be challenging.This,combined with the best wind resources located away from large population centres,makes it difficult to accelerate wind deployment.Renewables expansion is necessary,however,for energy security.In addition to coal export dependency,Indonesia currently imports a large amount of its oil,and so is vulnerable to volatile market prices.To partly address energy security,the National Economic Recovery(PEN)program ringfenced 3.5%of its budget for support of renewables.This has been overshadowed by the continued expansion of fossil fuel use,missing an opportunity for wind acceleration and boosting Indonesias reliance on fossil fuels imports.Indonesia aims to meet a large share of its climate commitments through emission reductions,primarily by reducing deforestation levels.This is expected to contribute to almost 60%of the emissions reductions necessary to meet both conditional and unconditional NDC targets.Indonesia currently has 150 MW of installed onshore wind capacity,and is forecast by GWEC to install about 75-100 MW per year under a business-as-usual scenario from 2023 to 2027.Under an accelerated transition scenario,if barriers to policy frameworks,transmission infrastructure and permitting schemes were resolved,Indonesia could install 26%more onshore wind energy capacity in the next five years.Energy mix and targetsIndonesia ratified the Paris Agreement on 23 April 2016 through Law No.16/2016,with the target goals of 23%renewables by 2025 and 31%by 2050.It aims to be carbon neutral by 2060,although this is not ratified through any legislation or executive motions.Indonesia currently has 150 MW of installed onshore wind capacity,and is forecast by GWEC to install about 75-100 MW per year under a business-as-usual scenario from 2023 to 2027.GWEC.NET51Indonesia aims to meet a large share of its commitments through emission reductions by reducing deforestation levels.This is expected to contribute to almost 60%of the emissions reductions necessary to meet both conditional and unconditional NDC targets.Relevant targets are shown in Table 8.Indonesias renewables target is realistic if the rate of renewables expansion increases or remains on course.The 2030 wind target is Table 8 Indonesia targets.Parameter2030 targetReduction of emissions intensity compared to BAU scenario(NDC as of September 2022)32%unconditional 43%conditionalShare of non-fossil fuel sources in installed electricity capacity mix23%(2025)Wind capacity in electricity mix1.8 GW0701402102803500 090199520002005201020152020Electricty generated(TWh)Share of electricity mixSource:IEACoalOilNatural gasHydroGeothermalBiofuelsWindSolar PVTotalTable 20 Indonesia electricity energy mix by source.unlikely to be met,however,as an extremely large increase in installed capacity is required in a short amount of time.Even if the renewables target is met,the past recent expansion of the use of coal is concerning and will partly counteract any progress made on renewables,even with a recently announced moratorium on coal.Indonesias electricity energy mix is dominated by fossil fuels,which have increased over the past two decades.The use of renewables has increased at a steady rate,but just behind the rate needed to maintain its share of the energy mix as shown in Figure 20.Capturing green recovery opportunities from wind power in developing economies52Economic stimulus and laws for clean energyLaw 112 of 2022 seeks to address perceived bottlenecks in the development of renewables and provide a framework for the procurement of renewable energy.It allows state-owned electricity company PLN to sign offtake agreements up to 30 years in length with generators of selected projects.Potential projects are initially screened to ensure they meet minimum administrative,technical and financial requirements.Then projects are bid in an auction with a pre-defined ceiling price adjusted by locational factors for projects connecting in different regions of the country.The ceiling price for proposed extensions of existing projects is capped at 70%of the original project price.PLNs procurement quotas are set by the Minister of Energy and Resources.These quotas use the Governments Electric Business Plan(RUPTL),which sets out Indonesias future electricity capacity and network development plans up to 2030,as the main guideline for procurement.Law 112 also mandates that no new coal fired power plants can be built in the country and sets out a framework for the early retirement of coal assets.Domestic and international funding is available to support the early retirement of coal power assets via a Clean Energy Fund that can support the development of renewables projects.Renewable energy projects are also eligible for other forms of government support including import duty exemptions,land availability guarantees,and land and building tax facilities.Current barriers to wind energyInadequate project screeningThere are currently doubts about the deliverability of the 600 MW of wind energy capacity that PLN has committed to.This is because projects can currently secure offtake deals without having to demonstrate permitting,feasibility or sufficient wind resource.They merely need to be led by entities that meet financial,technical and administrative criteria.This,combined with a lack of penalties for non-delivery,has led to projects that are not credible or GWEC.NET53robust securing offtake agreements.This presents a challenge to Indonesias ability to hit its renewable energy targets and potentially damages trust in the wind industry.Grid planningGrid planning in Indonesia is complicated by the nature of the countrys archipelagic geography.This means having a centralised grid is extremely difficult and not practical,making grid planning uniquely difficult in Indonesia comparted to other countries in this study.An opportunity from this would be to implement smaller decentralised micro grids with wind energy as a key generator.This allows for the reliance on fossil fuel generators to be negated and increase energy security within these isolated regions.Government will While the Indonesian Government publicly supports the expansion of renewables,there has been a reluctance to meaningfully invest in wind energy to date due to several factors:Continued focus on fossil fuels,particularly coal production,which is a large source of income for the state Reliance on reducing deforestation as a means to meet climate goals,and Lack of certainty on optimal locations for wind projects.Capturing green recovery opportunities from wind power in developing economies54Case study Sidrap Wind FarmIndonesia currently has just one utility scale wind farm project,Sidrap wind farm,which came online in March 2018.The 75 MW project comprises of 30 SGRE turbines rated at 2.5 MW which provides power to the Sulawesi PLN grid in South Sulawesi.The Sidrap project was developed in partnership between UPC Renewables and AC Energy Holding,a subsidiary of Ayala Corporation based in the Philippines.This project received funding from the U.S Overseas Private Investment Corporation and was completed on time and on budget.The project is in a windy area of the Sidrap region that has a large onshore wind energy potential.10 UPC Renewables,Project details Sidrap Wind Farm,2018,available online at:https:/ACEN Renewables,Sidrap Wind,2021,available online at:https:/Wind Farm has been well received by the local community which is supportive of the growth of wind energy in the region.Jobs have been created as a result of the wind farm being built,in both project development and construction sectors.A majority of these jobs have been occupied by the local people from the Sidrap region.10As of 2021 the renewable energy output of the wind farm had positively contributed towards a reduction in annual emissions of 129,460 MT CO2e.11 GWEC.NET55Recommendations for wind acceleration Broaden pre-qualification criteria to cover project viability.A more comprehensive set of pre-qualification criteria for participation in procurement rounds would help ensure that Indonesia has a more viable pipeline of projects.These criteria should include metrics related to resource analysis,permitting status,stakeholder engagement status,site control,and procurement,transportation,and logistics plans.Commission a government-funded study to establish the optimal locations for wind energy projects and ringfence the selected locations for wind development only.This will increase investor confidence as it will signal the government is making a commitment on wind energy.It will also give project developers greater amount of time to plan and develop projects as the locations are known further in advance.Increase government spending commitments directed at grid modernisation and expansion to promote a reliable operation and prevent bottlenecks.This is especially the case of Indonesia,an island nation,and will help futureproof the system for further low-cost wind additions.Promote diversification of the energy mix and competitive procurement processes to ensure low-cost renewable energy supply to meet decarbonisation commitments.This includes establishing priority dispatch for renewable energy generation on the grid.Project pipeline scenarios The methodology for these scenario forecasts is in Appendix A.In the business-as-usual scenario we forecast that about 450 MW of wind capacity will be installed between 2023 and 2027.If wind is accelerated and barriers are removed,we forecast about 550 MW being installed between 2023 and 2027.The greatest difference is seen in 2027,and this trend is expected continue past 2027.Figure 21 shows the forecast pipeline in the two scenarios between 2023 and 2027.Table 9 shows the forecast installed capacity in MW in the two scenarios between 2023 and 2027.20232024202520262027Capacity installed(GW)Year of installationBusiness as usualWind acceleration0.00.10.2Figure 21 Forecast of installed capacity in indonesia in the two scenarios.Table 9 Forecast of installed capacity in Indonesia in the two scenarios.New wind installed capacity(MW)20232024202520262027Business as usual7510010075100Wind acceleration75105120105160Capturing green recovery opportunities from wind power in developing economies56Impacts analysisIn the business-as-usual scenario,8,300 direct and indirect FTE job years are created by wind energy in the Indonesia between 2023 and 2027 in the development,construction,and installation phase.In addition,950 annual direct and indirect FTE job years are created in O&M,which continues for the lifetime of the wind farms.Figure 22 shows the annual FTE years created in the business-as-usual scenario by supply chain category.Examples of occupations across different segments of an onshore wind farm can be found in the Appendix B.In the wind acceleration scenario,10,100 direct and indirect FTE job years are created from wind energy in the Indonesia between 2023 and 2027 in the development,construction,and installation phase.In addition,1,500 annual direct and indirect FTE job years are created in O&M,which continues for the lifetime of the wind farms.Figure 23 shows the annual FTE years created in the wind acceleration scenario by supply chain Figure 22 FTE years created in the business-as-usual scenario in Indonesia.Figure 23 FTE years created in the wind acceleration scenario in Indonesia.20232024202520262027Aunual FTE years(Thousands)Cumulative FTE years(Thousands)Development and project managementTurbineBalance of plantInstallation and commissioningO&MCumulative1.8 2.5 2.7 2.1 2.2-5 10 15-1 2 3 4 520232024202520262027Aunual FTE years(Thousands)Cumulative FTE years(Thousands)Development and project managementTurbineBalance of plantInstallation and commissioningO&MCumulative1.8 2.7 3.2 2.9 3.5-5 10 15-1 2 3 4 5GWEC.NET57Aunual GVA($millions)Cumulative GVA($millions)Development and project managementTurbineBalance of plantInstallation and commissioningO&MCumulative0 200 400 600 800 1,0000 100 200 300133 179 180 136 122 20232024202520262027Aunual GVA($millions)Cumulative GVA($millions)Development and project managementTurbineBalance of plantInstallation and commissioningO&MCumulative20232024202520262027133 188 216 190 195 0 200 400 600 800 1,0000 100 200 300Figure 24 Gross value added created in the business-as-usual scenario in Indonesia.Figure 25 Gross value added created in the wind acceleration scenario in Indonesia.category,with a potential upside of 17,000 new jobs created compared to the BAU scenario over the lifetime of the wind farms.$700 million direct and indirect gross value added is created from wind energy in the Indonesia between 2023 and 2027 in the business-as-usual scenario over the lifetime of the wind farms.Figure 24 shows the GVA created in the business-as-usual scenario by supply chain category.$850 million direct and indirect gross value added is created from wind energy in the Indonesia between 2023 and 2027 in the wind acceleration scenario over the lifetime of the wind farms.Figure 25 shows the GVA created in the wind acceleration scenario by supply chain category,with a difference of$150 million compared to the BAU scenario.Capturing green recovery opportunities from wind power in developing economies58Impacts created in Indonesia in the business as usual scenarioImpacts created in Indonesia in the wind acceleration scenarioA total of 34,000 FTE job years created over the lifetime of the wind farmsUS$1.2 billion gross value added(GVA)to national economies over the lifetime of the wind farms1,400 GWh electricity produced per year from 2027,which is the same as 1 million homes powered with clean energy per year 0.4 million electric vehicles powered annually from 202723 million tonnes of carbon emissions saved during the lifetime of the wind farm,which is the same as:5 million cars of the road 7.6 million return flights from Jakarta to Sharm el-Sheikh Planting and maintaining 0.6 million trees for 10 years2.6 million litres of water saved annually from 2027 which would otherwise be used for thermal power generationA total of 51,000 FTE job years created over the lifetime of the wind farmsUS$1.6 billion gross value added(GVA)to national economies over the lifetime of the wind farms1,700 GWh electricity produced per year from 2027,which is the same as 1.2 million homes powered with clean energy per year 0.5 million electric vehicles powered annually from 202729 million tonnes of carbon emissions saved during the lifetime of the wind farm,which is the same as:6 million cars of the road 9.5 million return flights from Jakarta to Sharm el-Sheikh Planting and maintaining 0.8 million trees for 10 years3.3 million litres of water saved annually from 2027 which would otherwise be used for thermal power generationGWEC.NET59Capturing green recovery opportunities from wind power in developing economies60Morocco hosted COP22 in 2016 and has since launched further reforms to develop its renewable energy sector.This involves a target of producing over half of its energy requirements from renewable sources by 2030,up from around 15%today.As a developing country with low per capita emissions,Morocco is already implementing measures to achieve its updated 2021 NDC targets.Morocco remains largely dependent on the international energy market,as it imports more than 90%of its energy needs.Achieving energy security has been a top priority for Morocco over the last decade,and current high gas prices have greatly increased national energy costs,underscoring the need for Morocco to adopt a more self-sufficient energy policy.The Government of Morocco seeks to increase security of supply by reducing dependence on energy imports,including through the expansion of renewable sources for electricity production.Morocco has excellent wind resources,and currently has one of the largest onshore wind fleets on the African continent,after South Africa and Egypt.Installed capacity is forecast to reach 5 GW by 2035,supported by aggressive renewable energy targets.Morocco currently has 1,512 MW of installed onshore wind capacity,and is forecast by GWEC Market Intelligence to install about 200-510 MW per year under a business-as-usual scenario from 2023 to 2027.Under an accelerated transition scenario,if barriers to policy frameworks,transmission infrastructure and permitting schemes were resolved,Morocco could install 43%more onshore wind energy capacity in the next five years.Energy mix and targetsMorocco ratified the Paris Agreement on the 21 September 2016.It passed the Climate Change Policy of Morocco in 2019,which has the aim to add 10 GW of renewable energy capacity by 2030,of which 4.2 GW will be wind and 4.5 GW solar.Further plans aim to have 80%of the energy supplied by renewable energy by 2050.Relevant 2030 targets are shown in Table 10.Morocco hit its 2020 target of achieving 42%renewable energy by 2020 and a 10%growth in renewables out to 2030 seems reasonable.Wind COUNTRY STUDY MoroccoMorocco currently has 1,512 MW of installed onshore wind capacity,and is forecast by GWEC Market Intelligence to install about 200-510 MW per year under a business-as-usual scenario from 2023 to 2027.GWEC.NET61capacity targets may prove more challenging.Morocco was unable to meet its 2020 target for wind energy of 2 GW,though capacity expanded continually up to then,as can be seen in Figure 26.Figure 26 shows Moroccos electricity energy mix is highly fossil fuel dependant,though the share of renewables has been steadily increasing over the past decade.The continued expansion of coal in recent Table 10 Morocco targets.Parameter2030 targetReduction of emissions intensity compared to BAU scenario(NDC as of July 2021)29%unconditional 45%conditionalShare of non-fossil fuel sources in installed electricity capacity mix52%Wind capacity in electricity mix4.3 GW09182736450 0%Electricity generated(TWh)Share of electricity mixSource:IEACoalOilNatural gasHydroWindSolar PVSolar thermalTotalFigure 26 Moroccos electricity energy mix by source.Capturing green recovery opportunities from wind power in developing economies62years threatens to undo any progress made in renewables expansion.Economic stimulus and laws for clean energyLaw 345/68(1968)granted Moroccos National Electricity Office monopoly control over energy generators and limited self-generation by industrial sites to 10 MW of capacity,but an amendment in 2008 aimed at encouraging wind energy expansion raised this cap to 50 MW.Law 13.09/2009 establishes the core mechanism for the production and commercialisation of renewable energy.It allows independent producers to sell electricity from renewable energy projects to the national market,or private consumers connected to the medium and high voltage grids.Law 57.09/2009 created the National Agency for Solar Energy to manage and promote the solar sector.The remit of this body changed in 2016 when it became the Moroccan Agency for Solar Energy(MASEN).It is responsible for the development of international investments in renewable energy projects as Morocco looks to liberalise its renewable energy market.Energy project development was previously dominated by the Moroccan National Office for Electricity and Potable Water(ONEE).Wind projects in Morocco are largely financed by project finance mechanisms.There are well-developed capital markets in Morocco,primarily local banks.National subsidiaries of international outfits have also supported the development of wind projects.State-backed multilateral climate and development funds,such as the Climate Investment Fund and the European Bank for Reconstruction and Development,have also backed projects in addition to participation from private equity funds.The authorisation process for wind projects is run by The Ministry of Energy,Mines and Sustainable Development(MEM).Developers are able to secure the right to operate projects for 25 years with the option of securing a 25-year extension.Provisional permits enabling construction to commence are released following a technical review.MEM awards final permits after checking installations conform with the provisional consent terms.GWEC.NET63Current barriers to wind energyGrid legislationNew grid codes detailing the technical requirements for connecting to the grid have been published by MASEN.Turbine suppliers are struggling to meet some of these requirements which is complicating the project development process and delaying projects.New costs for grid usage have been introduced which increase the selling price of electricity for independent power producers,making their projects less competitive against those led by ONEE.Competition with solarLaws currently do not allow wind and solar projects to share grid connection points.Hybrid wind and solar projects are also not allowed.This increases competition for space between developers and reduces the opportunities for cost reductions that co-development of dual technology projects would enable.Offtake mechanismsThe Moroccan Governments tendering of renewables projects to the private sector has been slow.The current legal framework for PPAs puts the obligation solely on private producers to identify companies to enter into agreements with,rather than the government acting as an intermediary.This adds a time constraint and is challenging for developers and means wind projects can struggle to enter PPAs.Case study Midelt wind projectThe 210MW Midelt onshore wind project came online in 2020.The project came online quickly,with construction starting in 2018 and commercial operation beginning in 2020.SGRE supplied 50 turbines each with a rating of 4.2MW.12This project is the result of a joint venture between Enel Green Power and Nareva.The Midelt wind farm is one of the first in a project pipeline known as Projet olien Intgr,secured by both companies after they were successfully awarded an international tender.13The socioeconomic benefits of the wind farm have been experienced by the local community,with the 12 Power Technology,Midelt Wind Farm,Morocco,Dec 2021,available online at:https:/www.power-Enel Green Power,Midelt,Enel Green Powers best sustainable building site,Oct 2019,available online at:https:/project employing 500 people,of which 250 came from local communities.Providing local jobs has generated job security and economic growth in the site area.In excess of 2000 hours were spent on training workers along the value chain,including in quality,as well as health and safety.Local businesses and communities are also able to benefit from the external benefits facilitated by the investment brought by the project,including the refurbishment of local infrastructure like roads and bridges.The electricity generated from the wind farm offsets 326

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As Ecommerce Swells,Affiliate Inches Closer to Digital MainstreamSEP 2022Max WillensAffiliate MarketingPresented byAffiliate marketing is making a strong case for the role it can play in marketers broader digital plans,as influencer marketing,retail media,and social ad spending continue to gain steam.Unfortunately,28%of US marketing executives do not know the effect affiliate marketing is having on their revenues.This is a critical mistake.This eMarketer report reveals the trends,projections,and analysis on how the space is changing.Dear eMarketer Reader,eMarketer is pleased to make this report,“Affiliate Marketing:As Ecommerce Swells,Affiliate Inches Closer to Digital Mainstream,”available to our readers.This eMarketer report reveals the trends,projections,and analyses on how affiliate marketing is changing,as well as which strategies marketers should implement.We invite you to learn more about eMarketers approach to research andwhy we are considered the industry standard by the worlds leading brands,media companies,and agencies.We thank you for your interest in our report,and we thank Partnerize for making it possible to offer this report to you today.Best regards,Nancy Taffera-SantosNancy Taffera-SantosSenior Vice President,Media Solutions and Strategy,eMarketereMarketer,Inc.11 Times Square,Floor 14New York,NY Page 3Copyright 2022,Insider Intelligence Inc.All rights reserved.PRESENTED BY:Affiliate Marketing 2022:As Ecommerce Swells,Affiliate Inches Closer to Digital MainstreamThe pandemic helped power affiliate marketings growth,and the looming economic challenges figure to give it another jolt.The affiliate channel has historically thrived in periods of economic uncertainty.But it is not yet a critical channel in the digital ad landscape.3 KEY QUESTIONS THIS REPORT WILL ANSWER1 How much are US marketers spending in the affiliate marketing ecosystem?2 How are new players,such as influencers and buy now,pay later(BNPL)providers,reshaping the space?3 What strategies should marketers employ as the ecosystem continues to evolve?WHATS IN THIS REPORT?An overview of the affiliate marketing space,including comparisons with related digital advertising channels;analyses and insights from practitioners on how the space is changing.%of respondentsShare of Company Revenues Driven byPartnerships According to US MarketingExecutives,Oct 20211%-5%6%-10%-15%-20%9!%-25%4&%-30%51%-50%7P%8%Dont know/dont measure28%Source:I,The State of Partnership Marketing,Jan 13,2022277783eMarketer|InsiderIKEY STAT:More than a quarter(28%)of US marketing executives said they do not know or do not measure partnership marketings effect on company revenues,despite it being a channel dominated by performance metrics.Contents3 Affiliate Marketing 2022:As Ecommerce Swells,Affiliate Inches Closer to Digital Mainstream4 The One-Pager5 Key Points5 Brands Are Warming Up to Affiliate Marketing6 The Pandemic Gave Way to a Boom for Affiliate Marketing7 New Advertisers Dip Their Toes Into Affiliate Marketing9 Affiliate Marketings Growth Creates New Challenges for Brands and Their Partners11 How Brands Can Test and Measure Affiliate Marketing13 Insider Intelligence Interviews14 Editorial and Production ContributorsPage 4Copyright 2022,Insider Intelligence Inc.All rights reserved.PRESENTED BY:28%of US marketing executives do not know or do not measure affiliate marketings effect on their revenues.Shifts in consumer behavior and tech have expanded the capabilities of affiliate marketing.With thought and patience,affiliate marketing can solve many marketing challenges.Many D2C companies are looking to build their brands,not just move inventory.Find the right partners.Relationships remain crucial.Finding and securing effective partnerships can take time;commit to the process.Social media seeks a bigger,more direct role.Instagram and YouTube are testing new native platforms;TikTok operates its own affiliate program.Determine the best measurement strategy.Find partners that can provide impression-level data,or measurement that fits your digital strategy.Measurement progress is a must.Marketers cant fully integrate affiliate into their overall ad spending without better ways to measure success.Keep an eye on social media platforms.Their ecommerce ambitions have significant implications for the affiliate marketing ecosystem.Your OpportunityOur FindingsAffiliate marketing stands on the precipice of major change in perception.Many affiliate marketing players have posted record growth throughout the pandemic.Economic uncertainty could give a big boost to others,as consumers grow price-conscious.But the channel must make the case for the role it can play in marketers broader digital plans,as influencer marketing,retail media,and social ad spending continue to gain steamand as affiliates biggest players continue to guard data and attribution rules.Affiliate Marketing 2022Affiliate Marketing Inches Closer to Digital Media Buying MainstreamKey StatThe One-PagerAlso in this report:Retail ecommerce forecast|Social commerce forecast|Retail media spending forecast The One-PagerPage 5Copyright 2022,Insider Intelligence Inc.All rights reserved.PRESENTED BY:Key Points Affiliate marketing has piqued the interest of a new generation of marketers.After years of dealing with skepticism from decision-makers,this generation of direct-to-consumer and digitally native brandsparticularly those hungry for measurable growthis giving the channel a try.The affiliate space is far more complex than ever before.Advertisers are becoming publishers,and social,video,and shopping platforms are all angling for a way into the mix.But marketers can also tackle affiliate marketing one area at a time,rather than feel pressure to use every part right away.The channel will not truly bloom without a more settled set of measurement solutions.Advertisers must think about how to measure their investments in affiliate to better integrate them into the rest of their ad spending approach.Without an easy way to integrate and compare spending in the affiliate channel with broader media plans,affiliate will struggle to capture more of advertisers budgets.GlossaryAffiliate marketing:Method of promotion whereby an advertiser pays a publisher(the“affiliate”)for driving its audience to take a specific,measurable digital action within a mutually agreed-upon time frame.Actions can include visiting a retailers page,purchasing a product online,signing up for an offer,downloading an app,or registering with the advertiser.Coupon sites:Publishers that earn affiliate commissions by offering coupons to their visitors(e.g.,RetailMeNot).Rewards sites:Publishers that earn affiliate commissions by offering perks or discounts in exchange for transacting through their sites(e.g.,Rakuten Rewards).Content:Industry term for publishers that drive commission-earning behavior using articles or videos(e.g.,BuzzFeed,Wirecutter).Affiliate networks:Networks that provide infrastructure for connecting brands/merchants with publishers and executing affiliate campaigns.They typically charge monthly minimums(e.g.,Awin,Rakuten).Affiliate subnetworks:Aggregators of supply that secure preferential commissions from brands(e.g.,LTK,Skimlinks).Brands Are Warming Up to Affiliate MarketingAffiliate marketing has been on the margins of the digital advertising ecosystemeven though about 90%of major US brands have operated some kind of affiliate program,per a Rakuten Marketing and Forrester Consulting study published in February 2016.Yet,for the past two decades,the marketing method has battled perceptions that it is an untrustworthy,fringe investment channel.Without the scale of search,the ease and automation of display,or the pizzazz of experimental technologies like augmented reality,affiliate marketing had trouble breaking through with marketers who wanted their digital investments to be as easy(or as edgy)as possible.But that seems to be changing.Recent industry trends put affiliate marketing in position for a fresh look by marketers.Over the past five years,marketers have come under more pressure to prove their digital ad spending drives sales or other measurable business results,giving performance advertising channels more cachet.The coronavirus pandemic,which instantly plunged the economy into a brief but severe recession,threw that dynamic into overdrive.Emerging publishers(and creators)are attracting a new crop of advertisers.The internets largest social platforms,in their hunt for cost-effective sources of engaging content,have cultivated an entire creative class,collectively called influencers,of those who are used to monetizing their reach and the trust of their social followings.While affiliate commissions represented a small percentage of US influencers revenues last year,this group has emerged as an important source of affiliate partners and represents one of the practices fastest-growing channels.For example,LTK,an app and subnetwork that offers affiliate commissions principally to creators,claims that it was responsible for driving more than$3 billion in retail sales last year.The media industrys largest players have turned to affiliate marketing to build more direct partnerships with advertisers.Badly outgunned in the battle against those same platforms for digital advertising dollars,media firms see these arrangements as opportunities to better monetize the trust of their readers.Page 6Copyright 2022,Insider Intelligence Inc.All rights reserved.PRESENTED BY:For the most successful publishers,this has grown into a significant source of revenues.For example,BuzzFeed reported that its“commerce and other”revenues,which are driven principally by affiliate commissions,hit$61.6 million in 2021,or 15.5%of its total revenues for the year.BuzzFeed said it was responsible for“approximately$600 million in attributable transactions”for its advertisers.Those publishers embrace of the practice has provided fresh visibility to affiliate content and opened the doors to new types of relationships with brands.Affiliate commissions,custom content,display advertising,and content marketing,among other tactics,fit together to forge large strategic partnerships.Looming economic uncertainty could create more opportunity.Marketers are likely to lean on affiliate marketing even harder if there is a prolonged recession.Jim Nichols,editor at independent trade publication Martech Record,said that the market has grown around 10%every year,and that there could be even faster growth from traditional affiliates during a downturn.The Pandemic Gave Way to a Boom for Affiliate MarketingThe surge in consumer time and money spent online because of the pandemic led to a significant boom in the affiliate marketing ecosystem.Much of the increase in ecommerce activity was facilitated by affiliates across a range of channelsfrom established formats such as coupons and loyalty programs to emerging ones like influencers and BNPL providers.Publicly available data does not map precisely to the start of the pandemic,but according to research by The Performance Marketing Association(PMA)and PwC,US affiliate marketing grew from$6.2 billion in 2018 to$9.1 billion in 2021.While industry observers do not regularly measure or forecast the affiliate marketing ecosystem,these figures were comfortably ahead of projections made in 2016,when the Rakuten Marketing and Forrester Consulting study forecast that affiliate marketing would grow to$6.82 billion by 2020.That same report estimated that spend would reach$5.94 billion in 2018.But the report could not have foreseen the significant uptick in ecommerce activity spurred by the pandemic.US retail ecommerce sales rose 84.8tween 2018 and 2021,to$960.44 billion,according to our estimates.billionsUS Retail Ecommerce Sales,2018-20222018$519.642019$598.022020$815.452021$960.442022$1,050.33Note:includes products or services ordered using the internet,regardless of the method ofpayment or fulfillment;excludes travel and event tickets,payments such as bill pay,taxes,ormoney transfers,restaurant sales,food services and drinking place sales,gambling andother vice goods salesSource:eMarketer,June 2022277923eMarketer|InsiderIAnd,to be sure,affiliate was not the only digital ad market in the US to benefit from these changes:Between 2019 and 2021,spending on retail media more than doubled.We estimate that retail media spend grew from$13.23 billion in 2019(the year we began tracking this space)to more than$31.06 billion in 2021.Search ad spending,a category whose budgets many affiliate marketers have coveted for years,grew 78.9%,rising from$48.30 billion in 2018 to$86.43 billion in 2021.Influencer marketing,an emergent category that figures to overlap with the affiliate space,more than doubled in spending over the same period,growing from$1.91 billion in 2018 to$3.90 billion in 2021.For more on how one of these channels evolved during the pandemic,check out our August 2022 report“Influencer Marketing 2022:Spending Rises Amid Economic Uncertainty,and TikTok Gains on Competitors.”Page 7Copyright 2022,Insider Intelligence Inc.All rights reserved.PRESENTED BY:Amber Venz Box,co-founder and president of influencer shopping app LTK,said that between 2020 and 2021,there was a doubling of business collaborations between brands and influencers on the platform.It is difficult to compare the trajectories of these industries to affiliate marketing;The PMA did not publish estimates for future growth.Investments Made Into Proven Value-Driven TacticsBetween 2019 and 2021,the investments in affiliate marketing flowed mostly to proven channels.While affiliate marketing practitioners have been focused on content sites and their growing roles over the past couple years,brands spent 2020 and 2021 pouring resources into channels they knew to be effective.In 2018,41%of US affiliate marketing budgets went to either cash-back,loyalty,and rewards publishers(27%)or coupon,voucher,and rebate platforms(14%),according to PMA figures.By 2021,those two publishing channels accounted for about half(51%)of the dollars spent in the affiliate space,chiefly thanks to cash-back,loyalty,and rewards share growing to 35%;coupon,voucher,and rebate rose to 16%.Other channels that have grown significantly include:Buy now,pay later,which has piqued the interest of US consumers(and regulators)because as a point-of-sale installment loan,it allows people to spread out payments for goods over time Other technology solutions,such as RevLifter or UpSellit,which use automation and machine learning to target personalized offers to customers already on a merchants website Influencers,who often work with advertisers using a mixture of upper-funnel and lower-funnel tactics,comprised 5%of all affiliate ad spending in 2021,per the PMA dataEmerging channels could have significant implications for the perception of affiliate marketing among marketers.Affiliate had been viewed as a way to drive sales among consumers who care more about price than brand.Many of the spaces newest advertisers were brought into the fold by emerging channels,including influencers,whose endorsements can theoretically elevate a brand and its products more than a discount code or coupon does.“Our category has really focused on diversifying the partner ecosystem,moving to content,”said Matt Gilbert,CEO of Partnerize.“What does that look like as we move into the next year?Is there a regression to the coupon and cash-back behavior,the last-click behavior?”Affiliate Is Gaining Momentum With ConsumersConsumers are growing increasingly comfortable with incorporating affiliates into their shopping behavior.It is difficult to find a comprehensive picture of how widely consumers embrace affiliate marketing.But there are signals that they are,despite the return of in-person shopping and inflation-induced cutbacks in consumer spending.Throughout H1 2022,the volume of US traffic that affiliates were sending to advertisers sites was up 40%year over year on the Awin platform,according to Alexandra Forsch,president of Awin US.During the same period,many large affiliate publishers,including Honey,LTK,and Lyst,saw the number of US user sessions on their respective mobile apps rise significantly compared with H1 2021,according to Apptopia data.New Advertisers Dip Their Toes Into Affiliate MarketingLike most digital advertising channels,the affiliate marketing landscape is defined by retail ad spending.Nearly 80%of the dollars invested in the US affiliate marketing space last year were spent by retailers,according to PMA data.Retail also claimed about 80%of the ecommerce revenues generated through affiliate marketing.That is significantly higher than it was in 2018,when retail accounted for half of spending,also per The PMA.Other significant categories include financial institutions,travel,and entertainment and media.Page 8Copyright 2022,Insider Intelligence Inc.All rights reserved.PRESENTED BY:%of totalUS Performance Marketing Ecommerce RevenueShare,by Industry,2021Retail84%Travel10%Entertainment&media2%Financial institutions1%Telecom1%Other1%Note:automotive revenue share was less than 1%;numbers may not add up to 100%due toroundingSource:The Performance Marketing Association(PMA),2022 Performance MarketingIndustry Study conducted by PwC,Aug 2,2022277784eMarketer|InsiderIThe pandemic compelled advertisers in several categories to try affiliate marketing for the first time.Fast-casual restaurants,for example,needed to find ways to boost their delivery and takeout businesses in the early days of the pandemic,so they began operating affiliate marketing programs.“Were seeing brands that dont have things to sell starting up with affiliate marketing,”said Patricia Marange,managing director and head of affiliate marketing and performance partnerships at Neo Media World.“The way Ive redefined it is,Is there a customer action that you value that we can dip into?”Many newer advertisers are choosing content-based channels over discount-focused methods.These new brands,particularly the ones looking to position themselves as high-end or luxury purchases,are eschewing the coupon-and discount-focused subchannels in favor of influencer or content partnerships.Those partnerships typically involve discounts or special rates,but the perceived combination of endorsement from a trusted authority or influencer makes them a more attractive place to invest.Brands,Affiliates Go Through Trial and Error in Building PartnershipsFor most of the past two decades,the digital ad ecosystem trended away from relationship-based business as it embraced the opportunities inherent in automation.Affiliate marketing was almost structurally incapable of following the automation trend.On the whole,retailers,affiliate networks,and publishers were resistant to making their links biddable.In programmatic advertising,all the ad inventory on a page(or in a video)can be plugged into exchanges that allow lots of advertisers to vie for placements,largely because that inventory is standardized in its dimensions,file sizes,etc.Its a bigger challenge with affiliate content.For instance,imagine a shopping guide that recommends the best camping tents,and the sites owner is considering automating its affiliate links.That publisher will automatically see reduced demand,because the article recommends one specific product maybe only a small handful of retailers sell.The specificity of the recommendations leaves the publisher with zero room to maneuver:Picture the customers reaction if they clicked on a link to buy a Coleman tent and instead were directed to an REI-brand tent because REI won the bid.That demand is going to be reduced still further because many retailers do not share(and are not interested in sharing)real-time inventory availability with the networks.Nor are retailers keen on building the tech needed to modify the commissions they offer based on that supply.All of this keeps publishers in the drivers seat of the relationship,which helps keep commissions high.Elements of automation have begun to creep in,yet it remains a relationship-based business,where finding,building,and maintaining those connections remain key.More than one-third of US marketing executives engaged in affiliate marketing maintain 50 partners or fewer,according to I research from October 2021.Page 9Copyright 2022,Insider Intelligence Inc.All rights reserved.PRESENTED BY:%of respondentsNumber of Company Afliate PartnershipsAccording to US Marketing Executives,Oct 20215036Q-100191-50011P1-1K7%1K15%Dont know12%Source:I,The State of Partnership Marketing,Jan 13,2022277887eMarketer|InsiderIThe most productive affiliate partnerships can be powerfully symbiotic and lucrative.An affiliate relationship between an outdoor goods manufacturer and a hunting and fishing magazine,for example,could be worth tens of thousands,if not millions,of dollars per year to both sides.Yet,figuring out which relationships are going to be productive still requires trial and error.While some networks are taking steps to reduce the guesswork and effort for advertisers,the tests still need to be done.“From the advertisers point of view,you dont know if youre ever going to hit that level of success,”said Breton Fischetti,vice president of performance revenue at Recurrent Ventures,which owns Outdoor Life magazine.Affiliate Marketings Growth Creates New Challenges for Brands and Their PartnersThe Pitfalls of Measuring Affiliate MarketingThe question of why affiliate marketing remains a relatively small digital advertising channel has an ironic answer:Its difficult to measure.Despite being nimble,low-cost,and efficient by some measures,most of the largest practitioners cannotor will notprovide impression-level data in their campaigns.That makes measuring or comparing affiliate marketing with other channels difficult,if not impossible,according to executives we interviewed.“Brands are spending all this money on media mix modeling readouts,”said Kristen Pulver,vice president of performance media at Horizon Media.“Affiliate always has all these asterisks tied to its performance.”Marketing insiders said some of the bigger publishers fear that if they provided impression-level data,the results wouldnt be as great as desired.Agencies and advertisers are working to find solutions to this problem.Some are spending more money with sources that can provide a detailed level of reporting,migrating their budgets out of affiliate networks and into direct relationships with publishers that can provide impression-level reporting and data.Growing numbers of content publishers are working with advertisers on multidimensional programs that include a combination of media,paid social,and affiliate commissions that come with impression-level data.Absent a large,standardized solution that the industry can rally around,the amounts of money most brands invest in the channel remain low,and so does the channels effect on advertisers bottom lines.According to the I survey,over a quarter(28%)of US marketing executives said they do not know(or measure)the revenues driven by affiliate marketing.That is a telling statistic for a channel whose practitioners put return on ad spending at the center of their own marketing.%of respondentsShare of Company Revenues Driven byPartnerships According to US MarketingExecutives,Oct 20211%-5%6%-10%-15%-20%9!%-25%4&%-30%51%-50%7P%8%Dont know/dont measure28%Source:I,The State of Partnership Marketing,Jan 13,2022277783eMarketer|InsiderIPage 10Copyright 2022,Insider Intelligence Inc.All rights reserved.PRESENTED BY:Confusion Over Ever-Shifting RolesDespite(or possibly because of)the size of the affiliate market,different players have brought the basic business modeladvertiser pays publisher for driving its audience to take a specific,measurable digital actionto new content formats and channels.As more companies have begun participating in affiliate marketing,it has created confusion about who plays what role.For example,a brand seeking to partner with influencers to both promote a new product and drive its sales could be forced to coordinate the efforts of its public relations agency,its affiliate agency,and its media agency,as well as any existing in-house teams.“Until brands themselves really understand how to treat influencers,and who owns themand they can be fully across the funnelits going to be hard for them,”Marange said.This proliferation of channels has compelled some affiliate companies to act like brands and raise their own profiles.Rakuten Rewards,for example,ran an ad during the Super Bowl in 2022,a first for the company.Many BNPL firms,banks,travel sites,and others were previously advertisers,and now theyre publishers.This blurring of lines has the potential to slow the investment headed into emerging areas of the affiliate market.Social Platforms Looking to Play More Direct RolesAs affiliate marketing becomes more important to influencers,and as social platforms continue their hunt for revenue growth and audience data,the platforms that provide distribution and audiences have taken an interest in the space,hoping to carve out a roleand,by extension,a piece of the revenuesin the process.Social platforms already play an indirect but significant role in the affiliate ecosystem.The amount of time American consumers spend on social media continues to increase,and growing percentages of consumers feel comfortable buying products within their walled gardens.According to our forecast,US retail social commerce sales will more than double over the next three years,reaching$107.17 billion by the end of 2025.billionsUS Retail Social Commerce Sales,2021-20252021$39.512022$53.102023$68.922024$86.702025$107.17Note:includes products or services ordered via social networks and messaging apps,such asFacebook,Instagram,Pinterest,WeChat,Line,VK,and others,regardless of the method ofpayment or fulfillment;excludes travel and event tickets,tips,subscriptions,payments suchas bill pay,taxes,or money transfers,food services and drinking place sales,gambling andother vice goods salesSource:eMarketer,July 2022277924eMarketer|InsiderIBut efforts to muscle in and participate more directly in affiliate marketing deals either are just forming or have yielded mixed results.Roughly a year after launching an affiliate tagging program with influencers,Instagram told participants in late July that it would shut down the program,in favor of a creator marketplace.Instagram is currently encouraging both brands and users to use a native tagging tool,which does not support affiliate commissions,but does support advertising.YouTube recently began testing a native product tagging program.Creators participating in the tests are receiving flat fees,rather than commissions,for using the feature.TikTok,the fast-growing social platform,also operates an affiliate program,though it competes with other TikTok ad programs for advertiser attention.Many of the advertisers selling the goods that influencers could promote with affiliate tags are leery of becoming too reliant on platforms.That led to tepid use of Instagram Shops,which was a required step for any brand hoping to use the now-shuttered affiliate program.Many brands that did use Instagram Shops made only small selections of inventory available through these systems.Page 11Copyright 2022,Insider Intelligence Inc.All rights reserved.PRESENTED BY:Another contributing factor to these mixed results is that selling ads is more efficient and lucrative than affiliate commissions.The current native tagging capability,which brands can use to find user posts that can be used as ads,fits more naturally into Facebook and Instagrams ad infrastructure.Finally,while the platforms have done as much as they can to compel creators to focus their time and energy on one platform,the reality is that many creators work across multiple platforms.That minimizes a singular platforms ability to put itself at the center of any kind of partnership between advertiser and creator.Theres No More Free Lunch From Publishers and InfluencersAs recently as a few years ago,a brand that had the right relationships with reputable editorial outlets might be able to send some free items and the offer of a hefty commission,then see their products featured in those outlets content.Thanks to affiliates raised profile among traditional content publishers,those days are over.“You do need to have a budget to put forth and kick off that relationship,”said Emily Chan,the founder of Digital Disco,an affiliate marketing consultancy.Chan noted that a similar shift has taken place among influencers,who now see free goods from brands more as a conversation starter than an impetus to post.After the rest of the digital media world noticed that traditional content publishers,ranging from Cond Nast to Dotdash Meredith to New York Magazine,were generating tens of millions of dollars in revenues from commerce content,competitors swept in.“It was greenfield for large-scale publishers on search,”said Recurrent Ventures Fischetti.“The easy moneys gone.Now its about scale and sophistication.”How Brands Can Test and Measure Affiliate MarketingAs the digital media ecosystem grows more focused on driving ecommerce activity and harvesting first-party data from consumers,affiliate marketing could grow into a more strategically important channel for marketers.Here are some things to bear in mind for any marketer looking to either test or increase spending in this channel:Commit to the CommitmentPrepare for the long haul in building relationships with publishers.Most performance-oriented ad spending channels carry hidden costs and difficulties that make them less of a sure thing than they appear.Affiliate marketing is no different.Whether an advertiser starts by going directly to publishers or committing to a network,they should be prepared for a prolonged stretch of relationship-building and trial and error.Build Your Own Measurement FrameworkMost of the top affiliate networks provide some access to the data needed to demonstrate the value that affiliates provide.Understand what those options are and think about how they canor cannotbe integrated into your brands current ad measurement and attribution methodologies.Go Up and Down the FunnelConsider using affiliate as a tool to drive progress across multiple key performance indicators(KPIs),even if it typically takes more work.Affiliate got its startand much of its earlier reputationas an ad spending channel that thrived at the very bottom of the funnel,and marketers have proven that it can be used to drive awareness,leads,and consideration.Keep an Eye on Social PlatformsBecause of the role that these platforms play in many publishers and influencers affiliate businesses,it will be important to keep abreast of any changes the platforms make to their own product tagging and creator commerce features.“Always-on”search complianceand fraud monitoring thatensures brand safety.Automated,data-driven partner discovery,recruitment and optimization.Partner channel insights with scalable,flexibletracking infrastructure.The ability toeasily facilitateglobal partnerpaymentsat scale.Real-time analytics and actionable insights that power data-driven decisions.Communication,collaboration and commissioning flexibility that drives results.Partnerize is the only partnership management solution powering growth for marketers seeking high quality,scalable subsidies to primary channels through end-to-end software&comprehensive service.Visit for more info.Page 13Copyright 2022,Insider Intelligence Inc.All rights reserved.PRESENTED BY:Insider Intelligence InterviewsInsider Intelligence and eMarketer research is based on the idea that multiple sources and a variety of perspectives lead to better analysis.Our interview outreach strategy for our reports is to target specific companies and roles within those companies in order to get a cross-section of businesses across sectors,size,and legacy.We also look to interview sources from diverse backgrounds in order to reflect a mix of experiences and perspectives that help strengthen our analysis.The people we interview for our reports are asked because their expertise helps to clarify,illustrate,or elaborate upon the data and assertions in a report.Amber Venz BoxCo-Founder and PresidentLTKInterviewed June 1,2022Anthony CapanoManaging Director,North AmericaRakuten AdvertisingInterviewed May 20,2022Emily ChanFounderDigital DiscoInterviewed August 30,2022Breton FischettiVice President,Performance RevenueRecurrent VenturesInterviewed June 1,2022Alexandra ForschPresident,Awin USAwinInterviewed August 30,2022Matt GilbertCEOPartnerizeInterviewed May 25,2022Stephanie HarrisOwner and CEOPartnerCentricInterviewed June 1,2022Ashley HillGroup Director,AffiliateAssemblyInterviewed May 19,2022Patricia MarangeManaging Director and Head of Affiliate Marketing and Performance PartnershipsNeo Media WorldInterviewed May 23,2022Tricia MeyerExecutive DirectorThe Performance Marketing Association(PMA)Interviewed August 26,2022Jim NicholsEditorMartech RecordInterviewed August 26,2022Kristen PulverVice President,Performance MediaHorizon MediaInterviewed May 26,2022Page 14Copyright 2022,Insider Intelligence Inc.All rights reserved.PRESENTED BY:Editorial and Production ContributorsAnam Baig Director,Report EditingRahul Chadha Director,Report EditingJason Clinkscales Senior Report EditorMatthew Corkins Copy EditorJustin DeVoursney Graphic DesignerJoanne DiCamillo Senior Production ArtistMagenta Fox Senior Chart EditorDonte Gibson Senior Chart EditorKatie Hamblin Director,ChartsDana Hill Director,ProductionErika Huber Line EditorAnn Marie Kerwin Vice President,ContentKyndall Krist Copy EditorNa Li Director,Primary ResearchPenelope Lin Senior Copy EditorReuben Loewy Director,Report EditingJennifer Merritt Executive EditorStephanie Meyer Product SpecialistHeather Price Senior Director,Managing EditorErika Skorstad Copy EditorRachel Tatarek Senior Copy EditorAmanda Woodman Copy EditorJulia Woolever Senior Report EditorAli Young Senior Copy EditorPage 15Copyright 2022,Insider Intelligence Inc.All rights reserved.Power your next move with clear and credible insights.Your morning coffeeKeep up with timely digital trends delivered straight to your inbox.Learn MoreGet the bigger pictureOur research is trusted by industry leaders.Over 100,000 business decision-makers,including many of the Fortune 1000 and most major media companies and agencies,subscribe to Insider Intelligence research.Learn if your company subscribes.We are here to help.If you are an eMarketer research client and have questions,please contact ii-.If you are not a research subscriber,please send inquiries to ii-.To learn about advertising and sponsorship opportunities,contact.Learn more about advertising&marketing 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0人浏览 2023 年 3 月 20 日 15页 5星

ATscale: Demystifying the Semantic Layer – Enabling Smarter, Faster AI and BI (English Version) (13 seiten).pdf

Demystifyingthe Semantic LayerThe What,So What,and Now WhatA Perspective From Legendary Best-selling Author Prashanth Southekal,PhD,MBADr.Southekal has consulted for over 75 organizations including P&G,GE,Shell,Apple,and SAP.is the author of two books“Data for Business Performance”and Analytics Best Practices”Wh i t e pap e rFOR SMARTER,FASTER AI AND BI2DEMYSTIFYING THE SEMANTIC LAYERThe What,So What,and Now WhatThe data economy is increasingly embraced worldwide in every industry.Data has enabled firms like Netflix,Facebook,Google and Uber to have a distinct competitive advantage.In 2021,the market capitalization of Amazon($1.7 Trillion),a data company,was more than the combined GDP(Gross Domestic Product)of two big G20 countries-Turkey($780 Billion)and Saudi Arabia($700 Billion).Companies that are data-driven demonstrate improved business performance.A report from MIT says digitally mature firms are 26%more profitable than their peers MIT,2013.McKinsey Global Institute indicates that data-driven organizations are 23 times more likely to acquire customers,six times as likely to retain customers,and 19 times more profitable Bokman et al.,2014.Overall,data and analytics,when deployed at scale,can generate a 5%to 10%uplift in revenue and 3 to 6 percentage point increase in EBITDA margin CGT,2021.Today,every company is leveraging data and analytics for improved business performance.However,most organizations struggle to use data for improved business performance and one reason is poor data quality.According to Experian Data Quality,a boutique data management company,inaccurate data affects the bottom line of 88%of organizations and impacts up to 12%of revenues Experian,2015.According to Mckinsey,an average user spends 2 hours a day looking for the right data.A report by Harvard Business Review says just 3%of the data in a business enterprise meets quality standards.A joint study by IBM and Carnegie Melon University found that over 90%of the data in a company is unused Southekal,2020.All these studies point out that poor data quality affects the firms financial performance,growth,reputation,and branding.But what is data quality?How do you define data quality?Data is of high quality if they are fit for use in operations,compliance,and decision-making,leveraging the 12 different data quality dimensions.According to IBM research,in the U.S.alone,businesses lose$3.1 trillion annually due to poor data quality IBM,2020.3These data quality dimensions are based on good data definitions Southekal,2017.Unfortunately,many enterprises have challenges even in defining the data.Why?How?A data definition is a descriptor for the attributes(also known as features and the labels in data science and machine learning)of the data object.A comprehensive and consistent data definition is Stanford,2022:Concise:Described succinctly and clearly.Precise:Described using unambiguous words when possible.Non-Circular:The term being described should not be used in the definition.Distinct:Described so it differentiates this data element,data entity or concept from others.Unencumbered:The definition should not refer to a physical location or how it is created.1.2.3.4.5.Against this backdrop,this whitepaper is written as a reflection paper(WHAT?SO WHAT?NOW WHAT?)to thoroughly understand the data definition problem and guide the implementation of the solution.It is based on thoughts and analysis I have seen from a practical viewpoint.Specifically,this whitepaper looks at three main What,So What,Now What elements:WHAT is the problem?SO,WHAT is the impact of this problem?Finally,NOW WHAT solves this problem.Let us start first the discussion by looking at the problem.What is the problem in defining data?Why does defining the data well matter for improved business performance?Data attributes can be defined from both technical and functional perspectives.The technical data definition includes the format,type,length,etc.These are the metadata characteristics.However,the real problem is in defining the data object or the attributes in the data objects from a semantic or functional or business view because context plays a big role in how business users access,communicate,interpret,and consume data,especially in a fast-paced distributed working environment.In todays big data world,this context is severely magnified due to the volume,velocity,and variety of data that is getting ingested into the IT systems.So,what is the business impact of poor data definitions?Why does semantically defining the data matter?Semantically defining the data is based on the context in which the business users consume the data to run the business based on objectives,questions,and metrics.This context in business can come in three main flavours-stakeholder views,value chain impact,and business process differences.4Stakeholder views.Finance and procurement often have diverse views on managing vendor relationships.While procurement sees the vendor as a service provider,finance looks at the same vendor from the costing and budgeting perspective.A low payment term(say net 30 days)is desirable for procurement as it is seen by the vendor as reward and recognition of this service.This improves the service levels of the vendor.However,this low payment term affects the cash flow which is often not supported by the finance department.So,are vendor payment terms a service element or a cost element?Here is another example from the Retail industry.Marketing needs a good amount of inventory to serve the customers,but finance believes more inventory increases the carrying cost.So,is inventory bad or good?Who defines this?Value chain impact.Is the customer a prospect or an account(who pays for the invoice)?If a vendor gets paid for providing goods and services,can an employee be defined as a vendor given that the employee provides services and gets paid for the work?So,unless one defines the customer,the vendor,or the employee semantically based on their impact on the business value chain,there will be misunderstandings on the use of data.Business Process differences.Let us take an example of a financial services company.Is the start time for processing the credit application when the adjudicator receives the file or is it when the processing of the previous credit application is completed by the adjudicator?Unless the start time is clearly defined,there could be multiple interpretations of these start times.Another common example is using telephone and fax numbers to derive the jurisdiction and tax rates.While the telephone or fax numbers are not meant for tax calculation,the business circumstance or even the limitations in the data model force the business to use the available resources.To address the above contextual and circumstantial constraints and issues,we need to clearly and holistically define the data-technically and functionally.Overall,while the technical or metadata aspects are relatively easy to define,the business or functional or semantic aspects are challenging as the definition is formulated based on business context.There are four main ways to handle this data definition problem:Master Data Management(MDM),Data Integration Methods,Data Wrangling,and Semantic Layer.Lets quickly discuss these four solution options from the data definition perspective.1.2.3.Lets look at the impact of the semantic definition based on the above three main flavors using some common and simple business examples.5According to Gartner,MDM is a technology-enabled discipline in which business and IT work together to ensure the uniformity,accuracy,stewardship,consistency,and accountability of the enterprises critical data assets Gartner,2022.These critical data assets could be customers,products,vendors,factories/plants,currencies,general ledgers,and more.The goal of MDM is to provide a trusted,single version of the truth(SVOT)so organizations do not use multiple and inconsistent versions and definitions of the same data in different systems.The MDM initiative starts early in the data lifecycle(DLC)and includes defining the data,formulating the business rules,setting up the workflows,roles mapping,formulating the governance policies,processes,procedures,standards,nomenclature,taxonomies and so on.The second possible solution to fix the inconsistent versions and definitions of the data in different IT systems is with data integration tools.The data integration process(such as EAi,ESB,Message Queue and so on)happens in the DLC.The selection of these data integration tools and practices to address inconsistent data definitions is based on three key factors.Data Wrangling,especially cleansing the data in the canonical system like the data warehouse or data mart is also a potential option.Technically Data Wrangling is formatting,de-duping,renaming,correcting,improving accuracy,populating empty data attributes,aggregating,blending and any other data remediation activities that help to improve the data quality.Most of the data cleaning work is manual,even though stored procedures(set of SOL statements reused and shared)and automated routines are often used to support this manual labour.The fourth option to fix the inconsistent data definitions is using the Semantic Layer.A Semantic Layer is a business representation of data that helps users access data using common business terms.A Semantic Layer maps business data into familiar business terms to offer a unified,consolidated view of data across the organization.Implementing the Semantic Layer process happens in the end of the DLC and is generally considered as part of last mile analytics-the key piece that connects insights to business results.In simple words,the Semantic Layer creates the context for actionable analytics.Capabilities of APls(REST,SOAP,RPC,GraphQL and more)and their request-response dependencies.Number of transactional systems in scope with inconsistent data definitions that need to be integrated.Sequence of Transfer,Transpose and Orchestration(TTO)in the data integration process.1.2.3.6All these four solutions(MDM,Data Integration,Data Wrangling,and Semantic Layer)that can help in fixing the inconsistent data definitions depend on data mapping.The data mapping creates data element linkages between data attributes in two distinct data models.Overall,the MDM and Data Integration methods are more suitable for compliance and operations.But if the use case is on deriving insights,then the Semantic Layer is an attractive option.In terms of data and analytics,the Semantic Layer manages the relationships between the various data attributes in the database to create a simple and unified business view that can be used for querying and deriving insights.But more importantly,each of these four methods depends on specific use cases and the control one needs on data quality in the data lifecycle(DLC).A simplified and generic DLC is shown below.This brings us to the third part of the whitepaper.Now,what is the solution from the data and analytics perspective?Specifically,how to implement the Semantic Layer?Implementing the Semantic Layer requires some preparation and leadership.As Bill Gates,Microsofts founder,said-The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency.The second is that automation applied to an inefficient operation will magnify the inefficiency.Against this backdrop,how can an organization prepare itself for the successful implementation of the semantic layer platform?Figure 1:Simplified and Generic DLCData LiteracyCompetenciesStatisticalModelsDataStewardshipDataStorytellingDataArchitectureDataEngineeringDataAcquisition3DMMDMDataGovernanceDataEthics7Step 1:Identify the use cases.If the data is in one system format,you do not need the Semantic Layer.However,that is rarely the case in most enterprises today,given the variety,volume,and velocity in capturing and ingesting data into the data landscape.For example,one client,a large and global engineering conglomerate,has 17 systems.The Semantic Layer is effective if the data is distributed in multiple systems(in diverse types and formats).This is because the distributed landscape with diverse data models often creates a situation of multiple data definitions.If there are data silos in the company with multiple definitions for the same data object,then the Semantic Layer is a strong solution on the table.While most use cases describe the systems needs,meaningful use cases also identify the problem or opportunity owner,potential risks,and the business benefits in monetary terms.Also critical to success is active subject matter expert(SME)engagement to ensure proper representation of the business knowledge and understanding/use of the data.Step 2:Identify the business KPIs and the Ownership.Every meaningful initiative starts with a purpose that can be objectively measured and owned.Management guru Peter Drucker once said-You cannot manage what you cannot measure.When it comes to ownership the selection of the business KPI(Key Performance Indicator)is based on the strategy and business objective.For instance,if the business objective is to improve the firms liquidity,it is prudent to have the cash conversion cycle(CCC)as one of the KPIs.Also,it is always advisable to have a leader very close to the business and data to own the KPI.For instance,to reduce the inventory carrying cost,it is better to assign the KPI ownership to the Sales manager than to the Finance manager.This is because the sales manager has more variables under his control such as demand variability,forecast accuracy,service levels,order sizes,etc.The granularity of the insights from the KPI also matters.If the KPI owner is a C-level executive,the KPI will be very different from that of a manager.Once we have the KPls and ownership identified,the data objects must be identified.This process will help us define the data from the right stakeholder views.For example,if the KPls are focused on reducing expenses,then the definition of data from the finance is more important than that of marketing with inventory management.Step 3:Build data literacy in the Enterprise.Taking ownership of any initiative for success requires a strong commitment and one effective way to bring data ownership is with good education or awareness.Data literacy is the ability to understand and communicate data and insights.Data literacy is to the 21st century what literacy was in the past century given that over 93%of the high-value business process today are digital and data-centric Hurst,2018.The digitization and data capture rate will continue to grow in the coming years.The figure below is the 10 key data literacy competencies.8Step 4:Define the data attributes.With the above four steps,one can define the data attributes technically and semantically.The technical data definition includes information such as format,type,length,etc.These are the metadata characteristics.The semantic or functional view defines the data attributes from a business viewpoint,which is very challenging.Given the context can come from the KPls and the ownership,defining the data attribute from the functional or semantic perspective at this stage should not be very difficult.Step 5:Implement the Semantic Layer PlatformWith the strong foundation built in the first four steps,you are now ready to deploy the Semantic Layer platform.The Semantic Layer platform links the analytics consumption platform with the data platforms using the facts(data values),dimensions(data attributes)and hierarchies(i.e.taxonomies)in the Data Warehouse(DWH)or any other canonical data platforms such as the data lakes or data marts or lake houses.The consumption or analytics tools can be Power Bl,Tableau,Python,Business Objects.Looker,Jupyter Notebook,and even Microsoft Excel.The queries from the business users could be in SOL,DAX,MDX,etc.,using the tool-specific native protocols such as XMLA,JDBC,ODBC,SOAP,and REST interfaces.By abstracting the physical form and location of data,the Semantic Layer platform makes data stored in the canonical data platforms accessible with one consistent and secure interface for the business users.Figure 2:Data Literacy CompetenciesData CaptureData IntegrationData ScienceDecision ScienceExternalFeedsDataInsightsEAIETLTransactionsystem RPA BOTSSemanticlayerBI and AnalyticsSystemFocus on Data QualityMDMDataWarehouse9So,how does the end state with the Semantic Layer look once implemented?A holistic SL platform meets these five features:connect to any data source,support modeling,governance,security,and performance Thuma,2019.Again,even if there is real-time data ingestion(say from Kafka Pubsub)or batch data ingestion(say from files),the Semantic Layer is a viable and strong solution only when multiple data definitions exist.Essentially,the Semantic Layer works as middleware between the data sources and the analytics platforms by providing virtualized connectivity,modelling,and other data management features.As all the data required to derive insights from analytics data is filtered through the Semantic Layer,the data scientists and the business users see the same data in one consistent way resulting in a single version of the truth with the same measures and dimensions.In his backdrop,below are five key value propositions or reasons for the business to implement the Semantic Layer.Value#1:Democratization of Data Analytics and Machine Learning(ML)As data analytics have spread more within organizations,relying on one monolithic Bl(Business Intelligence)or ML(Machine Learning)platform to meet everyones needs is becoming less realistic.A Semantic Layer platform is needed to connect and work with diverse data platforms,protocols and consumption tools.This will decouple the data from consumption,enabling the democratization of data analytics and ML in the enterprise.Value#2:Seamless Model development and Sharing While Data scientists rely on raw and granular data for deriving insights from their models,this raw data has little business value from the data and analytics perspective.Businesses need insights to make decisions and not the raw data per se.But adding a data model to the raw data makes it very valuable because data models create a visual description of the business for analyzing,understanding,and clarifying the data and the associated relationships The Semantic Layer,with its data modeling capabilities,enables easy authoring,sharing,and collaborating of data models and insights.Value#3:Improved query performance and reduced computing costsThe limited scalability and the higher up-gradation costs of on-premise data warehouses are forcing companies to leverage the power of the cloud to offer enhanced scalability,flexibility,and elasticity.While cloud computing,including cloud data warehouses,offers many benefits,these benefits come at the expense of performance and costs.We have often heard stories like the$50,000 query in the cloud Lynch,2020.A good Semantic Layer platform includes a comprehensive performance management system beyond simple caching techniques in todays big data environment.At the core,the Semantic Layer facilitates improved query performance(and faster time to insights)and reduced computing costs.10Value#4:Reduced Data Cleaning EffortStudies have shown that over 70%of the effort in data and analytics projects is on data cleansing Southekal,2020.A common and consistent data definition using the governance-enabled Semantic Layer will help business analysts,data analysts,and data scientists have the same definition and context on the data.In addition,the Semantic Layer offers pre-built controls for managing data access,integration and feature creation.All this will not only reduce the data cleaning effort but will also produce reliable insights.In addition,the Semantic Layer provides a logical schema with views,stored procedures,functions,and more.Value#5:Better Security and GovernanceAs the Semantic Layer sits between the data platform and the analytics tools,it secures the digital infrastructures with the right levels of authentication and authorization.The Semantic Layer can authenticate users with single sign-on solutions through Active Directory,LDAP(Lightweight Directory Access Protocol),OAuth,or any other user authentication platforms.Secondly,the semantic layer offers R BAC(Role-Based Access Control),including the ability to protect sensitive data attributes,limit data access as per users business roles,and more.Using the Semantic Layer for creating the context and deriving insights from data analytics is promising.To remain competitive in todays market,Toyota,the multinational automotive manufacturer,empowered its teams to work with data and analytics more independently using AtScales Semantic Layer platform.Toyota has achieved a 2100%reduction in the insights derivation cycle time and reduced the IT infrastructure by over 60%using the Semantic Layer platform.Home Depot,the largest home improvement retailer in the United States and Canada,deployed the Semantic Layer solution from AtScale by working directly in Googles Memory cloud data warehouse,i.e.BigQuery and reduced the cost of a query by 91%.And the company realized efficiencies to increase data retention from 3 months to 3 years(a 1200%increase).This enabled Home Depot to support over 17,000 queries per day executed by internal and external users on a real-time basis.In addition,companies like Cardinal Health(health care services company),Wayfair(e-commerce furniture company),Tyson Foods(a food company)and many more have implemented the Semantic Layer with minimal disruption to their teams working style while accelerating their efforts to derive insights for better business results at a much lower cost.A generic system architecture with the AtScale Semantic Layer is shown below.11Figure 3:Semantic Layer Based System ArchitectureThough enterprises have been using Semantic Layer tools to manage data for a long time,the data landscape has changed significantly in the last few years due to the increased adoption of big data,cloud data warehouses,self-serve analytics,and more.Companies need quicker and better insights in todays VUCA(volatility,uncertainty,complexity,and ambiguity)world of sudden and unpredictable change.Sadly,many of these companies have deployed numerous data and analytics solutions across diverse cloud and on-prem data platforms,resulting in data and insight silos.In addition,this distributed set-up has created challenges in data quality,literacy,adoption,and ultimately,business performance.The Semantic Layer makes data accessible to business users while hiding the complexities with data definition,manipulation,reading,and mapping.The Semantic Layer creates actionable data!Building the Semantic Layer consists of many solutions,ranging from the organizational data itself to data models that support object or context-oriented design,semantic standards to guide machine understanding,and tools and technologies to enable and facilitate implementation and scale for interoperability and governance Tesfaye,2020.But once built,business users can access the data as per the business terminology.This will reduce the complexity/costs,improve security,and accelerate and streamline reporting for the business users in todays complex data environments.Importantly all these can happen using the data and analytics tools the users already have expertise in.This will ultimately increase the odds of better analytics adoption and improved business performance.Source SystemsSource SystemsSourceSystemsETL ToolsData TablesAggregatesData LakeS3XMLAJDBCODBCRESTSpark/HiveSpectrumMDXPythonDAXSQLData WarehousePlatformSemantic Layer12References?Bokman,Alec;Fiedler,Ars,Perrey,Jesko;Pickersgill,Andrew,Five facts:How customer analytics boosts corporate performance,https:/mck.co/2Ju0 xYo,Jul 201?CGT,Learn How Tyson Foods Appetite for Data is Customer-Driven,https:/Sept 2021?Experian,Is Dirty Data Costing you?,https:/www.xperience-Glossary,Master Data Management(MDM),https:/technology/glossary/master-data-management-mdm,Feb 202?Hurst,Heather,5 Systems of Record Every Modern Enterprise Needs,https:/201?IBM,Spreadsheets vs.Watson Studio Desktop,IBM Research,Jan 2020?Lynch,Christopher,How to Avoid the Not So Mythical$50,000 Query in the Cloud,https:/2020?MIT,Digitally Mature Firms are 26%More Profitable Than Their Peers,https:/bit.ly/2xBTPNe,Aug 2013?Southekal,Prashanth,Data for Business Performance,Technics Publications,April 201?Southekal,Prashanth,Analytics Best Practices,Technics Publications,April 202?Stanford,Data Definitions Best Practices,http:/web.stanford.edu/dept/pres-provost/cgi-bin/dg/wordpress/,202?Tesfaye,Lulit,What is a Semantic Architecture and How do I Build One?,https:/enterprise 202?Thuma,John,Five Things That Make a Great Universal Semantic Layer,https:/201913Prashanth Southekal,PhD,MBAPrashanth Southekal is the Managing Principal of DBP Institute(www.dbp),a data and analytics consulting and education firm.He is a Consultant,Author,and Professor.He has consulted for over 75 organizations including P&G,GE,Shell,Apple,and SAP.Dr.Southekal is the author of two books-Data for Business Performance and Analytics Best Practices-and writes regularly on data,analytics,and machine learning in F,FP&A Trends,and CFO.University.Apart from his consulting pursuits,he has trained over 3,000 professionals worldwide in Data and Analytics.Dr.Southekal is also an Adjunct Professor of Data and Analytics at IE Business School(Madrid,Spain).COO Magazine included him in the top 75 global academic data leaders of 2022.He holds a Ph.D.from ESC Lille(FR)and an MBA from Kellogg School of Management(U.S.).He lives in Calgary,Canada with his wife,two children,and a high-energy Goldendoodle dog.Outside work,he loves juggling and cricket.

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贸发会议：外国直接投资审查机制的演变：主要趋势和特征 (αγγλική έκδοση) (17 Seiten).pdf

Note:This IPM was prepared by Vicente Guazzini,Anastasia Leskova and Massimo Meloni under the supervision of Joerg Weber and the overall guidance of James Zhan.This document can be freely cited provided appropriate acknowledgement is given to UNCTAD.It has not been formally edited.SPECIAL ISSUE 9 SEPTEMBER 2022 IPM HIGHLIGHTS THE EVOLUTION OF FDI SCREENING MECHANISMS key trends and features At least 37 countries introduced a regulatory framework for the screening of investments on national security grounds since 1995.Key objectives included harmonizing or codifying dispersed provisions and practices on FDI entry,enhancing the protection of sensitive sectors from foreign takeovers,and ensuring sufficient publicity and visibility of the relevant regimes.Investment screening for national security was adopted predominantly by developed economies from Europe(22 out of 37),while the remainder of the schemes were adopted by a few developed and developing countries in other regions:9 countries in Asia,2 in North America,2 in Oceania,1 in Latin America and 1 in Africa.The trend towards the adoption or revision of FDI screening mechanisms accelerated in the second half of the 2000s,particularly after the global economic crisis,and reached a peak in 2020-2021,in the aftermath of the COVID-19 pandemic,both of which heightened concerns about potential foreign takeovers in sensitive sectors.Over the past five years,the scope and coverage of the“national security”concept was expanded,resulting in several new economic sub-sectors being considered as strategic.Governments also moved to subject new forms of critical know-how and strategic technologies to screening,including economic activities involving access to sensitive personal information or capable of shaping public opinion.Investment screening for national security comprises a patchwork of very diverse approaches,but some efforts to enhance regulatory alignment and achieve a higher level of harmonization are ongoing between jurisdictions within the European Union.In the context of the expanding use and scope of investment screening mechanisms,it is ever more relevant to take a balanced approach to policymaking,so as to enhance the States ability to address essential security concerns without weakening its FDI promotion efforts in the interest of sustainable development.By reviewing different models and regulatory options,this IPM highlights some policy practices that can help enhance the predictability,transparency,and administrative efficiency of screening regimes,by clarifying the procedural rules applicable to investors,and providing decision-making guidance for the implementing authorities.FEBRUARY 2023 ISSUE 25 2 ISSUE 25 FEBRUARY 2023 IPM Introduction With an increasing number of economies adopting security-related investment screening regimes and the expansion of the concept and coverage of“national security”,1 policymakers are still attempting to find a balanced approach that preserves the attractiveness of a country to investments,while strengthening the States ability to address potential national security threats posed by both foreign and national investments in strategic sectors.The present Investment Policy Monitor(IPM)provides an overview and analysis of dedicated regimes for investment screening,outlining emerging trends and common features(see Box 1 for UNCTADs approach).The analysis highlights the existence of a patchwork of different mechanisms,in which the key definitions,the coverage and the governance of investment screening varies significantly from country to country.In the absence of a common model applicable to security-related foreign direct investment(FDI)screening,this IPM can offer policymakers considering the introduction or revision of a screening mechanism an overview of different approaches to address national security risks and provide them with a general understanding of the existing legislative options to design a system for reviewing investments in areas deemed worthy of protection.1 See:Clifford Chance(2022).Box 1Box 1 UNCTADs methodological approach on investment screening At the current stage of policy developments in this field,the depth and detail of screening mechanisms in force varies greatly among different jurisdictions.As an unfolding regulatory trend,so far there is little uniformity in the level of complexity and normative elaboration among existing regimes,as well as a significant disparity in the availability of official information.These disparities mean that the contours of what constitutes a dedicated regime for investment screening are not set in stone.For the purpose of the analysis,this study relies on UNCTADs Investment Screening Database,which adopts the following methodological approach:-Screening involves the discretionary use of regulatory powers by public authorities,to be exercised on a case-by-case basis(thus not bound by statutory bans on FDI),and which involves national security considerations;-Only nationwide screening is considered,thus excluding sub-national level reviews;-Sectoral exclusions to FDI or negative-list schemes are not considered as screening;-Prohibitions on foreign ownership of land based on border-related or territorial integrity grounds are not considered as screening.Source:UNCTAD 3 ISSUE 25 FEBRUARY 2023 IPM Section A illustrates the trend towards the adoption of investment screening mechanisms to address national security risks from 1995 to 2022.In light of the recent peak of legislative activities in this area,particular attention is given to measures adopted during the 2020-2022 period in the context of the COVID-19 pandemic,as well as screening measures adopted in response to the war in Ukraine.Section B presents an overview of the differing policy approaches to address national security concerns.Issues of scope and rationale of investment screening and factors that are taken into consideration during the screening process,as well as screening governance are among those discussed.A.Key trends in FDI screening for national security The concept of foreign investment screening on national security grounds is not new.Some countries use a general safeguard clause on national security in their investment laws that provides sufficient legal ground to reject unwanted foreign investments.Others include sector-specific restrictions where foreign participation above certain limits would be considered detrimental to national security.However,in recent years a new trend to adopt sophisticated procedures specifically dedicated to investment screening on national security grounds can be identified.This shift in legislative practices can be explained by the intention of countries to harmonize or codify existing dispersed provisions and practices on FDI entry and to ensure sufficient publicity and visibility of the security-related investment screening regimes.The first signs of the current trend started to appear in the second half of the 2000s.Between 2006 and 2009,the number of countries making use of investment screening for national security increased threefold(from 3 to 9).In the aftermath of the global economic and financial crisis,and in parallel with the expansion of outward FDI from developing countries,more developed countries began to introduce dedicated regimes for the screening of investments.By 2014,a total of 17 countries had incorporated elements of investment screening to their national investment policies.Starting from 2016,countries have introduced a significant number of amendments to existing investment screening regulations,mostly seeking to expand their scope.Most of these reforms took place in 2020 and 2021,when 17 and 12 countries respectively adopted amendments to their screening regimes.Figure 1 shows that the peak of regulatory activity came in 2020,when the world economy faced risks associated with the COVID-19 pandemic.The number of countries introducing new screening regimes had been steadily growing for the previous decade and the pandemic did not change this trend but rather accelerated it.4 ISSUE 25 FEBRUARY 2023 IPM Figure 1:Number of countries introducing or expanding security-related investment screening(1995-2022)Source:UNCTADs Investment Policy Monitor In total,from 1995 to 2022,at least 37 countries introduced new regulatory frameworks for the screening of investments that include national security considerations.2 An additional 8 countries are undergoing a consultative or legislative process expected to lead to the adoption of a new mechanism,in response to the potential threat posed to its national security from some investments.3 Out of the 37 countries that have established investment screening for national security in the reviewed period 22 are developed economies from Europe.In other regions,these regulations are used only by a few developed and developing countries(9 countries in Asia,2 in North America,2 in Oceania,1 in Latin America and 1 in Africa).2 These countries are Australia,Austria,Canada,China,Czechia,Denmark,Finland,France,Germany,Hungary,Iceland*,India,Israel*,Italy,Japan,LAO Peoples Democratic Republic*,Latvia,Lithuania,Malta,Mexico*,the Netherlands,New Zealand,Norway,the Philippines*,Poland,Portugal,the Republic of Korea,Romania,the Russian Federation,the Kingdom of Saudi Arabia*,Slovakia,Slovenia,South Africa*,Spain,Thailand*,the United Kingdom of Great Britain and Northern Ireland,and the United States of America.Countries for which no sufficient data on investment screening regulations are available are marked by an asterisk(*).These are not considered in the analysis of section B.3 These are:Belgium,Croatia,Estonia,Greece,Ireland,Luxembourg,Sweden,and Switzerland.See:European Commission(2021)111141453171212321314321555205101520253035400510152025303540Introduces investment screeningExpands existing investment screeningCumulative number of countries with investment screening 5 ISSUE 25 FEBRUARY 2023 IPM Recent trends Regulatory changes towards a tightening of screening procedures for national security enacted over the past five years focus on three substantial aspects.Firstly,they expanded the scope of sectors targeted by the screening mechanism,in order to cover new activities increasingly considered as strategic.Secondly,they lowered the threshold rule triggering the FDI review,whether such thresholds refer to transaction value or percentages of foreign capital participation.Thirdly,they broadened the definition of investment or control that triggers the FDI screening(i.e.,by expanding the screening criteria or rationale,the scope of acquisitions and the type of investors falling under the screening regime).Other regulatory changes during the period included an extension of initial review timeframes(e.g.,the discretionary period during which the authorities can block an investment)and the introduction of sanctions and penalties for non-compliance with obligatory filing obligations.The expansion in the scope of FDI screening indicates that national authorities are increasingly concerned by foreign ownership of companies operating in new services activities perceived as strategic.Also,governments have stepped up scrutiny over entities engaged in business activities involving access to sensitive personal information or capable of modifying the balance of public interest values such as the pluralism of the press or the shaping of public opinion.Finally,governments have recently moved to include new forms of critical know-how and strategic technologies under the scope of FDI screening mechanisms(Box 2).Box Box 2 2 Regulatory changes expanding FDI screening scope since 2018(Policy examples)Activities related to the protection of sensitive information In 2019,Italy amended its screening regime to include“access to sensitive information,freedom and pluralism in the media”;In 2020,Slovenia introduced a temporary FDI screening mechanism whose scope includes acquisition of businesses which entail“access to sensitive information,including personal data,or the ability to control such information;the freedom and pluralism of the media”;In 2021,Malta amended its FDI screening procedure to include“access to sensitive information,including personal data,or the ability to control such information”;In 2021,Canada published new“Guidelines on the National Security Review on Investments”,stipulating a set of national security factors to be taken into account by the authorities in their review of FDI transactions.Such factors include“the potential of the investment to enable access to sensitive personal data that could be leveraged to harm Canadian national security through its exploitation”.Sensitive personal data under the guidelines covers a wide range of data on individuals;In 2022,Australia included a prior approval requirement for foreign investments targeting a“business or entity that has access to bulk sensitive personal information of over 100,000 Australian”.According to the authorities,sensitive personal information may include,non-exhaustively,medical and/or psychological information,psychometric and profiling information,financial information of individuals and genetic information;In 2022,the United States strengthened the FDI screening mechanism.An Executive Order of the President(No.14083)directed the Committee on Foreign Investment in the United States(CFIUS)to consider five 6 ISSUE 25 FEBRUARY 2023 IPM In addition,between 2020 and 2022,at least 12 jurisdictions introduced 25 screening measures in response to the COVID-19 pandemic(Box 3).The vast majority of these measures were either aimed at further restricting foreign investments by screening a wider scope of investments,transactions and investors or at creating more elaborate and detailed screening regimes(15 measures).In addition,several temporary security-related measures introduced during the COVID-19 pandemic were steadily extended for further periods or upgraded into a permanent screening regime(10 measures).The ongoing war in Ukraine was another driver of current trends to accelerate the introduction of dedicated screening regimes focused on managing national security and public order risks brought by inward foreign investments,with Canada,Italy and the European Union(EU)enacting screening-related policy measures in response to the war in Ukraine(Box 3).BoxBox 3 3 Recent changes to FDI screening legislation(2020-2022)(Policy examples)Measures adopted in response to Covid-19 pandemic*In 2020,Australia introduced temporary changes to the foreign investment review framework that are designed to protect national interests while dealing with the economic implications of the spread of COVID-19.In 2020,Canada enhanced scrutiny of FDI related to public health or involved in supply of critical goods as a response to opportunistic investment behavior in the context of the COVID-19 pandemic;In 2020,France,in response to the COVID-19 pandemic,included biotechnology in the list of sectors and critical technologies subject to review;specific factors when conducting national security reviews,including risks to sensitive data of United States citizens.New strategic technology sub-sectors In 2018,Lithuania amended its screening regime to include“information technology hardware and software of the State Enterprise Centre of Registers,software platforms and data of the main state registers and state information systems that process critical information”;In 2020,Japan expanded the scope of its screening regime by including“manufacturing industries related to highly-controlled medical devices”;In 2022,Australia published a Guidance Note on national security matters regarding foreign investment,in which it orders a prior approval requirement for acquiring direct interest in the national internet domain administration(.au);In 2022,in the United States,Executive Order No.14083 mentioned above also directed the CFIUS to consider,among others,the transactions effect on the resilience of critical supply chains and on the technological leadership of the United States in specified industries,when conducting national security reviews.Source:UNCTADs Investment Policy Monitor 7 ISSUE 25 FEBRUARY 2023 IPM In 2020,Germany stipulated that foreign acquisitions of at least 10 per cent stock in German companies developing,manufacturing or producing vaccines,medicines,protective medical equipment and other medical goods for the treatment of highly infectious diseases require prior governmental authorization;In 2020,Hungary introduced a temporary foreign investment screening mechanism applicable to investors from both inside and outside the European Union in 21 industries,including health care,pharmaceutical,medical device manufacturing,but also some non-medical industries;In 2020,India introduced the regime of prior authorization for all investments originating from countries that share land boarders with India“for curbing opportunistic takeovers/acquisitions of Indian companies due to the current COVID-19 pandemic”;In 2020,Italy lowered the screening threshold and expanded the scope of FDI screening to cover the financial,credit and insurance sectors,infrastructure,and critical technologies,including energy,transport,water and health,food security,access to sensitive information(personal data),artificial intelligence,robotics,semiconductors,cyber-security,nanotechnology and biotechnology;In 2020,Japan expanded the scope of screening by including“manufacturing industries related to pharmaceuticals”and“manufacturing industries related to highly-controlled medical devices”into the list of companies subject to specific notification requirements.In 2020,New Zealand introduced a“national security test”that allows the Government to decline consent for certain transactions ordinarily screened if they are considered contrary to New Zealands national interest;In 2020,Poland temporary extended the scope of FDI screening and widened the list of sectors/activities falling under the screening regime to include energy,gas and oil production,storage,distribution and transportation,manufacture of chemicals,pharmaceuticals and medical instruments,telecommunication and food processing;In 2020,Slovenia introduced a 3-year temporary FDI screening mechanism that applies,amongst others,to critical infrastructure,transport,water,aviation,media,data processing,artificial intelligence,medical and pharmaceutical technology,the supply of critical inputs;In 2020,Spain introduced a temporary screening procedure for all foreign investors from outside the European Union who acquire 10%or more of the share capital or an effective management or control of a Spanish company in the sectors of critical infrastructures,critical technologies and dual-use products,supply of fundamental inputs,sectors with access to sensitive information,and media;In 2022,Italy made the temporary COVID-related screening regime permanent.Furthermore,it broadened the scope of transactions falling under the FDI screening regime to include procurement of services and assets related to 5G networks and cloud services,and additional strategic assets and technologies in connection with cybersecurity and gave the Government authority to review acquisitions by investors from the European Economic Area(EEA);Measures adopted in response to the war in Ukraine*In 2022,Canada issued a“Policy Statement on Foreign Investment Review and the Ukraine Crisis”,indicating that,with respect to national security reviews,should it be determined that an investment,regardless of its value,has ties,direct or indirect,to an individual or entity associated with,controlled by or subject to influence by the Russian State,this will support a finding by the Minister that there are reasonable grounds to believe that the investment could be injurious to Canadas national security;In 2022,Italy introduced urgent measures to counter the economic and humanitarian effects of the Ukrainian crisis.Among others,it expanded a notification obligation to new subjects and widened the definition of non-EU individuals or entities;In 2022,the European Union adopted the“Guidance to the Member States concerning foreign direct investment from Russia and Belarus”,where it urged EU Member States to implement the FDI Screening Regulation to address risks related to security or public order related to FDI from the Russian Federation and Belarus.Source:UNCTADs Investment Policy Monitor Note:*Measures classified as such when the State has explicitly justified their introduction on the basis of the COVID-19 pandemic crisis or the war in Ukraine.8 ISSUE 25 FEBRUARY 2023 IPM B.A review of dedicated regimes for investment screening The analysis in this section covers 29 countries that have adopted dedicated regimes for investment screening,understood as those establishing a comprehensive set of substantive and procedural rules on the screening of foreign and national investments on national security grounds,which were available to UNCTAD for review.4 Such regulatory frameworks typically set out explicitly the scope,coverage,rationale and conditions under which the scheme is applicable,including a procedural timeframe and an expiry period for the exercise of the blocking power by the relevant authority,as well as a clearly defined set of rights,obligations,sanctions and remedies for the investors concerned.Accordingly,this section does not cover those FDI review mechanisms whose main focus is competition,domestic market protection,local SME promotion or other grounds,which include only a single provision reserving the States right to block a foreign acquisition on national security grounds.As illustrated below,there is no unified approach to FDI screening for national security reasons,with significant differences as to the scope,clarity and the transparency of the various mechanisms.Indeed,the complexity of applicable rules,the wide margin of regulatory discretion and the lack of predictability inherent in several regimes may become significant barriers to investment and represent an increasing administrative burden for host country authorities.In this context countries should seek to balance the safeguard of essential security concerns with the promotion of FDI,so as to ensure that restrictions on investment,or conditions on transaction,do not exceed what is required to protect national security.At the OECD level,guidelines to help countries design and implement FDI screening policies,so that they achieve their national security goals with the smallest possible impact on investment flows,were adopted in 2009.5 More recently some harmonization attempts have been made at the European Union level.Through“Regulation(EU)2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union”,the European Union sought to establish a Union-wide coordination and cooperation mechanisms on screening,including through a set of recommendations and principles governing the screening of investments.6 Scope and rationale of investment screening Two main approaches in national legislation are identified to determine the main subject of the screening mechanism.One approach is to discriminate on the basis of the economic grouping/s of origin of the investor.At least 12 countries define foreign investors subject to screening in whole or in part as entities or citizens not 4 For country-specific examples see:Baker McKenzie(2017);C.S.Goldman(Ed.)(2017);Dechert LLP(2022)and Jones Day(2018).5 The guidelines include the principles of non-discrimination,transparency of policies and predictability of outcomes,proportionality of measures,and accountability of implementing authorities.In particular,they state that governments should rely on measures of general application which treat similarly situated investors in a similar fashion(non-discrimination),with regulatory objectives and practices made as transparent as possible so as to increase the predictability of outcomes(transparency/predictability).Restrictions on investment,or conditions on transaction,should not be greater than needed to protect national security and should be avoided when other existing measures are adequate and appropriate to address a national security concern(regulatory proportionality).Finally,in order to ensure accountability of the implementing authorities,oversight procedures should be established,including internal government oversight,parliamentary oversight,judicial review,and periodic regulatory impact assessments(OECD,2009).6 Such recommendations include the introduction of provisions on transparency of screening rules and procedures;the protection of confidentiality of the information made available to the State;the establishment of screening timeframes and the possibility to seek judicial recourse against screening decisions of the national authorities,among other procedural elements.Furthermore,the Regulation mandates the European Commission to act as an advisory body on screening of FDI projects regarding EU-funded projects and programs.These involve development of critical infrastructure or critical technologies in sectors such as energy,transportation,telecommunications or scientific endeavors such as research on atomic energy and space exploration.9 ISSUE 25 FEBRUARY 2023 IPM belonging to the European Union.Not belonging to the European Economic Area is used as a discriminant factor by at least 4 countries,to the European Free Trade Association(EFTA)by 4 countries and to the OECD by one country.A second approach is based on the public or private nature of the foreign entity subject to screening.In this regard,at least 11 countries have enacted special screening provisions targeting specifically acquisitions of national entities by foreign State-owned entities.In terms of scope,screening procedures for the identification of national security risks can be classified in three categories.Cross-sectoral screening procedures are those that apply to transactions of a certain nature(e.g.,critical infrastructure,dual use products and technologies etc.),rather than to specific sectors(21 countries).This approach is present in the majority of screening regimes and allows countries to preserve a broad level of regulatory discretion in such a sensitive topic as national security.Sector-specific screening is also frequently utilized and can be applied in parallel or in addition to cross-sectoral screening(20 countries).Much less frequent is entity-specific screening(e.g.those applying to natural monopolies or specific companies)(4 countries).Detailed information about the rationale or criteria behind the screening process is provided by all analyzed countries except for two.In the wide range of criteria put forward,“public order”is the main screening criterion for 11 countries,while“national security”and“national interest”are offered as the key rationale in 6 and 5 countries respectively.Five countries provide more than one criterion(figure 2).The same criteria,however,can have different definitions depending on the regime considered.7 This is not surprising,as essential security concerns are self-judging and each country has a right to determine what is necessary to protect its national security(OECD,2009).The existence of such a wide range of often undefined criteria,however,can be a source of uncertainty for investors,with potentially deterrent effects on FDI.Figure 2.Investment screening rationale Source:UNCTAD,using M 7 For examples,under national security interests Norway understands country sovereignty,territorial integrity and democratic governance,including security interests related to defence and emergency preparedness,economic stability and freedom of action.Finland defines its key national interest as securing military national defence,functions vital to society,foreign and security policy objectives,and safeguarding public order and security.For more on this see:UNCTAD(2019).10 ISSUE 25 FEBRUARY 2023 IPM Assessment factors and legal certainty in investment screening In order to increase the legal certainty and predictability of the screening process for investors,several countries have introduced provisions that set out in detail the factors to be considered by the authorities in the screening process,as well as the aspects or investor features that are taken into consideration for the assessment of an investment project(Box 4).BoxBox 4 4 Examples of factors considered in the screening of investments In Austria,when assessing a possible threat to security or public order,particular account shall be taken of whether an acquiring person is controlled directly or indirectly by the government of a third country;whether an acquiring person,or a natural person who holds a senior position in an acquiring legal entity,is or has been involved in activities that have or have had an impact on security or public order in another member State of the European Union,and whether there is a significant risk that an acquiring person,or a natural person who holds a management position in an acquiring legal entity,is or has been involved in illegal or criminal activities.8 In Canada,the authorities will take into account the following factors:the effect on employment,on resource processing,on the utilization of parts,components and services produced in Canada and on exports from Canada;the degree and significance of participation by Canadians;the effect of the investment on productivity,industrial efficiency,technological development,product innovation and product variety in Canada;the effect of the investment on competition within any industry or industries in Canada;the compatibility of the investment with national industrial,economic and cultural policies,taking into consideration industrial,economic and cultural policy objectives enunciated by the government or legislature of any province likely to be significantly affected by the investment.9 In Germany,the assessment of a likely effect on public order or security can also consider whether(a)the acquirer is directly or indirectly controlled by the government,including other state agencies or armed forces of a third country;(b)the acquirer has already been involved in activities which have had undesirable effects on the public order or security of Germany or of another member State of the European Union,or(c)there is a significant risk that the acquirer or the persons acting on his behalf have been or are involved in activities which,in Germany,would amount to a certain crime or administrative offence under national legislation.10 In Japan,in the assessment,the authorities will take into consideration,among other factors,the capital structure of the foreign investor,its beneficial ownership and business relationships,the foreign investors plan and their track record relating to the investment(including the degree of potential direct or indirect influence by foreign governments and other related parties on the foreign investor).Furthermore,the Government will assess the possibility of technologies or information leakage or the probability of use of these technologies or information against the objectives of protection of national security,maintenance of public order,or safeguard of public safety.Track record of the foreign investors compliance with the Foreign Exchange and Foreign Trade Act and equivalent or similar legislation of other jurisdictions is also considered.11 In Slovenia,in determining whether a foreign direct investment is likely to affect security or public policy,the Government authority shall take into account,in particular:whether the foreign investor is directly or indirectly controlled by the government of a third country,including state bodies or armed forces,including through ownership structure or significant funding;whether the foreign investor has already been involved in activities affecting the security or public order of a Member State;whether there is a serious risk that the foreign investor engages in illegal or criminal activities.12 Source:UNCTAD,based on the cited documents.8 Section 3 of Austrian Investment Control Act/ICA:unofficial translation(europa.eu)9 Section 20 of Investment Canada Act(justice.gc.ca)10 Section 55A of Foreign Trade and Payments Ordinance(Auenwirtschaftsverordnung-AWV)(gesetze-im-internet.de)11 Factors to be considered in authorities screening of foreign direct investment:Ministry of Finance(mof.go.jp)12 Article 72 of Act determining the intervention measures to mitigate and remedy the consequences of the Covid-19 epidemic(europa.eu)11 ISSUE 25 FEBRUARY 2023 IPM Often,the potential direct or indirect influence by foreign governments and records of investors past behaviors relating to the investment are the first factors considered in national assessments.Awareness of the role played by new technologies in national security brought to existence new assessment factors,such as potential technology or information leakages or their potential use against the State.However,some assessment provisions are deliberately left open to interpretation,for example,the compatibility of the investment with national industrial,economic and cultural policies,which can add to the uncertainty associated with FDI screening regimes.Standard-setting regarding the assessment factors in investment screening is also evolving at a regional level,which could lead to a certain degree of harmonization.In this regard,the EU Regulation 2019/452 provides recommendations for EU Member States in the form of a list of factors that should be taken into consideration when determining whether an FDI project is likely to affect national security or public order.Governance of investment screening In over half of the countries reviewed(15),the screening is conducted at ministerial level by the authorities in charge of investment matters(e.g.,the Ministries of Investment,Industry,Economy,Energy or Trade).In several cases,however,a separate,ad hoc body was created(or is currently envisaged)to perform the screening and all procedures associated with the mechanism(8 countries).Only 6 countries rely on a national regulatory authority to take on screening duties.Finally,across 22 countries,the authority responsible for investment screening seeks advice from other government agencies or related bodies on the proposed investments,when their expertise is deemed necessary for the decision.Investors affected by screening can be subject to different administrative requirements,as summarized in Figure 3.The large majority of countries(24)introduced obligatory filing schemes,including 7 countries that adopted several schemes either for different types of investors or for different sectors of activities.In addition to the obligatory filing or as a separate procedure,17 countries have adopted a notification procedure.Finally,at least 9 countries use a pre-authorization(pre-formal screening)procedure.Each of the above-mentioned procedures is considered briefly below.Figure 3.Administrative requirements in investment screening for national security(number of countries)Source:UNCTAD 12 ISSUE 25 FEBRUARY 2023 IPM Under the obligatory filing scheme,investors must submit certain categories of transactions for review.Such categories may vary significantly from one country to another.Transactions subject to review may include those exceeding a certain value or a certain foreign ownership percentage threshold(21 countries),those taking place in specific sectors(1),or a combination of both(6 countries).In addition to those,or as a separate issue,some countries introduced a“control test”to examine specific transactions.These include those which may lead to the acquisition of a number of voting rights that would allow an investor to pass or block resolutions governing the affairs of the entity,to gain access to information,systems or technologies that are important for national security,or to transactions that would give an investor a significant influence over the management of the company in any other way.Filing obligations can be“light”,i.e.,requiring the investor to provide a general description regarding ownership of the acquiring entity and an overview of the proposed investment project(16 countries),or more extensive,i.e.,requiring not only to report on ownership information but also to provide a draft of the potential merger or acquisition,as well as a detailed business plan for the economic activities of the acquiring entity(9 countries).These provisions are without prejudice to the authoritys power to request additional information or to conduct its own enquiry as to the provenance of the proposed investment.On the other hand,the notification regime is characterized primarily by its voluntary nature and by a simplified procedure,which may lead the investor to notify the future investment plans to the screening authority,to wait for a“no objection order”,or to notify the investment post factum(Box 5).Typically,investors choose to undergo the notification procedure to obtain legal certainty,in situations where the applicability of the filing scheme is not clear or when there is a risk that the transaction might be“called in”at a later stage.However,in some cases,the line between the notification and the filing regime is blurred(e.g.,in situations where the declaration should be sent to the reviewing authority to report the beneficial ownership change of a shareholder of a company operating in a strategic sector).Failure to comply with this rule may result in a sanctioning decision to alienate shares or stocks of the equity capital of the said shareholder.A pre-authorization(pre-formal screening)procedure is used to assist investors in cases when it is unclear whether the transaction in question falls under the official screening regulation.This procedure can help foreign investors to navigate the complicated screening rules,it may also reduce the workload of reviewing authority and allow them to focus on more critical transactions.In some cases,the pre-authorization procedure is obligatory for specific sectors(for example,nationwide radio or television,broadcasting,or a publisher of a periodic press),in which the State reserves the right to a certain degree of control,without subjecting these transactions to obligatory filing procedure.BoxBox 5 5 Approaches to the governance of investment screening for national security In Australia,the FDI screening mechanism includes:(a)Mandatory notification of proposed investments in certain assets and in national security business as defined in the regulation.In such cases,the investor should seek approval before taking action and is subject to penalties for failure to notify;(b)Voluntary notification of reviewable national security actions in such cases where there is no direct obligation to notify the reviewable actions.Guidance is provided for investors in investment areas where voluntary notification is encouraged.However,investors may choose to notify the investment in order to extinguish the call-in power;(c)The investments that do not require mandatory notification may be called-in for review on national security grounds by the authorities when the action is proposed or up to ten years after the action has been taken;and(d)Under exceptional circumstances,the authorities can require modification and even divestment of any approved investment where national security risks emerge(power of last resort).China introduced a three-level FDI screening system.When a foreign investment is made in any of the sectors specified in the regulation,it should be declared to the relevant authority.Before filing a formal 13 ISSUE 25 FEBRUARY 2023 IPM declaration for security review,a party may request a consultation with the relevant authority.Upon receipt of the declaration,the authority shall decide whether there is a need to conduct a security review of a declared investment and notify the party.Before the formal decision is received,a foreign investor cannot proceed with an investment.Further review may be conducted in the form of an ordinary review or a special review.During the special review,the investor may be requested to complete relevant documentation or provide additional details.In Germany,investment screening for national security is administered through:(a)mandatory filing of proposed acquisitions in German businesses above the established thresholds and in any of the listed sectors considered by the German Government as sensitive or strategic.The authority authorizes the acquisition if it does not raise any concerns regarding public order or national security;(b)voluntary notification of acquisitions of German businesses when the transaction entails ownership of over 25 per cent,in any other sector.Foreign investors may apply for a clearance certificate(“certificate of non-objection”)to obtain legal certainty on whether an acquisition is subject to review and/or whether it may be prohibited;(c)an authority may initiate a review on its own initiative(ex officio)when it has knowledge of the acquisition up to five years after acquisition took place.In Japan,a foreign investor carrying out an inward direct investment as defined in the law will be required to file either:(a)a prior notification,when a foreign investor intends to engage in businesses that are likely to cause a situation that impairs national security;or(b)a post facto report,when the investment does not fall under the previous category.Failure to file a prior notification or post facto report can result in criminal and administrative penalties.In the Russian Federation,FDI screening for national security is conducted through:(a)mandatory filing of the proposed investments in strategic sectors for which a prior consent should be obtained in order to proceed with the investment;(b)post facto notification when,due to the change in voting rights distribution,the foreign investor gains control over the enterprise in the sectors of concern;(c)pre-authorization procedure for cases when the establishment of a foreign investor control is not clear.In this situation,the investor may request the relevant authorities to clarify whether the mandatory filing is necessary.In the United States,the FDI screening mechanism consists of:a)a voluntary filing process in which investors submit declarations or notices of transactions to the CFIUS.These notices are subject to review within 45 days,and CFIUS may initiate further investigation.Investors might fast-track the screening procedures through a lighter procedure by submitting a declaration on covered transaction in order to receive a potential“safe harbor”letter,which prevents CFIUS from subsequently initiating a review of a transaction,except in certain limited circumstances;b)a mandatory filing process for certain transactions that require authorization under FIRRMA;c)an ex officio procedure,in which the authority might review pending or completed transactions if it has reason to believe that the transaction is subject to CFIUS jurisdiction and may raise national security concerns.Source:UNCTAD Duration,transparency and other procedural elements in investment screening The timeframe for the investment review is clearly indicated in the legal instruments of all countries,but only in half of the reviewed regimes,the investor has a right to judicial appeal against a decision blocking the proposed investment.In addition,only 7 countries include a provision establishing a tacit approval of the investment project upon expiration of a predefined period(Austria,Finland,Italy,Latvia,Lithuania,the Netherlands and Portugal).Investment screening regimes tend to operate outside public scrutiny and provide limited levels of transparency to those involved in the screening process(OECD,2021).While only 12 countries have a legal obligation to publish decisions on investment screening,no direct provisions related to prior notification of 14 ISSUE 25 FEBRUARY 2023 IPM stakeholders about the planned changes in screening regulation were identified.Only two countries included legal provisions on prior consultation with relevant stakeholders or interested parties(UK,Japan).While a small number of countries have started reporting official data on FDI screening(Australia,Canada,France,Germany,Italy,New Zealand,Russian Federation,United States)(UNCTAD,2021),the type of information,reporting periods and metrics used vary from country to country.At the European Union level,attempts are ongoing to introduce reporting obligations on the application of the screening mechanisms on an annual basis,including on decisions allowing,prohibiting or subjecting foreign direct investments to conditions or mitigating measures.Once the review process of an investment project on national security grounds is completed,the decision may lead to different consequences:-To authorize the investment project,subject to certain conditions(25 countries);-To order divestment measures(9 countries);-To prohibit investments that are considered a threat to national security(25 countries).Screening regulations provide for a broad range of sanctions for non-compliance with the relevant procedures.Injunctions can be issued:to modify the investment in order to exclude the possible risks for national security 3 countries;to restore the status quo which existed before the investment 4 countries;or any of the above-9 countries.Failure to comply with the obligatory filing requirements or other obligations under the screening regime may result in administrative fines(21 countries)or even criminal charges,including imprisonment(9 countries).In some cases,the court may order civil pecuniary penalties or interest to be paid(New Zealand);or register the non-compliance in a negative credit record(China);or to prohibit the representation of the company and the management of its record-keeping(Latvia).Furthermore,a range of sanctions are envisaged to prevent investors from posing any harm to the protected interests of the country,in such cases where implementation of the injunction can be delayed.These include conservatory measures,such as a restriction to disclose company-related information to the acquirer,the appointment of a trustee or external manager(4 countries),or the imposition of vote rights restrictions(13 countries).As a legal conservatory measure,in 12 countries,the unauthorized investment transaction is considered void or nullified from the date on which it took place.Conclusion In the past decade,the number of countries introducing new screening regimes and amending the existing regulations has been steadily growing.At the moment,dedicated screening regimes are enacted predominantly by developed countries,but as the trend continues,it is likely to expand also among developing countries.As investment screening regimes become more widespread and comprehensive,the complexity of applicable rules,the wide margin of regulatory discretion and the lack of predictability inherent in several regimes may become significant barriers to investment and represent an increasing administrative burden for host country authorities.Finding the proper balance between preserving the appropriate level of regulatory discretion to address constantly evolving challenges in the areas of national security and technological progress and ensuring an acceptable level of legal certainty and predictability to foreign investors is a challenge.15 ISSUE 25 FEBRUARY 2023 IPM The policy practices put forward in this report,however,indicate that there is ample scope to improve the transparency,predictability and administrative efficiency of investment screening mechanisms,and introduce effective appeal.In particular:(i)Pr Predictability:the complexity of investment screening mechanisms both in terms of the applicable rules and possible substantive outcomes creates uncertainties about how these rules will be applied in practice.Introducing regularly updated guidelines on applied procedures or special notes on different aspects of screening,including illustrative examples and cases,can enhance predictability.(ii)Transparency:information about the FDI screening procedures should be made available on dedicated websites or platforms.This may include relevant legal documents with a link to their official text and all relevant official information.Where possible,this should be available in languages commonly used by investors in the country.In addition,the publication of available statistics on screened and rejected FDI transactions may help potential investors to manage their expectations regarding the planned investments and expected FDI screening timeframes.(iii)Administrative efficiency:the expansion of strategic sectors and transactions that fall under the scrutiny of the FDI screening mechanism can create significant administrative burden for the implementing authorities.Introducing information and communication channels and widening the scope of application of pre-authorization procedures allows to deal with less complex applications outside the lengthy and formal screening process and decrease the overall number of applications going through the filing procedures.16 ISSUE 25 FEBRUARY 2023 IPM References Baker McKenzie(2017).“Rising Scrutiny:Assessing the global foreign investment landscape”.A Baker McKenzie Report.November.C.S.Goldman(Ed.)(2017).“The Foreign Investment Regulation Review(Fifth Edition)”.The Law Reviews,September.Clifford Chance(2022).“The Evolving Concept of National Security”.February.Dechert LLP(2022).“The Evolving Global Foreign Direct Investment and National Security Review Landscape”.May.European Commission(2021).“First Annual report on the screening of foreign direct investment into the Union”.Report from the Commission to the European Parliament and the Council.COM(2021)714 final.Brussels.Jones Day(2018).“Foreign Investment Control Heats Up:A Global Survey of Existing Regimes and Potential Significant Changes in the Horizon”.January.OECD(2009).Recommendation of the Council on Guidelines for Recipient Country Investment Policies relating to National Security,OECD/LEGAL/0372.Paris:OECD.OECD(2021).Transparency,Predictability and Accountability for investment screening mechanisms.Research note by the OECD Secretariat.Paris:OECD.UNCTAD(2019).Investment Policy Monitor.National Security-Related Screening Mechanisms for Foreign Investment:An Analysis of Recent Policy Developments.Special Issue,December.New York and Geneva:United Nations.UNCTAD(2021).World Investment Report 2021:Investing in sustainable recovery.New York and Geneva:United Nations.United Nations publication.17 ISSUE 25 FEBRUARY 2023 IPM For the latest investment trends and policy developments,please visit the website of the UNCTAD Investment and Enterprise Division unctad.org/diae investmentpolicy.unctad.org unctadwif For further information,please contact Mr.James X.Zhan Director Investment and Enterprise Division UNCTAD diaeinfounctad.org 41 22 917 57 60

1人浏览 2023 年 3 月 20 日 17页 5星

Strategie&: 2023 Digital Vehicle Report (Volume 1) (English version) (40 pages).pdf

Digital Auto Report 2023What consumers really wantVOLUME 1Strategy&2Eleventh annual Digital Auto Report,developed by Strategy∧ PwCGlobal consumer survey with a focus on the US,EU and China(n=3,000)Quantitative market outlook up to 2035,based on regional structural analysisInterviews with industry executives at OEMs and suppliers,and with leading academics and industry analystsDigital Auto Report 2023Digital Auto Report 2023 Volume 1Coming up next:Volume 2Assessing global mobility market dynamicsMarket outlook penetration of technologies and mobility typesTechnology shifting gears in connected,electric,automatedRegulation slowdown or acceleration of key policies?This report:Volume 1Understanding consumer preferences and implicationsConsumer view changing mobility preferencesImplications for auto players interface,subscription and chargingStrategy&Addressing changing consumer preferences requires auto players to gear up their user interfaces and business modelsNote:Please refer to respective section for detailed assumptions and sources behind stated propositionsExecutive summary Volume 1Digital Auto Report 20233Our consumer survey(n=3,000 in Germany,US,China)captures current preferences in auto&mobility and is contrasted with expert opinionsIn respect of connected services,consumers first want to get the basics right the highest priority is safety navigation,phone mirroring is gaining importance,on-demand car functions as well;experts rate the importance of infotainment and lifestyle higher than consumers do;willingness to pay for full set of connected services stands at 20/months in GER and the US,and at 40 in China experts give more conservative estimatesGermans still hesitant about BEV cars only 35%would consider getting one;more openness in the US 50%;China very open to BEVs with 90%Low trust towards L4 automated vehicles in GER and US with 60-70eling uncomfortable vs.15%in China;but on the other hand,Germans who want to use L4 have a higher willingness to pay to use robo-taxis than to use driver-driven taxis;in the US and China willingness to pay is lowerPurchasing a new/used car preferred;subscription models gain traction;online car purchase scores highest in China(36%vs.10%in Germany)Consumers intend to use public transport more often than last year,but show similar intentions for own car;less interest in sharing/hailing1.Consumer preferences2.Automotive implicationsAuto players face strategic challenges with regard to connected,electric,automated&smart mobility.Volume 1 focuses on three key aspects:A Getting the user interface rightAs software-defined vehicles open the door to many new markets,OEMs need to be clear in which consumer life areas they want to play,which experience differentiators to focus on(luxury vs.convenience),and how to build a corresponding service portfolio.Investment decisions should be based on value creation beyond direct user revenues,with a balanced view on build vs.buddy vs.buy for tech componentsB Rethinking vehicle salesOEMs benefit from a rising demand for car subscriptions-expected to grow from 0.3m to 2-4m units by 2035 in Europe.To reach profitability.OEMs need to balance consumer needs(model flexibility,transparent pricing)with smart asset lifecycle management for maximum residual valueC Going beyond the vehicleNew business models emerge around batteries and bi-directional charging.With 5m bi-di cars in Germany by 2035,market potential is 160-220m for vehicle-to-home/microgrid and 470-550m for vehicle-to-grid solutions assuming successful orchestration of ecosystem playersStrategy&Contents2.Implications for auto players interface,subscription and charging1.Consumer preferences connected,electric,automated and smartDigital Auto Report 20234Strategy&Latest consumer attitudes within CASE are reflected in a survey of 3,000 respondents in Germany,US and China*Age brackets harmonized;*Low income(1,6T EUR,2T USD,8,3T EUR,10T USD,64T YUAN)Overview of consumer surveyDigital Auto Report 20235Consumer OverviewKey resultsn=1,000Gender(%)n=1,000n=1,0005149Age*(%)Household income*(%,gross monthly)9 743248Medium incomeLow incomeRather low incomeRather high incomeHigh income33353235-5418-3455 3regions15questions3,000respondents50504456273736184339243018910213127138Employer type of experts(%)211663OEMSupplierOperator18384433531450expertsPurchasing a new or used car still preferred option,but car subscription models are gaining tractionConsumers want to reduce CO2 mainly through more walking/cycling,switching to electric car,and using more public transport Safety navigation remain the most important connected services features on-demand functions gaining popularityWillingness to pay at 20 per month in Germany and the US,while at 40 in China experts more cautiousGermans still sceptical about BEV cars only 35%would consider getting one,but more openness in the US 50%In China,overwhelming preference for BEV with 90%considering such option vs.only 80%considering ICEGerman/US respondents sceptical about L4 automated cars 60-70%uncomfortable vs.15%in ChinaWillingness to pay for robo-taxis vs.driver-driven taxis is lower in the US and China than in GermanyStrategy&Safety and navigation remain as most important connected services features on-demand car functions on the riseSource:PwC Strategy&consumer researchSafety and navigation still mostimportant feature for respondents across all regions.Significant increase in the number of participants in Germany who rate smartphone mirroring as important”Mirror smart-phone in car27%NavigationSafetyInfotainment/EntertainmentVehiclemanagementOn-demandcar functionsLifestyle and comfort80 xiE9xqaUbYv%Question:“Which connected service categories are particularly important to you?”Consumer Connected202320212020Infotainment/entertainment more important for younger consumersDigital Auto Report 20236Connected services Share of participants rating feature as important Infotainment/entertainment more important for younger consumersStrategy&Experts rate infotainment higher than consumers do in China,they underestimate relevance of on-demand functionsSource:PwC Strategy&expert surveyConnected services Share of experts rating feature as importantSafety,navigation and entertainment are considered the most important byexperts.Experts in Germany are rather less enthusiastic when assessing the importance of mirroring smart-phonesExperts in China are comparatively less upbeat when assessing the importance of on-demand functions and lifestyle&comfort services.”94898931736863VehiclemanagementNavigationSafetyLifestyle and comfortOn-demandcar functionsMirror smart-phone in carInfotainment/Entertainment-48% 63% 130i946969758175 35% 28936780877367-27% 14%-25%Question:“Which connected service categories are particularly important to you?”Expert Connected2023 Experts 2023 ConsumerDigital Auto Report 20237Strategy&Smartphone mirroring to the car has highest rating;Auto OEM apps for service access are less popularSource:PwC Strategy&consumer research;Difference to 100%:no/low likelihoodConnected services and media/entertainment in the car53iE2%On a screen mirroringfrom a smartphoneinto the vehicleHighest preference across all countries is for smartphone mirroring.Media/entertainment via an auto OEM application is less popular.”Question:“How would you prefer to enjoy connected services and media/entertainment in your car?”Consumer Connected59i75YcE3%1stand 2ndrankOn an appof content providerinstalled in your carOn my smartphonedirectlyAuto OEM appaccessing contentDigital Auto Report 20238Strategy&010203040506070Notes:1)Calculation of price points based on van-Westendorp-methodologySource:PwC Strategy&consumer research;Exchange rates:USD/EUR 0.93,YUAN/EUR 0.14(15.02.2023);PwC Strategy&expert survey research 2023;n=50Connected services Median willingness to pay1)High spread of willingness to pay in China indicates strong polarisation of luxury vs.budget customers differentiated service packaging neededHigher optimal price in China indicates that consumers envision more benefits from the“perfect connected service bundle”than in the US/GER expert view more conservative on prices.”Consumer Connectedfor a full set of connected services in the vehicle that“perfectly fit your needs”Willingness to pay1)(monthly in)Question:“At what price would you consider a full set of relevant connected services Too cheap?”A good value for money?”Starting to get expensive?”Too expensive?”By nationalityXXXMaximum priceMinimum priceOptimal priceExpert estimateWillingness to pay for connected services around 20/month in Germany and the US but twice as much in China(40)Digital Auto Report 20239Strategy&Among on-demand functions,automated driving features such as traffic jam pilot/parking pilot are attracting more interestSource:PwC Strategy&consumer researchOn-demand car functions Share of participants rating function as importantConsumer ConnectedAutomated driving functions traffic jam pilot or parking pilot attract considerably more interest vs.previous year.Air condition activation is still viewed as the most importanton-demand car function.”Question:“How important would be on-demand car function.to you?”69ccSHID%Traffic jam pilotAdvanced headlightfunctions/performanceAir conditionactivationExtension of batteryrange(e.g. 80 km)Seat heatingactivationParking pilotIncrease of enginepower(e.g. 50 hp)60RSwebAx 232021Digital Auto Report 202310 Traffic jam pilot more important for older consumersStrategy&Experts in Germany/US attach even more importance than consumers to automated driving function attractivenessSource:PwC Strategy&expert surveyOn-demand car functions Share of experts rating function as importantExpert ConnectedExtension of battery range and traffic jam pilot are considered the most important functions among experts When compared with consumers,experts are particularly bullish about on-demand engine power.”Question:“How important would be on-demand car function.to you?”84tX0%Increase of enginepower(e.g. 50 hp)Air conditionactivationExtension of batteryrange(e.g. 80 km)Advanced headlightfunctions/performanceSeat heatingactivationTraffic jam pilotParking pilot 94% 129ci% 81% 108sss 23 Experts2023 ConsumerDigital Auto Report 202311 Experts in US&China are more conservative in assessing the importance of air conditioning activationStrategy&H2O2 77%Source:PwC Strategy&consumer researchShare of participants rating engine types as likely for next purchase(%)Question:“Assuming you wanted to buy/lease/subscribe to a passenger car,how likely are you to consider the following types of engines?”Consumer Electric53RyWQABD%GasolineBEV69%PHEV73D9555-34yo55 yo35-54yoAge bracketLooking at powertrain preferences,German and US consumers stick with gasoline,while Chinese prefer BEVDigital Auto Report 202312 Gasoline engine surprisingly more attractive for younger consumersGasoline is most popular engine type in USA and Germany,followed by PHEV engines,which are slightly more popular than BEVs.Chinese consumers exhibit opposite preferences with BEVs being most popular,ahead of hybrid and ICE engines.”Strategy&Question:“How comfortable would you feel using an autonomous vehicle(Level 41)”1)There is still a steering wheel and pedals,but no human action or supervision is required,except in more complex cases such as inclement weather or an unusual environment2)Can operate fully automatically on any road and under any conditions that a human could negotiate.There is no steering wheel or pedals.All you have to do is specify a destination to the vehicleSource:PwC Strategy&consumer researchAutomated driving Consumer attitudesConsumer AutomatedQuestion:“How comfortable would you feel using a fully autonomous vehicle(Level 52)”50C$#8%9G%40%Very comfortableNot comfortable at allRather not comfortableRather comfortable66S0%6Q0%6%Vs.14%in 2021Vs.18%in 2021Vs.39%in 2021In general,willingness to use automated cars has recovered in comparison with relatively low 2020 figures,which resulted from negative headlines at the time e.g.following accidents and cybersecurity threats.Scepticism towards“fully automated”vehicles(Level 5)still stronger than for Level 4.Consumer acceptance of automated driving remains low in Germany and the US more openness in ChinaDigital Auto Report 202313Level 5Level 4Strategy&Source:PwC Strategy&consumer researchAutomated driving Top 3 preferences for usage of time gainedThe intention to use time gained from not driving went down compared to 2021 the reduction was significant in Germany and the US.Media&Entertainment as well as relaxation are still the main intended activities.”Consumer Automated414533525139Relaxation and recovery(e.g.sleep)Media and entertainment(e.g.video streaming)Work and productivity(e.g.email)414030455539Work and productivity(e.g.email)Media and entertainment(e.g.video streaming)Relaxation and recovery(e.g.sleep)20222021575349626257Relaxation and recovery(e.g.sleep)Media and entertainment(e.g.video streaming)Social exchange(e.g.video-conferencing)Question:“For which activities would you use the time gained while driving in a fully autonomous vehicle?”On an robo-ride,people want to be entertained or relax in GER/US they also want to work,but in China prefer to socializeDigital Auto Report 202314Strategy&60%of US citizens want to pay less for a robo-taxi vs.a driver-driven taxi;only 5%want to pay more vs.30%in GermanySource:PwC Strategy&consumer researchAutomated driving Willingness to payQuestion:“When considering an average taxi ride and its price,what would be your willingness to pay for an autonomous ride compared to this taxi ride?”Consumer Automated28$EVdg67WD9D700SS77%7%9%6U y35-54y18-34y35-54y18-34y55 y3-34y35-54y6U y100%Im willing to pay moreIm willing to pay the sameIm willing to pay lessDigital Auto Report 202315While younger German respondents are willing to pay more for an autonomous ride,older Germans are less inclined to do so.US and Chinese respondents overwhelmingly intend to pay less for an automated ride among those who want to pay less,a 40-50%price cut from driver-driven taxis is the norm.”Strategy&Majority of respondents prefer to purchase a new or used car;but car subscription models are attracting interestSource:PwC Strategy&consumer research|Difference to 100%:no/low likelihoodRanking of buying/leasing/subscribing to a car70G3%Purchase of a new carLeasingof a new carPurchase ofa used carSubscriptionof a carThe intention to purchase a used car is growing,especially in Germany and the US.Subscription is gaining in popularity especially in China.The preference for subscription increased strongly in Germany and the US in 2023(27%vs.14%in Germany and 19%vs.15%in US).”Question:“How would you rank the following ways of acquiring a car if you needed to purchase,lease,or subscribe to a passenger car in the next one to two years?”Consumer Smart Mobility76x1)V%7C%1stand 2ndrankLeasing ofa used carDigital Auto Report 202316Strategy&Readiness for online car purchases very high in China,while rather low in Germany the US falls in betweenSource:PwC Strategy&consumer researchWillingness to make car purchases onlineQuestion:“Would you buy your next car online?The willingness to buy a car onlinevaries significantly across countries.In China,people are particularly open to completing certain steps or even the entire buying process online.In contrast,the majority in Germany feel more comfortable with store processes.”2023417%I would rather do everything at the storeYes,I feel comfortable configuring and signing online,but I would prefer to do a test drive at the storeI would configure it online,but sign and test drive it at the storeYes,I feel comfortable with doing all steps online18 2332 23361%Consumer Smart MobilityHighHighHighLowLowLowWillingnessWillingnessWillingnessDigital Auto Report 202317Strategy&20212023Even as immediate COVID-19 risks decline,using ones own car remains popular;increasing use of shared modes in ChinaSource:PwC Strategy&consumer research Mobility pattern after COVID-19 restrictions(%)Consumer Smart MobilityQuestion:“COVID-19 has temporarily changed our mobility behavior in many aspects.How do you plan to use modes of transport once we have left the pandemic behind us?”MoreSameLess/not at allUsing ones own car is still seen as the most convenient means of transportation with highest increase in demand in Germany and the US.In China,consumers plan to use shared modes more.Across all regions,the number of people planning to use public transport more has increased.”202320212021202320212023202120232021202320212023Own bikeBy footOwn carPublic transportShared micro-mobilityCar-sharingRide-hailingDigital Auto Report 202318Strategy&45) 2136 2354( 23202125%Source:PwC Strategy&consumer researchFactors encouraging sustainable transportation modesIn Germany,there has been a sharp increase in the number of consumers who say that better availability is an important factor in persuading them to use sustainable transport.US respondents focus strongly on cheaper prices,whereas user-friendly access is most likely to encourage respondents to use sustainable transport in China.”59# 21202324mily offers(e.g.4 bikes for the price of 2,.)Cheaper priceBetter availability(e.g.more bikes)User-friendly access(e.g.cashless payment via app,.)Incentives by the employer(e.g.job bike,car sharing benefit package,.)Consumer Smart MobilityQuestion:“What would encourage you to use sustainable transportation(e.g.bike sharing,car sharing,public transportation)more frequently?”Price and availability are by far the top drivers for encouraging consumers to use sustainable transportDigital Auto Report 202319Strategy&25u%Source:PwC Strategy&consumer research Top-3 contributions to CO2reduction High willingness to contribute to CO2reduction,especially in China(98%)strong increase in the US(79%vs.52%last year)Main contributions will be completing short-distance journeys more often on foot/by bicycle,switching to an electric car,or using public transport more frequently.”Question:“What major personal changes would you like to do to contribute to a reduction in CO2emissions?”51)%Completely cut out short-haul flightsShort distances more often on foot/by bicycleUse public transport more frequently Short distances more often on foot/by bicycle43$7%Switch to an electric carUse public transport more frequently Use public transport more frequently 49HT%Switch to an electric carShort distances more often on foot/by bicycle21y%DonothingChange behavior98%2%Consumer Smart MobilityEvery country has different priorities to reduce CO2:In GERmore walking,in the US switch to BEV,in CN public transportDigital Auto Report 202320Strategy&2.Implications for auto players interface,subscription and charging1.Consumer preferences connected,electric,automated and smartDigital Auto Report 202321ContentsStrategy&Digital Auto Report 202322Getting the user interface rightStrategy&The relevant market for automotive players is expanding beyond the car itself maintaining user access is crucialSource:Strategy&,PwC EcosystemizerRealiserEnablerMobility demandMobility demand is influenced by long-term economic,political and social trends as well as generational changes The individual user is located at the center of the ecosystem approach(business to human)Consumer needs can be grouped into ten distinct Life AreasWithin these Life Areas,ecosystems emerge in the form of business-to-business and business-to-consumer relationships around specific customer needsMobility solutionsHuman needs in mobility Life Areas determine customer requirementsSuccessful mobility ecosystem players are clear on four key topics:Digital portfolio scopeE.g.life area coverage,niche positioning,Experience differentiatorsE.g.luxury,convenience,Value chain integrationE.g.vertical/horizontal integration,partnering,Value leversE.g.top-line,bottom-line optimization,Digital Auto Report 202323Redefining business models to meet human-centric mobility needs RecreationOrchestratorE.g.AggregatorE.g.OEME.g.SupplierStrategy&Getting the digital interface right means creating a differentiated experience for diverse customer needsSource:Strategy&analysis Experience differentiators ExamplesAt your fingertipsFINN manages to provide customers with their vehicle of choice around seven days after booking7Hassle-free serviceGenesis picks up and returns the car for aftersales services at a place of choice,managed through a personal assistant Seamlessly integrated offeringsUber integrates multi-modal mobility options with related services such as food delivery,health or transit on one platformFull flexibilitySixt offers various vehicle ownership models(renting,subscription,sharing)with flexible run times and payment schemes in one appProactive offeringsBMW 7 Series actively welcomes riders into the car by extending a carpet made of lightTrading scarcity Lamborghini has created only 5 digital NFTs based on physical keys made from carbon fiber from the international space stationDifferentiated experience:LuxuryDifferentiated experience:ConvenienceDigital Auto Report 202324Efficient interactionsMercedes me app lets users manage their vehicles on the go,from scheduling service,to making payments,to getting assistance at the push of a buttonBespoke services Bentley allows their buyers to customize every part of the car,including paint,finishes,materials and even light-projected logosDigital opulence Rolls Royce cements the credentials of its bold new brand identity for its website with mood videos similar to perfume adsCrafted touchpoint NIO broadens their services with the EP House,a space where owners can come together and celebrate the brandStrategy&A value-creating digital service portfolio requires automotive players to balance multiple trade-offsSource:Strategy&analysisDigital portfolio scope ExamplesVehicle Function-as-a-ServiceConsumer onboard servicesConsumer offboardservicesB2B/data servicesPortfolio Trade-offsDifferentiation vs.revenue potentialReach vs.profitabilitySynergy focus vs.risk hedgingTouchpoint controlvs.open partnersDigital first vs.BEV/AD availabilityMobilityEntertainmentWorkHealthSound BMW e-engine sound packAutonomous driving Tesla autopilot upgradeLight BMW high beam assistCamera Tesla sentry modeAccess Tesla virtual bluetooth keysParking search and pay VW we parkP2P car/ride sharing Sono motors appFleet mgmt./diagnostics Daimler connect businessCar data marketplace Caruso,Otonomo,High M.Car data based insurance BMW CarDataDrivers log/GPS tracking Daimler connect businessPredictive maintenance BOSCH,CarmenIntelligent car assistant Alibaba,Volvo/DaimlerGaming Tesla arcade,RacingEntertainment Tesla caraokeAdvanced navigation MB live trafficMusic streaming BMW Spotify,NIO RadioPassenger safety NIO fatigue warningSmart Office Connection BMW IFTTT Last Mile Logistics NIO delivery in trunkEmergency assistant GM OnStar guardianPlug and charge VW/IonityMood-based lightening Mercedes-Benz ambientIn-car Office Mercedes me connectMeditation Porsche Feel-Good-CoachNFT Collections Roll Royce PhantomAI Avatar Fetch.ai autonomous agentsCrypto Car Wallet Various pilotsIn-car AR gaming Audi/holoride partnershipRoadside assistant support Urgently/OtonomoAutomated park and charge Bosch Autom.Valet ParkingSafer traffic planning Mercedes Data/LondonWeb3 Loyalty Program BMW/CoinwebDigital Auto Report 202325Strategy&30-40ditional revenue potential based on customer insights 30-40%of incidents can partly/fully be prevented by OTA 20-30%cost reduction potential through variant reduction 20-30%inventory decrease due to demand forecasting50-60%of companies indicate that they do sell data to third parties 30-40%switch to paid subscription after free trial45-55%are more loyal to brandsto which they have a subscription35-50%are interested in post-purchase activations 60-70%are willing to pay 180$/year for connectivity service setAlong the value chain and vehicle life cycle,digital services unlock value beyond direct user monetizationValue levers of digital services ExamplesImplicationsBottom-line:OpEx/CapExOptimizationTop-line:Direct revenue and customerlifetime valueServices monetizationBrand loyaltyPost-purchase activationsPlatform access/data salesConnected services activation fees and/or recurring revenues related to monthly subscriptionsHigher satisfaction with on-board experience and creation of stickiness through subscription servicesUpselling effect during the ownership cycle by unlocking personalization features or activating built-in hardwareDirect revenues from granting third parties access to own platform or monetizing(anonymized)data/insightsLeverage of real time data on customer preferences/behaviorsfor timely adjustment of vehicle specifications and features Reduction of the number of model-specific variants by activating on-demand vehicle features Optimized inventory management through advanced planning of upcoming repairs enabled by predictive maintenanceAfter-sales LoyaltyHigher revenues for dealers from original parts sale and workshops traffic triggered by predictive maintenance R&D optimizationRecall campaignsVariant managementParts inventory managementPrevention of recall campaigns by leveraging OTA updates to fix potential technical issues within the circulating fleetSource:Strategy&analysis expert discussion Digital Auto Report 202326Ecosystem business cases should extend beyond vehicle-centric business casesDirect and indirect revenue potential,and opportunities beyond vehicle offerings,should be considered along the customer life cycle B2B offerings offer significant direct monetization potentialIn addition to external opportunities,a significant amount of internal opportunities exist,e.g.to increase efficiency in processes&portfolioStrategy&IIIIIIIVVOEMs are forced to partner with technology players to deliver compelling digital services risking a loss of controlSource:Strategy&analysisValue chain integration Range of partnership optionsNo tech player involvementOperating system and all applications are developed by the OEMFull control for OEM,no standardization,slower development,reduced offering compared to market leadersOperating systemsupplyStandardized tech stack is provided by supplier,e.g.Android Automotive OSFaster development,easier integration of external applications(e.g.Spotify),standardized setting cannot be adjusted by OEMContent mirroringApple/Google content is displayed by using apps within the vehicle,e.g.Android AutoCommon mobile apps(e.g.Google Maps)are immediately available in-vehicle;less use of OEM native apps/content Tech player involvementOEM ControlNext?A winning digital experience requires customer proximity,tech capabilities and effective data governanceDigital Auto Report 202327Tech player content using vehicle dataUsage of car data to enrich 3rdparty in-vehicle apps,e.g.for usage based insurance or location based commerceCompelling user experience on par with mobile app UX,but OEM apps loose advantage of specific driver/vehicle insightsExternal development of the digital experienceEntire automotive softwareis developed by tech supplierData governance between involved stakeholders crucial to avoid downgrading of OEM to pure hardware provisioningStrategy&Digital Auto Report 202328Rethinking vehicle salesStrategy&Duration(average figures for Germany)Included services Relative price per month Leasing2 years5-9years2)3 years1)Low,due to fewer services and longer durationtrend1 month2-6yearsSubscription1 year1)High,due to high convenienceRental 1 day1 yearHigh,due to high amount of included mileage7 days1)Sharing10 min.1 week30 min1)Highest,due to highest convenience and most services includedtrendExact model selection/some configurationUp-front down paymentInsurance,tax and registration Flexible cancellationDelivery and collectionSwitching models Residual value coverage Additional driver allowedRisk-dependent fee(driver history)Scheduled service,repairs/wear and tear Fully digitized customer journey/=Usually included/Depends on provider/Usually not included Subscription fills the gap between leasing and rental offerings resulting overall in four major vehicle ownership archetypes1)Based Strategy&analysis2)Depending on specific regulatory environment allowing“prolonged lease”Source:Strategy&analysisVehicle ownership archetypesDigital Auto Report 202329Strategy&2.Lifecycle:Used car leasing(different customer(s)As alternative ownership models such as subscription emerge,OEMs need to sharpen their vehicle lifecycle mgmt.skillsSubscription customer and asset journey Example4.Used car leasingCustomer journeyVehicle journey012345789Car handoverScheduled maintenanceSubscription model suggested to customerFor their vacation,the customer temporarily adds a second driverCustomer occasionally uses car sharingCar enters used leasing contract with a new customerScheduled maintenanceRepairs followingaccidentScheduled maintenanceAfter the lease,the car is returnedYearRefurbish battery and ADAS in preparation for next lifecycleInteriorrefurbish1.New car leasing2.Subscription3.New subscription5.Car sharing and rentalMaintenance and minor fixesFamily plans:subscription renewal with bigger carDue to increased price consciousness,customer decides to lease a used carMove into city:end of lease and switch to sporadic sharing and rental carsCustomer signs contract to lease new carNew car is in-fleetedIn the last lifecycle,the car moves into the sharing fleetAt the end of its useful life,the car is recycled or sold B2BAfter the lease,the car is returnedCar rentalduring vacationResidual value optimal:customer offered to trade carsCustomer increases the annual km6Scheduled maintenance1.Lifecycle:New car leasing3.Lifecycle:Car sharing(different customers)Source:Strategy&analysisDigital Auto Report 202330Strategy&Suitable ownership modelsHolistic vehicle lifecycle management aims to increase revenue and utilization,especially during 2ndand 3rdphaseSubscription“3x3”asset lifecycle1stLifecycle phase(years 1-3)2ndLifecycle phase(years 4-6)3rdLifecycle phase(years 7-9)Residual valueRevenue and utilization potentialMaintenance and refurbishment1)In accordance with residual valueAdditional revenue from e.g.,contract extras or repair chargesAsset potentialRegular maintenance costs Sporadic refurbishment costsPotential repair costsDepending on vehicle utilization in respective ownership modelContract add-onRecycleLeasingSubscriptionRentalCar sharing2)3)()Repurpose vehicleRefurbish vehicleMaintain/repair vehicleRecycle componentsAdd contract extrasSequence of ownership modelsas well as external market conditions have influence on most suitable selection for each lifecycle phaseFor certain ownership models,assets that are viewed as too old may not be favoredThe younger the asset,the shorter the duration-especially if utilization is high 1)Annual OEM-prescribed maintenance/service intervals and use-based repairs sporadic refurbishment;2)Depending on specific regulatory environment allowing“prolonged lease”;3)As low-budget optionSource:Strategy&analysis Digital Auto Report 202331Strategy&Alternative ownership models are on the rise and offer profit potential for OEMs if the asset life cycle is managed well1)Estimate of share development for ownership model depends on shares of competing models;LCP:Life cycle phase;2)Profitability estimate based on individual consideration of ownership model for average middle class passenger EV(price 53.5k EUR)Source:Strategy&analysis Vehicle ownership model split and profitability IndicativeSharing420%Leasing2%SubscriptionPurchase45%Rental1%6.05.60.31.40.213.4Ownership model split 2023 m unitsRegion Europe,40 countriesProfitability of ownership models2)Ownership modelsTraditional car ownershipAlternative ownershipPurchaseLeasingSubscriptionRentalSharingLCP 1 year 1-3LCP 2year 4-6LCP 3 year 7-97%9%-115v%-91xq-15%5%5%5%Total5-7-15-15-15%5%Subscriptionhas potential to growto 2-4m unitsby 2035 in Europe1)Leasinghas potential to growto 7-8m units by 2035 in Europe1)Digital Auto Report 202332Overall profitability potential higher for leasing,subscription and rental than for purchaseProfitability across LCPs varies from relatively constant to a sharp increase.With rental,there is only one LCP.It is not individual consideration but a merged portfolio view that is crucial for OEMsStrategy&More flexible ownership models offer benefits and risks for OEMs and customers a win-win solution is requiredVehicle subscription benefit and risk perspectiveAlternative ownership models need to create a win-win situation for customers and OEMsCurrently,they mostly play into the strategic agenda of OEMsStrong customer centricityand efficient asset management of used cars are needed to reach profitabilityOEMs may leverage their existing retail network and preferential vehicle acquisition conditions to differentiate themselves from start-up competitorsProduct piloting and learning from data insights into longer-term car usageKeeping track of battery lifecycle/recycling requirements according to regulations Customers willingness to pay and price pressure for alt.ownership offeringOEMCustomerFlexibility of car ownership in case of changing life circumstance Residual value and admin process(insurance,maintenance,etc.)peace of mindResidual value risk at end of lifetime and need for strong operational excellenceSource:Strategy&analysisDigital Auto Report 202333Key takeawaysOpaque pricing and difficulty of comparing offeringsPerception of ownership is absentStrategy&Digital Auto Report 202334Going beyond the vehicleStrategy&Rise of e-mobility provides ample opportunities to capture value beyond the vehicle e.g.with batteries and chargingSource:Strategy&analysisValue pools beyond the vehicle Focus e-mobilityDigital Auto Report 202335Battery value chainCharging value chainAdjacent ecosystem serviceseMSP1)Last mileservicesLocation-basedcommerceFleet mgmt.servicesOnboardentertainmentCharge point operationEnergy provisioningSite and asset ownershipCharging equipment manufacturingEnergy system integrationBi-directional ChargingBattery exchangeCar/battery usageBatteryproductionBattery incar assemblyBatteryrecyclingBatterysecond lifeInstallation and maintenanceStrategy&Infrastructure and vehicle penetration are key requirements for successful realization of bi-directional charging use cases Bi-directional charging Market simulation GermanyParkingHome and apartment buildingsCharging hubs1.8m0.16m0.03m0.7mBi-directional sockets by 2030Bi-directional charging-capable vehicle fleet(#)OfficePrivate2.5mPublic0.19mTotal 2030:2.7 million bi-directional socketsTotal 2030:5 million bi-directional vehiclesBi-directional charging capable vehicle fleet in Germany(as share of total EV fleet)Source:PwC Strategy&Study(2022):“Der E-Mobility-Check:Wie bereit ist Deutschland?”;Strategy&analysisDigital Auto Report 202336202820232026202420252031202720322029203020332034203536%6)TBHXabc%Strategy&Enablers&LimitationsFront-of-meter prosumer use cases depend on a multitude of external factors that limit mainstream adoption in short term V2L:Vehicle-to-load(e.g.e-bike,another EV,etc.)V2H/B:Vehicle-to-home/building V2G/VGI:Vehicle-to-grid/vehicle-grid-integrationPV:Photovoltaic 1)Includes software for grid optimization of households(V2H)and public charge point operators only;2)Includes software for power market trading for households and public charge point operators onlySource:Strategy&analysisProsumer charging business model comparison GermanyPower market tradingLoad shiftingSelf-supply optimizationV2H/BV2G/VGIV2LMid-term:EV user demand driven by incentive to earn/save money,but depending on available solutions&attractive pricingShort-term:Growing EV user demand to use vehicle e.g.as additional storage for home PV or emergency power bank(in the US)Customer DemandNeed for penetration of bi-directional capable vehicles and infrastructure(i.e.EV charger)to reach“critical mass”Need for development of standard protocols(interconnection,communication,vehicle and charging station safety&functionality)Energy TechFully supportive regulation not expected before 2028 at EU level due to high stakeholder complexity(smart meter as reference)Fully supportive behind-the-meter regulation expected by 2024 due to limited complexity of“closed”micro-ecosystemRegulationNeed for flexible V2G tariffs:Time-of-Use or Time-of-Day pricingMinimum number of kwh must be available at a certain point in time for utility providers to rely upon when managing the gridTech cost reduction(vehicle/infrastructure)required for scale upAvailability of comprehensive ancillary services as important enablerEconomicsUse CasesApplication AreaEnabler RevenuesPotential for software enablers:160-220m1)in 2030While front of meter still requires more regulatory alignment at European level,behind the meter already has a high market readiness in the short term Potential for software enablers:470-550m2)in 2030Digital Auto Report 202337Behind the meterFront of meter Consumption optimizationStrategy&Bi-directional energy provisionCharge and dischargeConnect to chargerRealization and scale-up of prosumer use cases require efficient charging and battery stakeholder coordinationSource:Strategy&analysisDigital Auto Report 202338ServicesWhite label SoftwareCharging dataCharging dataIntegrationChargingdataServicesEV dataCharging dataCharging dataEV/BatteryService providerSoftware supplierBattery manufacturerVehicle manufacturerParkingproviderUtilitysectorCPOEnd userV2HMain scale-up challengesStakeholder fear of losing control points to a central,dominant player(e.g.OEMs see USP in unique charging experience)Enabling ecosystem partnersCharging stakeholdersCharging&battery ecosystem stakeholder activationCan a decentralized coordination approach help to solve these challenges?Relatively high transactions costsfor clearing and billing(given comparatively low value of single transactions)Different interests and priorities across parties(e.g.CPOs want to maximize utilization,whereas OEMs want to maximize charging availability)Data exchangeStrategy&Implication for automotive players:Holistic ecosystem approach beyond core business is key to future successSource:Strategy&,PwC Ecosystemizer Be clear about own ecosystem role whether orchestrator,realizer or enabler Build offering portfolio and allocate resources accordingly Maintain a holistic and iterative approach in the selection of suitable offerings Actively manage the portfolio and prioritize clearly according to a coherent,consistent and multi-layered ecosystem logicOn the one hand Ecosystems can create lock-in effects based on differentiated offerings Customer lifetime value can be increased through holistic journey coverageFaster growth and higher earning potential can be achieved when compared with traditional approaches to value creationOn the other hand Building&managing ecosystems is complexTheoretically,unlimited number of potential offerings complicates the selection processProduct-centric view carries risk of missing market/customer needs(particularly for more advanced topics)Success factorsEcosystemsDigital Auto Report 202339RecreationNew WorkPersonalized pleasureHolistic wellbeingSmart environ-mentRest and relaxationBelieve and mindfulnessRelation-shipsGreen and seamless mobilityCustomized and fast demand fulfillmentPersonal wealth and legalStrategy&Network contactsDigital Auto Report 202340Jrg K Automotive EuropeDr.Jrn N Alternative PowertrainsJonas SConnected and Smart MobilityContributors 2023 PwC.All rights reserved.PwC refers to the PwC network and/or one or more of its member firms,each of which is a separate legal entity.Please see for further details.Mentions of Strategy&refer to the global team of practical strategists that is integrated within the PwC network of firms.For more about Strategy&,see.No reproduction is permitted in whole or part without written permission of PwC.Disclaimer:This content is for general purposes only,and should not be used as a substitute for consultation with professional advisors.Dr.Andreas GDigital TransformationKentaro AAutomotive JapanAkshay SAutomotive USSteven JAutomotive ChinaSteven van ArsdaleSebastian Hauk Carl HeselschwerdtTobias KarlTobias KillmeierTobias Seemann Patrick SchwenkeMalien ZehnpfenningMilos B Infrastructure DealsThilo Bhnenthilo.buehnenpwc.chMobility VenturingHartmut GAutomated Driving

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埃森哲：数字健康和医疗技术 (33 σελίδες).pdf

Digital Health and MedTechNew Signals for TransformationGlobally,healthcare is experiencing unprecedented pressure and disruption.Todays challenges range from affordability issues to shifting patient expectations.Costs continue to rise.Pressure is mounting to find innovative solutions.The healthcare ecosystem must help alleviate these concerns.MedTech and Pharma are under pressure to improve R&D,service models and treatment.The goal is to reshape the industry with a modern approach that involves digital technology.And one that delivers significantly more ambulatory and at-home care.There are clear benefits to digital innovation.However,its important to know the forces behind its adoption.And its essential to understand what challenges stand in the way.We wanted to gain a deeper understanding of this topic.To do so,we interviewed over 30 Digital Health senior executives and C-Suite leaders from across the MedTech and Pharma sectors.Interviews were primarily conducted with members of AdvaMeds Digital Health Center of Excellence.To gain a deeper understanding,we interviewed 30 Digital Health senior executives and C-Suite leaders from the MedTech and pharma sector in AdvaMeds Digital Health Center of Excellence.In addition,we surveyed 150 MedTech senior executives globally and analyzed over 100 M&A deals and over 600 product launches from a subset of MedTech companies that took place between January 2019 and May 2022.In doing so,we found that five key trends are driving the future growth of MedTech.2Digital Health&MedTech New Signals for TransformationFive trends will help MedTech transform healthcare through Digital Health.If approached strategically,customers-patients and providers-will experience better outcomes.Trend 1:The Consumer PatientHealthcare is no longer a one-way interaction where the patient is on the receiving end.Rather,it is now a structure of continuous engagement.Here,the patient becomes the consumer.They actively demand and receive healthcare consistent with their broader expectations for non-healthcare services.Trend 2:Care Anywhere,EverywhereThe Consumer Patient is demanding care anywhere and everywhere.In response,healthcare is increasingly expanding in scope.Its moving from the traditional setting of hospitals to ambulatory and at-home care.Trend 3:The Rise of Digital Health Healthcare is shifting to anywhere and everywhere.Because of this,the Digital Health agenda has now become a priority for the C-suite.Its used to continuously generate insights.And it powers the expansion of services and products throughout patient care pathways.Trend 4:Converging SectorsThe rise of digital in healthcare is fueling non-traditional deals.Now,various sectors are converging.Theyre coming together to develop products and services.And theyre doing this across the entire care pathway.Trend 5:New RegulatoryPathwaysDigital Health and the digitization of health may very well fall outside the bounds of established regulatory pathways.This is particularly true for any untested technologies used.As a result,new approaches from the sector may be required to help ensure the success of Digital Health.3Digital Health&MedTech New Signals for TransformationAcross the board,weve heard that MedTech leaders are shifting their businesses.Theyre moving from traditional models of healthcare and adopting Digital Health as a core part of their approach to improving patient outcomes.Consistently,executives reported that they are grappling with major challenges such as payers not being caught up with the power of the Consumer Patient.The industry is still working on solutions.The aim is to generate evidence on a more compressed but still acceptable timeline.Meanwhile,companies are considering how to market,sell and create consistency with their brands.At the same time,theyre constantly adjusting to evolving regulatory pathways.Traditional 10 to 15 year timelines to launch a new clinically-proven product are less viable given the pace of technology and consumer expectations.The industry is in flux.All leaders in our research agree that MedTech must find a new approach,and it must reflect and benefit from the speed of transformation enabled by digital innovation.The solution clearly sits within Digital Health.Most respondents reported that momentum is growing and they believe that Digital Health adoption is inevitable.But,we have to ask:Is this the moment that digital health moves from pilots to scalable transformation?How will the industry find success?How should MedTech respond to these emerging trends?And what needs to change to realize the potential of Digital Health?4Digital Health&MedTech New Signals for TransformationTrend 1:The Consumer PatientHow the five trends are impacting MedTech companiesWere seeing the rapid growth of digital technology in every industry across the world.Its set a standard in how consumers expect to experience and interact with medical technology.Its vital MedTech companies are able to go beyond the standard expected.This is how they can help ensure successful healthcare delivery.People no longer anticipate healthcare as being a one-way,one-size-fits-all transaction.Rather,theyre demanding a combination of factors.This is to allow for continuous engagement in how people manage their wellness.And they want to be treated safely,equally and with understanding.This is what we refer to as the Consumer Patient.5Digital Health&MedTech New Signals for TransformationTrend 1:The Consumer PatientThe Consumer Patient has better health literacy.They are in more control of their health than previous generations.This can be an asset to MedTech companies.However,it requires many companies to re-orient their long-term strategies.They must shift from a“product first”to an“outcomes first”mindset.It also shifts a bulk of the responsibility for risk from institutions to the patient.According to Accentures 2021 Global Digital Health survey of cross-industry C-Suite executives,a majority of the 350 respondents agreed that Digital Health accelerates the shifting of risk from employers and governments to individuals.1 70%of respondents said that the Consumer Patient phenomenon is very relevant.They expect it to significantly re-orient their firms long-term strategies.2Healthcare consumers are becoming more demanding.Theyre also taking more control of their health.And together with their physicians,theyre becoming more involved in decision-making.This is leading to increased importance in the consumer/physician experience.Not to be overlooked in this transition is the increasing pressure on physicians to adopt digital tools.Many physicians are already experiencing heightened workloads.They are now being asked to log into different portals for different products.And theyre expected to learn the software and how the tools operate and fold all of this information into their services.Some form of standardization of Health Care Professional(HCP)digital tools is needed.Without it,this experience will remain unmanageable.It has led many MedTech experts we spoke with to validate the shift to an“outcomes-first”mindset.For the majority of companies,the focus used to be on developing next-generation products with an engineering mindset.Now,they are looking at entire care pathways,identifying challenges for physicians and patients.A big part of this is designing better experiences and products that fit into both physician workflows and consumer lifestyles.In doing so,theyre looking to create increased value.And theyre trying to drive better outcomes across the ecosystem.The rise of the Consumer Patient requires MedTech companies to adopt and develop human-centric approaches.At the same time,patients are also becoming increasingly more powerful.They now have the ability to self-educate.And they have expectations toward effective treatments and the immediacy of care.Leaders in our interviews pointed to the need for specialized skills and expertise in this area.These will be core to meeting patients expectations.6Digital Health&MedTech New Signals for TransformationDigital Health products need human-centric design.They must be built for integration with other products,services and platforms.They must be implementable.And they should always be convenient and easy to operate.This will help MedTech companies make sure their desired outcomes are always successful.However,it should be noted that human-centric design requires a significant level of effort to achieve.Amazon,for example,has 10,000 employees alone working on its Alexa products and services.3Some successful MedTech companies are approaching the challenge by prioritizing the hiring of high-quality digital talent with consumer product experience.They then teach their talent how to operate within the MedTech space.This approach is an attempt to account for digital and human-centric expertise.Both of these are needed to drive success in this space.Key takeaways:Patients are taking more control of their healthcare experiences.Theyre demanding continuous engagement.And theyre gaining a better understanding of their health.MedTech leaders believe that the consumer patient is very relevant.They expect it to significantly re-orient their firms long-term strategies.The goal is to effectively serve the Consumer Patient.To do this,MedTech companies need to design new tools and solutions.And they must fit both physician workflows and consumer lifestyles.When done well,this approach can support product and engineering teams.It enables them to focus on innovation.And it gives space for a surge of ideas.Many of these ideas often end up on the floor.This is typically due to time-constraints or limited capacity.Developing the right connected programs for customers remains a hurdle.This is true in terms of programs for both patients and providers.There are many challenges across MedTech categories.We found that 46%of executives agreed that“implementation complexity”and“not having the right partners”are their primary challenges.This is important.51%of all respondents reported they believed that the customers voice needs to be strengthened.They know its the key to improving the Consumer Patient relationship.Customer service capabilities followed closely behind with 49%.4A lot of MedTech products fail due to the lack of the outcomes mindset.They go product-first vs.value/outcomes-first.AdvaMed Digital Health CoE Executive Trend 1:The Consumer Patient Challenges to overcome7Digital Health&MedTech New Signals for TransformationTrend 2:Care Anywhere,EverywhereHow the five trends are impacting MedTech companiesThe Consumer Patient is increasingly demanding services in both remote and digital settings.Because of this,healthcare is expanding.Its now moving from hospitals to ambulatory and at-home care.The change was accelerated by the emergence of COVID-19.The pandemic amplified the demand and need for virtual care and remote patient monitoring.In 2020,just prior to the pandemic,only 7%of people participated in a virtual consultation with a healthcare provider.In comparison,32%used virtual consultations in 2021.And compared to Accentures last pre-pandemic survey,remote patient monitoring tripled during the same period.5Healthcare has become a full-time part of a persons life.It goes where they go.It is no longer episodic,contained healthcare experiences.This decentralization trend is something we refer to as Care Anywhere,Everywhere.8Digital Health&MedTech New Signals for TransformationOne MedTech Executive leading a Virtual Care Business Unit stated,“All COVID did was change the face timeit did not transform the workflow of the clinic.”Healthcare has become more digital and remote.However,the industry remains at the beginning stages of building the right platforms and capabilities to meet the needs of the Consumer Patient.The decentralization of healthcare will require new business models.They must include new products and solution strategies.This is vital to service the full care continuum.The new models should also feature different marketing strategies.And they should target various types of consumers,such as hospitals,physicians and patients.Its also advisable to make use of changing sales team incentives.In our survey,we asked 150 MedTech executives to rank the changing care settings in order of importance based on their business goals.6 This was the result:1.Remote devices and monitoring2.Preventative care(wearables)3.TelehealthExecutives confirmed that the decentralization of healthcare impacts their businesses.And remote devices and monitoring technologies are having the biggest impact so far.Over 75%of executives surveyed expect expanding care settings and delivery models to significantly re-orient their companys long-term strategy.They believe these changes will require them to completely rethink their business approach.In fact,approvals for patient monitoring products in the US were 60%higher during the 18-month period between July 2020 and Dec 2021 compared to the 18-month period prior.7,8Fig 1:510k approvals for patient monitoring products01/2019 06/202007/2020 12/2021Source:Accenture Research analysis of 510k approvals,2022,Global Data databaseThe majority of MedTech experts we interviewed confirmed their traditional products are driving the bulk of their revenues.However,they also noted they see this expansion of care to new settings as part of their growth strategy.For example,smaller,connected instruments with rapid diagnostic tests are being placed in physicians offices instead of large hospital labs.Similarly,at-home tests with virtual assistance have become very common due to the pandemic.Trend 2:Care Anywhere,Everywhere9Digital Health&MedTech New Signals for TransformationIn orthodontics,patients are now using progressive trays instead of traditional braces.This helps them avoid the back and forth of going to the orthodontists office.It also enables orthodontists to double their treatment capacity.And it saves patients countless hours spent on treatment.We can also look to neuromonitoring devices.These can be remotely reprogrammed as necessary.They save time for many patients.And they were especially common during the pandemic.“We estimate that 80%to 90%of chronic and behavioral care can shift to virtual.It means that providers are able to work to the full extent of their medical training,rather than burning time on more menial tasks.“AdvaMed Digital Health CoE Executive At-home diagnostics,like wearables,also allow patients to capture data.They enable new opportunities to capture data that dont necessarily coincide with hospital visits.Wearables help physicians gain a deeper understanding of their patients.And they can help determine when potential required interventions will be needed,which can save further costs and time.Trend 2:Care Anywhere,Everywhere10Digital Health&MedTech New Signals for TransformationIts time to move products from hospital settings to alternative settings such as physicians offices,ambulatory centers or at-home care.But this move has implications on the business models of MedTech companies.And the shift requires comprehensive solutions.They are critical to solving any new challenges that may arise.Different payment and contracting models will be impacted.These impacts will also have implications for the size and incentives of sales teams.For example,consider the large diagnostic instruments that may be sold with a five to ten-year contract to large hospitals.Alternatively,small rapid test instruments could be sold to thousands of physicians offices.Likewise,at-home tests can be sold to millions of consumers.Many executives report that many MedTech companies are bolting on their old structures to create Digital Health teams by simply identifying and re-labeling team members.This results in a lost opportunity to enrich home-grown expertise with new ideas and ways of working.Its advisable to blend and incubate external talent in addition to upskilling and reskilling existing talent.Digital Health requires the addition of talent focused on design and technology.And it must be partnered with the best of MedTechs core competencies.These are engineering,regulatory and therapeutic area knowledge.Digital Health should transition from being(in many cases)a small fringe group into part of a more comprehensive strategy for the future.Marketing is also different when it comes to Digital Health.Traditionally,MedTech companies have access to disease area specialists.For example,orthopedics,cardiologists,oncologists and more.The decentralization of healthcare,by its nature,requires access to consumers and primary care physicians.It requires MedTech companies to build new relationships.They must leverage different thinking and mindsets for marketing teams.Its clear that the broad action to be taken in Care Anywhere,Everywhere is in the designing and engineering of technology that supports decentralized care.It is not simply an overlay of Digital Health teams to existing structures.Instead,its an integrated approach.And its designed around patients and physicians requiring MedTech to develop new business models.Trend 2:Care Anywhere,Everywhere Challenges to overcomeKey takeaways:Healthcare is expanding from hospitals to ambulatory and at-home care.Many executives agree that the industry remains at the beginning stages of having the capabilities to meet decentralized care.Decentralized care requires the addition of talent focused on design and technology.It must be partnered with the best of MedTechs core competencies:engineering,regulatory and therapeutic area knowledge.11Digital Health&MedTech New Signals for TransformationTrend 3:The Rise of Digital HealthHow the five trends are impacting MedTech companiesHealthcare is shifting anywhere and everywhere.As a result,Digital Health strategies born in the C-suite have become a priority.Theyre needed to generate insights and theyre key to expanding services and products throughout patient care pathways.99%of survey respondents said that the development and commercialization of Digital Health solutions has accelerated in the past two years.As part of this,companies now require various new and strengthened capabilities.Theyre essential to the execution of their visions.9 This is what we call the Rise of Digital Health.12Digital Health&MedTech New Signals for TransformationIn terms of the primary strategies for digital expansion,respondents reported being evenly split.Build(44%)is a traditional way to build digital health capabilities in-house.It requires companies to make investments in R&D,technology,MedTech and new business models.Buy(47%)involves asset acquisitions.They enable companies to expand their pipeline across therapeutic areas.They also help companies to add capabilities to innovate faster or reach customers in new ways(less than 10%reported primarily pursuing a hybrid model of the two).10As part of the investments for the Build model,MedTech companies are increasing the amount of their Digital Health spend within their R&D budget.Most expect it to increase over the next three years.Today,these companies spend an average of 5%of their R&D budget on Digital Health.11 Within three years,they expect that to be 12%.12 In our analysis of over 600 product launches between January 2019 and May 2022,just over a quarter have been Digital Health products.During that time,diagnostic imaging has been the biggest category.13As part of the Buy model,MedTech companies have also been inorganically growing their Digital Health products and offerings.In the past three years,for the 25 companies we analyzed,almost half of Mergers and Acquisitions(M&A)deals were in the Digital Health space.During this time,robotics,remote monitoring and decision support tools made up the vast majority of deals.14MedTech companies are sticking with their core competencies.But theyre also partnering with other companies to strengthen their portfolio.The real end-to-end vision is multi-dimensional.And it includes when,where and to whom insights are connected to during the patient journey.All of this can potentially reveal surprising and actionable next steps for care.Why are MedTech companies executing M&A deals?Respondents identified the following factors as drivers to invest in Digital Health capabilities:15Research supplies and equipment:expanding geographic reach Therapeutic area devices:obtaining new inventions or assetsImaging:building organizational and internal capabilities Medical services and monitoring:expanding geographic reachTrend 3:The Rise of Digital Health13Digital Health&MedTech New Signals for TransformationWith increased investment in digital via R&D and M&A,a comprehensive plan is key to building capabilities.MedTech executives feel confident in their M&A abilities and theyre confident in their R&D and manufacturing capabilities.However,our survey suggests most companies need to develop a better understanding of the market and customer behaviors and expectations.These are essential to keep up with the Consumer Patient and serve them in various care settings.75%of respondents said they now have capabilities for internal R&D techsuch as Internet of Things(IoT),analytics and other MedTechstrong M&A capacity and Digital Health manufacturing.However,more than half also reported that IoT,omni-channel marketing,customer expertise,market intelligence and manufacturing still require further development.16In addition,according to the experts we interviewed,a good strategy of integration post-acquisition is also key.This is where acquired capabilities are scaled across the entire portfolio.Trend 3:The Rise of Digital Health14Digital Health&MedTech New Signals for TransformationThe common vision for Digital Health is for it to be able to reveal insights.Insights must be surprising,individually relevant,not generically true and valued by the health ecosystemand increasingly the consumer patient.In most cases,companies are less interested in innovating ways to gather data.Instead,they are focusing more on what they can do with the data.One major barrier has been fragmented data or not having access to data.For example,almost every hospital has different rules and approaches to risk-taking.This is typically because there is no central guidance on whats appropriate or acceptable to share.Experts we interviewed pointed to the need for a dialogue among the MedTech players,hospitals and governments.They must work together to form an overarching guideline on data privacy.This is how they can enable Digital Health products and services while protecting the individuals data.Its key for serving the healthcare consumer across the whole care pathway.It enables all biopharma,device and lifestyle interventions to be connected and personalized to set up the best possible outcomes.Transparency and education of consumers are also very important.We have seen this in previous years.Indeed,one reason many people didnt adopt Digital Health technologies more broadly before was due to an attempt to safeguard personal health information.Fortunately,respondents report they would be more likely to adopt digital technologies if they felt more confident in data security and privacy(30%)and if these technologies enabled them to receive better information about their health(30%).18A major opportunity many executives highlighted is that Digital Health may help physicians unlock new insights.It can do this by adjusting their approach,including expanding beyond the clinical workflow to include at-home patient data.They also need to trust that the data collected is accurate,safe and secure.This is essential in order for them to adopt Digital Health more meaningfully.Executives in our survey found that the biggest challenge they face is getting clinicians to understand how Digital Health benefits them.For the most part,they want hard evidence.This requires clear communication,evidenced clinical studies,white papers,and other data that they can clearly see.Once they have this information,they are more likely to adopt Digital Health.Trend 3:The Rise of Digital Health Challenges to overcomeSeveral respondents believe that there are crucial datasets that have still not been fully unlocked,such as voice,text and video data.If companies can extract key insights from those and act on them,they may be able to deliver more comprehensive and better care.1715Digital Health&MedTech New Signals for TransformationKey takeaways:99%of respondents indicated that development and commercialization of Digital Health solutions has accelerated in the past two years.As part of this,companies require various new and strengthened capabilities to execute their visions.Patients and health professionals need to trust that data collected is accurate,safe and secure in order for them to feel comfortable using it.Fragmented data or lack of access todata has been a barrier to development.An overarching guideline on data privacy is needed.231Trend 3:The Rise of Digital Health Challenges to overcome16Digital Health&MedTech New Signals for TransformationTrend 4:Converging SectorsHow the five trends are impacting MedTech companiesHistorically,MedTech and other industries have largely been siloed and they have experienced different levels of success when entering the domain of each other.Solving this issue requires evolving to a much more innovative approach.It must include a full end-to-end solution and be comprised of many partners,verticals and companies.The burden to provide the total solution doesnt fall on individual companies alone.However,they do need to be part of the connected solution.As weve seen,various industries are coming together to develop products and services across the entire care pathway.This is leading to non-traditional deals and partnerships,or Converging Sectors.17Digital Health&MedTech New Signals for TransformationTo understand healthcare sector convergence,we analyzed all mergers,acquisitions,private placements and majority equity stake deals over a ten-year period between 2012 to 2021.All buyers and sellers of life science and healthcare-related deals as designated by S&Ps Capital IQ database were considered.Deals within a sector are considered“traditional,”whereas deals between sectors are considered“non-traditional.”19 86%of respondents agreed that future success will depend on companies targeting the entire care pathway rather than specific products and services.20Fig 2:Convergence continues,non-traditional deals grew more than 25%While med-device non-traditional deals didnt grow,the most frequently targeted sector was digital health(30%)Digital health convergence grew 46%in the past five years,and 12%of the convergence is with the med-device sectorBig tech companies are increasingly getting into healthcare with 38%growthBiotechno-logy5806369068160238309 4T065676192232113406560108271280101988628322245175841302937232406921212645102263862497295401151,2401712,0321,7211,4362,1751,671Drug retailCRODistributorsMedical DevicesProvidersHealth CareServicesHealth CareSuppliesManagedCarePharma-ceuticalsSource:Accenture Research Analysis,Evaluate Pharma,CapIQTraditional 20172021Traditional 20122016Non-traditional 20122016Non-traditional 20172021DigitalHealthBigTech 46% 3821123Trend 4:Converging Sectors18Digital Health&MedTech New Signals for TransformationApproximately 30%of deals within Medical Device and Digital Health segments are non-traditional.This indicates that MedTech is breaking out of its historically conservative reputation.It is now embracing digital innovation and the MedTech sector has been placed at the forefront.It currently is driving massive investment across the spectrum.Within MedTech non-traditional deals,the most frequently targeted sector was DigitalHealth,which made up roughly 33%of such deals.All large players,such as Philips,Baxter,Medtronic,and Smith&Nephew,have leveraged deals with digital health companies.Theyve done this specifically to boost their portfolios.For instance,Baxter acquired healthcare software developer True Process to strengthen its personalized care offerings and Philips has acquired over 13 MedTech companies in the past five years.With these acquisitions,it can grow its connected care business to transform the delivery of healthcare with integrated solutions.21In the Digital Health segment,more than half of the nontraditional transactions in the past five years have been with healthcare services companies and 12%have been with medical device companies.For instance,Planet DDS is a provider of practice management software systems to the dental industry.It acquired Apteryx,a company engaged in developing and commercializing dental devices and related software,in 2021 for$30 million.22As compared to the period between 2012 and 2016,there were no notable changes in MedTech non-traditional transaction volume.Trend 4:Converging SectorsHowever,the share of convergence with the Digital Health segment grew from 19%to 33%in the last five years.At the same time,non-traditional Digital Health segment deals registered more than 45%growth.19Digital Health&MedTech New Signals for TransformationThroughout our interviews,we heard a common theme;MedTech executives see pharma as future customers.This will occur as companies build connected infrastructure to bring meaning to data.For example,Dako(part of Agilent)and Merck&Co.collaborated on developing a companion diagnostic test.It enables the analysis of the potential tumor biomarker PD-L1 to aid in the treatment of cancer.Dakos PD-L1 test is approved by the FDA as a companion diagnostic to Mercks Keytruda treatment for various indications.In addition,Dexcom,a glucose monitoring device company,collaborated with biopharma company Eli Lilly.Theyre working together to help improve diabetes management for patients.Their solution helps quickly identify adult patients who struggle to manage their postprandial glucose levels.It also helps determine if patients may benefit from treatments like Lyumjev from Eli Lilly.Trend 4:Converging SectorsThe top drivers for cross-industry convergence and partnerships to advance Digital Health vary among sectors:25Research supplies and equipment:government and biotechs Therapeutic area devices:large tech companiesImaging:large tech and insurers Medical services and monitoring:large tech and governmentThis is primarily due to an increase in deals with healthcare services,MedTech companies,providers and biotechnology companies.Overall,large tech deals grew by 38%.The majority of deals were in Application Software,IT Consulting,and Electronic Equipment and Instruments.23Pharmaceutical sector companies are also converging in deals with other segments.Theyre using the deals to greatly expand their portfolios.In the past five years,more than 20%of non-traditional biopharma deals were with the MedTech segment.In 2017,Allergan plc,a biopharmaceutical company,acquired ZELTIQ Aesthetics,Inc.,a medical technology company behind a proprietary-controlled,cooling fat-reducing treatment,CoolSculpting,for$2.4 billion.Such unconventional deals help strengthen biopharma companies portfolios by entering adjacent areas in the care continuum.2420Digital Health&MedTech New Signals for TransformationAs indicated in the high number of non-traditional deals,everyone has a role in the Digital Health ecosystem.Because of this,companies need to consider partnering within the broader ecosystem.This must be done in addition to M&A.Respondents reported that a common motivation for collaborations is a partner being able to bring products to market faster.They also highlighted the need for collaborations to develop differentiated products that they couldnt develop alone.They noted that the key to the most successful partnerships is balancing varying risk tolerances.These include regulatory and reputational risk,between partners and being mindful of cultural differences.87%of respondents identified government regulations as a threat and disruptor to their business.This may be due to the shifting nature of regulatory guidelines as regulatory bodies work to keep up with the rate of new and emerging technologies and help ensure they are safe and effective for those they are trying to support.26One of the biggest challenges MedTech companies face when going into partnerships is ensuring their potential partner has the required level of data privacy and protection compliance.However,evaluating companies that have historically operated outside of varying data privacy and protection guidelines(GDPR and HIPAA)can be tricky.A lot of time and resources are spent investigating and determining if a potential future partner meets the level of data security they are comfortable with.A standard global definition of levels of data privacy compliance would save industry partners time and resources and it would enable them to make products and solutions available to patients faster.Trend 4:Converging Sectors Challenges to overcomeKey takeaways:Industries are coming together to develop products and services across the entire care pathway,which is leading to non-traditional deals and partnerships.Approximately 30%of deals within the MedTech and Digital Health segments are non-traditional,indicating that MedTech is breaking out of its historically conservative reputation and embracing digital innovation.Key to the most successful partnerships is balancing varying risk tolerances.It should include regulatory and reputational risk,between partners and being mindful of cultural differences.A standard global definition of levels of data privacy compliance would save industry partners time and resources.And it would enable them to make products and solutions available to patients faster.21Digital Health&MedTech New Signals for TransformationTrend 5:New Regulatory PathwaysHow the five trends are impacting MedTech companiesDigital Health sits at the convergence of medicine and technology.Its precisely due to this positioning that it is governed by a number of different regulatory and legal frameworks and working groups within governing bodies.However,the focus throughout remains on helping ensure that human health and consumer interests are well protected.This largely happens through regulation and enforcement.As such,companies need to be able to navigate the New Regulatory Pathways.22Digital Health&MedTech New Signals for TransformationDigital Health sits at the convergence of medicine and technology.Its precisely due to this positioning that it is governed by a number of different regulatory and legal frameworks and working groups within governing bodies.However,the focus throughout remains on helping ensure that human health and consumer interests are well protected.This largely happens through regulation and enforcement.As such,companies need to be able to navigate the New Regulatory Pathways.In nearly every part of the world,there has been a surge in the adoption of software in healthcare settings.The surge was driven by the emergence of COVID-19.Most,but not all software in healthcare settings is classified as Software as a Medical Device(SaMD).27The International Medical Device Regulators Forum(IMDRF)is a consortium of medical device regulators from around the world.It defines SaMD as“software intended to be used for one or more medical purposes that perform these purposes without being part of a hardware medical device.”In the US,the Food and Drug Administration(FDA)largely follows this definition.The FDA is also working to establish a new regulatory framework.It will adopt a risk-based approach.In China,SaMD is classified as a Class II or Class III device by the National Medical Products Administration(NMPA).It is subject to premarket authorizations.Software technologies are rapidly changing.As a result,China also released the draft amendment of the technical review guidelines for SaMDs in 2020.28Inside the EU,Digital Healths legal environment is very diverse.In 2021,the UKs Medicines and Healthcare products Regulatory Agency(MHRA)developed the“Software and AI as a Medical Device Change Programme.”It provides a regulatory framework and is seeking changes across the SaMD lifecycle.These changes range from qualification to classification to pre-and post-market requirements.29Adaptive artificial intelligence(AI)technology is another key component of Digital Health.AI is also constantly evolving and changing and it brings its own challenges to existing regulatory frameworks.In response,the EU published its proposal for the Artificial Intelligence Regulation.It opts for a risk-based approach for AI systems.30Our experts voiced that in many cases,when it comes to regulatory bodies and advancing Digital Health,agencies are under-resourced to handle the volume of cases.Governing bodies are strained to move at speed.This lack of urgency is resulting in high opportunity and resource costs for Digital Health innovators.Trend 5:New Regulatory Pathways23Digital Health&MedTech New Signals for TransformationTrend 5:New Regulatory Pathways Challenges to overcomeOur survey shows that MedTech executives ranked regulatory uncertainty as a medium-high barrier.They agreed that this has a moderate impact on their Digital Health agenda.Regulatory bodies have established guidelines.But they remain at a very high level and fail to address the intricacies of Digital Health solutions that are rapidly being developed.A harmonized set of guidance and regulatory frameworks is essential to support innovation and help ensure the safety and effectiveness of solutions.However,across the board from our interviews and surveys,we heard a common theme that MedTech is navigating barriers within regulatory.Surprisingly,only 26%of respondents indicated that regulatory uncertainty had a“high or great impact”on their Digital Health agenda.31Given the current state of regulatory guidance,experts in our research pointed to the importance of the mindset shift when it comes to thinking about regulations and receiving approvals for their Digital Health products.In the past,they thought more about the minimum evidence required to receive approval for their devices.Now,there is a better approach;they should ask,“How can I ensure this product is safe and effective for healthcare consumers?”This parallels the shifting mindset of“product-first”to“outcomes-first.”And it underlines the importance of putting the consumer at the heart of product design.It also shows the need to provide evidence that proves outcomes and safety.When one starts regulatory conversations with this mindset,experts agree that they have better regulatory success.MedTech is uniquely positioned to navigate and turn perceived regulatory barriers into a competitive advantage.But to win in Digital Health,companies need to become more comfortable working within current environments.They must feel confident even where there may not be an established regulatory pathway.Furthermore,they must also collaborate with regulatory bodies to develop new guidance in parallel.Key takeaways:Digital Health sits at the convergence of medicine and technology.Its governed by a number of different regulatory and legal frameworks and working groups within governing bodies.MedTech executives ranked regulatory uncertainty as a medium to high barrier.They agreed that it has an impact on their Digital Health agenda.Digital health stakeholders must work in regulatory spaces they are less comfortable inor in some cases,work with the regulatory body to develop new guidance.24Digital Health&MedTech New Signals for TransformationDigital Health,affordability and the economics of healthcareThe five trends outlined in this paper show a clear case for the greater adoption of Digital Health.However,there are additional barriers and considerations.Across the spectrum,healthcare costs continue to rise.25Digital Health&MedTech New Signals for TransformationThe Center for Medicare and Medicaid Service(CMS)projects that US National Health Expenditure(NHE)growth will outpace GDP growth.It also projects that the share of NHE will increase from 18%of GDP in 2018 to 20%by 2028.In 2020,US NHE was almost at 20%primarily due to the COVID-19 response.This rise is contributing to an affordability gap in developed markets.The gap is predicted to reach an estimated$300 billion by 2028.32 In the US,the average premium for family coverage has increased 22%over the last five years and 55%over the last ten years.Thats five times the rate of average wage growth experienced over the same period.33In the EU5,the average premium for family coverage increased 38%percent between 2015 and 2019.This is roughly six times the rate of average wage growth experienced over the same period.In growth markets,health spending is projected to be highest in Brazil and China,both of which already spend the most on health.Brazils per capita healthcare expenditure is expected to grow from$681 in 2020 to$746 by 2030,while Chinas is expected to grow from$591 to$797 in the same period.A major part of this expenditure,around 33%,is out-of-pocket spending,and the trend is expected to remain the same in the upcoming years.In addition to China,India has a high share of out-of-pocket payments for health expenditure.Millennials are more likely than other generations to take advantage of financial assistance.For example,rebates and non-profit services.They are also more likely to rely on digital technologies and digital therapeutics to manage their condition when they cannot afford healthcare.Gen-Xers and Baby Boomers,on the other hand,are more likely to explore alternatives that impact their treatment.Digital Health:affordability and the economics of healthcareIts clear that healthcare affordability is becoming untenable in most markets and the reaction to the affordability barrier varies across age groups.26Digital Health&MedTech New Signals for TransformationThe question is,can Digital Health help solve this affordability challenge?It is true that Digital Health is not currently a major profit driver in most cases.However,disruptive transformation rarely occurs during the beginning stages of adoption.The current health paradigm is largely set up for“sick care”,where physicians are able to bill more if they treat sick patients.To solve this issue,there needs to be a shift in the reimbursement model.This will incentivize physicians to support Digital Health and preventative care.In many instances,Digital Health is already helping save valuable time.In one health system,charge nurses in the hematology department spent the first hour of the day rescheduling everyone for the day.Digital Health has allowed insights to be aligned with pertinent rescheduling factors.Thanks to this,nurses arent investing their time in rescheduling.In another good example showing the value of Digital Health,Happify/Pear are involved in a program with Medicare/Medicaid.It was set up to look at policy changes and laws to support prescription digital therapeutic(PDT)reimbursement.Most partnerships today arent innovating the payment model.Instead,theyre adding digital tools to charge more within existing Fee-For-Service(FFS)constructs with providers.By taking the alternate approach,innovative companies are helping reshape the cost pipeline.27Digital Health&MedTech New Signals for TransformationDigital Health,MedTech and the Future of HealthcareMedTech will lead the transformation of Digital Health.This is thanks to its unique understanding of therapeutics and patients.Growth is being driven by the increasing popularity of digital devices,many of which are already in the hands of consumers.However,the right digital foundation is needed to support these companies internally.Without it,digital insights will be difficult to leverage.These insights are critical to create a comprehensive Digital Health solution.One C-Suite executive in our research summarized by saying,“(MedTechs)have to be leaders.Tech disrupters will eventually figure it out.If we do not lead in Digital Health,we are choosing to have our future market-share shrink.MedTech needs to build ecosystems to reach consumers everywhere,anywhere.”Medtech executives strongly believe the future winning strategy is to develop products and solutions to tackle the entire care pathway,with the Consumer Patient as a first priority.But at this stage,no single company alone has amassed all the capabilities required to serve the entire care pathway and drive the Digital Health ecosystem.Therefore,traditional competitors must work together on pre-competitive initiatives.They must also collaborate with external partners.For example,with MedTech and other technology companies.This collaboration requires“open”standards and interoperability between the various partners.Critically,it needs internal regulatory,legal and privacy guidance with the appropriate internal teams to support them.Healthcare is facing huge pressures around the world.Challenges range from affordability and the growing percentage of GDP spent on healthcare to shifting Consumer Patient expectations.MedTech offers value through accessibility.It provides critical insights for both patients and physicians and and it improves costs.Companies are becoming more outcome-oriented through digital adoption.Therefore,reimbursement models also need to shift to incentivize HCPs to pursue more Digital Health solutions.The key is understanding the barriers currently facing healthcare.This will enable companies to be better able to build strategies and create a more effective,affordable and innovative paradigm.The level of care will not only be sustainable but will continue to improve across the entire ecosystem.The future of health is in the hands of MedTech.28Digital Health&MedTech New Signals for TransformationReferences29Digital Health&MedTech New Signals for Transformation1 Global Digital Health survey,n=350.Accenture Research,2021.2 Med-tech Digital Health survey,n=150.Accenture Research,2022.3 https:/Med-tech Digital Health survey,n=150.Accenture Research,20225 2021 Accenture Life Sciences and Health Experience Survey n=17556 Med-tech Digital Health survey,n=150.Accenture Research,20227 Patient monitoring refers to the definition as per Global Data database8 Accenture Research analysis of 510k approvals,2022,leveraging data from Global Data9 Med-tech Digital Health survey,n=150.Accenture Research,202210 Med-tech Digital Health survey,n=150.Accenture Research,202211 For the purposes of the survey question,digital health spend is limited to the digital health aspects of a product,not the whole product budget 12 Med-tech Digital Health survey,n=150.Accenture Research,202213 Accenture Research analysis,2022,leveraging data from Global Data14 Accenture Research analysis of M&A deals,2022,leveraging data from Global Data15 Med-tech Digital Health survey,n=150.Accenture Research,202216 Med-tech Digital Health survey,n=150.Accenture Research,202217 MedTech expert interviews,202218 2021 Accenture Life Sciences and Health Experience Survey n=175519 Note:The exception to this includes deals between biopharma,biotech and CRO which are designated as“traditional”deals.Deals between managed health care and providers;health care supplies and medical devices are also considered“traditional”20 Med-tech Digital Health survey,n=150.Accenture Research,202221 Capital IQ transaction screening,Accenture research analysis22 https:/All numbers are sourced from Capital IQ.Segment definition is as per Capital IQ Health segment definition24 https:/Med-tech Digital Health survey,n=150.Accenture Research,202226 Med-tech Digital Health survey,n=150.Accenture Research,202227 See Appendix28 https:/https:/See Appendix 31 Med-tech Digital Health survey,n=150.Accenture Research,202232 New Science:A new economic reality for innovation and growth.Accenture 202133 New Science:A new economic reality for innovation and growth.Accenture 2021AppendixSource:AdvaMeds Center of Digital Health30Digital Health&MedTech New Signals for TransformationDEFINITIONWe are taking a broad view of digital health,not as a vertical but rather as an evolving complement of digital technologies and data capabilities that are increasingly embedded across medical technology and healthcare.As a wide range of stakeholders,including healthcare providers,patients and consumers,adopt and integrate digital heath technologies,the net effect is increasingly efficient delivery of higher quality patient care and improved patient outcomes.The digital revolution encompasses:Data-generating and communications technologies that:-Diversify and improve data collection and communications platforms within and outside of traditional,intensive healthcare settings through telehealth,encounter-based technologies,wearables,ingestibles and implantables to;-Enable collection of novel,real-time,more frequent,and/or continuous information that;-Yields new scientific insights into health and disease states(population and individual),enables remote or on-site monitoring and intervention,and empowers consumers and patients.Aggregation,analysis and use of data to advance scientific understanding;inform healthcare decision making;support research and development;facilitate product approvals and regulatory compliance;administer and evaluate value-based care;improve delivery and quality of care,including patient experience and empower remote and/or automated interventions.Data-driven technologies that:-Inform and or augment human decision making,and;-Effect remote and/or automated interventions.Appendix31Digital Health&MedTech New Signals for TransformationIn the US Medical devices including SaMD are classified into one of three regulatory classes:Class One:simple,minimal-risk devices that requires the lowest level of regulatory control,e.g.Cranial Measurement Software;Cranial measurement software is intended to be used to calculate and display physical measurements of the head for interpretation by a qualified user in conjunction with other clinical methods.Class Two:these devices may involve small to moderate risks to the user and are subject to few regulatory approvals,e.g.Coronary Vascular Physiologic Simulation Softwaresoftware that aids in the identification of functionally significant cardiovascular disease.Class Three:mainly includes life-sustaining high-risk devices that could cause significant harm to patients in case of a malfunction,therefore requires highest level of regulatory approvals and clearances,e.g.Software Option For Anesthesia Gas Machine to Achieve and Maintain Targeted End Tidal Oxygen and Anesthetic Agents;the software feature is indicated for use with the anesthesia system to support clinicians in maintaining the targeted end tidal oxygen and end tidal anesthetic agent concentrations that the clinician sets during an anesthetic procedure,by making multiple,limited adjustments to the fresh gas composition and total flow.In the US,the FDA released an AI/ML-based SaMD action plan in January 2021.It outlines a series of steps authorities will take to expand the regulatory oversight of AI/ML-based SaMD:FDAs expectations for submissions related to software modifications.Harmonization of Good Machine Learning Practices.Promoting user transparency and a patient-centered approach to regulation.Improving algorithms to address issues such as bias.Proactive response to safety and usability concerns for AI/ML.EU Artificial Intelligence Regulation risk based approach:Unacceptable risk,where AI poses serious threat to life,is banned.High-risk in AI-defined settings,such as a system failure that would put individual rights and health of citizens at risk,will be subject to extensive technical,monitoring and compliance obligations.Low-risk such as AI chatbots will be subject to minimal obligations.In China,NMPA defines AI/Machine Learning(ML)SaMD as software that uses AI to analyze medical data for medical purposes and is most likely regulated as a Class 3 medical device.About the AuthorsContributorsLaura WestercampManaging DirectorFuture Business Model Lead,Life Sciences&MedTSelen Karaca-GriffinSenior PrincipalGlobal Life Sciences Research Leadselen.karaca-Andrea ParaSenior ManagerStrategy Consulting,MedTech/Industry X Tim DurstManaging DirectorGlobal MedTech LeadThomas E.KawalecManaging DirectorMedTech Executive SponsorPhilip FreyManaging Director European MedTech LeadBrad Michel Senior Managing DirectorLife Sciences Lead North AmericaTed BoyleManaging Director Global Digital Health LeadGarima MishraAssociate ManagerLife Sciences ResearchAlyssa Brill ConsultantLife Sciences R&DAran BahlManagerStrategy&Consulting,Life SciencesNilam Patel ManagerLife Sciences R&DFrank MuellerSenior ManagerGlobal MedTech MarketingSpecial thanks to AdvaMeds Center of Digital Health and AdvaMeds team:Chris White,Jim Jeffries,Sarah Arth and Tonya Simon.We thank the following colleagues and partners for contributing with subject matter expertise to this report:32Digital Health&MedTech New Signals for TransformationCopyright 2022 Accenture.All rights reserved.Accenture and its logo are registered trademarks of Accenture.This content is provided for general information purposes and is not intended to be used in place of consultation with our professional advisors.This document refers to marks owned by third parties.All such third-party marks are the property of their respective owners.No sponsorship,endorsement or approval of this content by the owners of such marks is intended,expressed or implied.About AccentureAccenture is a global professional services company with leading capabilities in digital,cloud and security.Combining unmatched experience and specialized skills across more than 40 industries,we offer Strategy and Consulting,Technology and Operations services and Accenture Songall powered by the worlds largest network of Advanced Technology and Intelligent Operations centers.Our 721,000 people deliver on the promise of technology and human ingenuity every day,serving clients in more than 120 countries.We embrace the power of change to create value and shared success for our clients,people,shareholders,partners and communities.Visit us at Accenture Life SciencesAccentures Life Sciences group is committed to helping our clients make a meaningful impact on patients lives by combining new science with leading edge technology to revolutionize how medical treatments are discovered,developed,and delivered to people around the world.We provide end-to-end business services as well as broad range of insight-driven services and solutions in strategy,consulting,digital/analytics,technology,and operations in all strategic and functional areaswith a strong focus on R&D,Sales&Marketing,Patient Services and the 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