Chinese Healthcare & BATX (Baidu, Alibaba, Tencent, Xiaomi):
The Chinese healthcare system is facing huge challenges with, on one hand, a greying population, multiplying chronic diseases and poor health literacy and, on the other hand, too few qualified doctors working in overcrowded top tier hospitals while lower tier ones are deserted. eHealth solutions are today multiplying to address the very obvious needs for higher quality of care and the associated market was recently estimated to reach USD 110 million in 2020 by BCG.
After examining how Chinese companies were improving patients’ experience, I further explore the strategies deployed by the “BATX”, the Chinese equivalent of the American GAFA (Google, Apple, Facebook, Amazon): Baidu, Alibaba, Tencent and Xiaomi. They all pursue an active strategy to promote and develop tomorrow’s healthcare system in China, though with very different visions and means. Here is a short analysis:
Baidu’s main strategy has been to create its own subsidiary dedicated to digital health, Baidu Doctor, with activities aiming at patients, such as easing their access to medical information with platforms like Zhida, providing online registration services, administrating a social network gathering both doctors and patients and enabling both sides to leave reviews and feedbacks on each other. It enables doctors to create their own page, describing their activity, specialisation, etc. They can then select the patients they want to receive and manage their information. Baidu also offers productivity tools that doctors can use to better manage their time and tasks. In parallel to this in-house innovation, Baidu has recently invested in Quyiyuan, participating in a fundraising totalling US$ 40 million. Quyiyuan seems to have complementary activities to those currently offered by Baidu Doctors and Zhida, such as diagnostic reports checking, e-payment solutions and a platform gathering hospitals and medical instruments manufacturers.
Alibaba’s expansion towards health-related activities began with the acquisition of CITIC 21 CN in 2013 for US$ 171 million. The investment was surprising at the time, as CITIC 21 CN had been performing poorly for several years. Its core product, a drug authentication platform, has however turned to be key in the development of Alibaba’s eHealth strategy. As CITIC 21 CN changed its name into Alibaba Health Information Technology (Ali Health) in 2014, the platform became Ali Health’s core product, “Drug PIATS”, a drug scanner on mobile capable to identify counterfeited products or to analyse doctors’ prescriptions so as to help patients purchasing prescribed drugs online. This scanner is one of the key features of Ali Health’s mobile app, alijk, that was launched in December 2014, connecting users to local pharmacies (e-commerce) and providing insurance services, especially since Taobao’s health branch has been transferred to Ali Health. The mobile app also permits medical care reimbursements. Ali Health finally entered a partnership with Ali Cloud, Alibaba’s subsidiary developing the group cloud computing offering, aiming at using Big Data analytics to ease registrations for consultations, monitor and optimize queues, review customers’ feedbacks and experiences, etc. The underlying roadmap, “Future Hospital Plan”, is aiming at turning Ali Health into the largest actor of hospitals’ digitalization. Unlike Baidu and Tencent, it seems that neither Alibaba nor Ali Health have invested into eHealth companies over the past two years, favouring an organic growth.
Tencent’s approach to enter the eHealth market is sensibly different from Baidu and Alibaba’s. One key difference is that the group does not communicate much on this activity. For example, it did not declare any healthcare-related activities in its latest annual report. Of course, the fact that it does not declare them does not mean it is not doing anything: it proves, however, that whatever is being done within the company is at a much earlier stage of development than both Baidu and Alibaba’s projects. Searches on Tencent’s eHealth projects still lead to “Tencare’s Doctor Tang (Sugar)”, a newly issued app coupled with a smart glucometer and linked to Tencent’s WeChat, but I have failed so far to find further information on Tencare’s activities, even though I visited their headquarters in Shenzhen in late May. Furthermore, the group has recently signed agreements with public administrations to offer users to link their WeChat account with their Social Security ID, enabling it to provide medical insurance-related payment services through its own e-payment solution, Tenpay. If Tencent seems reluctant to develop its own solutions, it has, however, a very dynamic investment strategy. It participated in 2 of the 3 fundraising rounds that got Weiyi (formerly Guahao) to raise US$ 895 million since 2015. Guahao has since then become an important component of Tencent’s WeChat ecosystem: Guahao is accessible through WeChat Wallet’s Public Services, for users looking to book a consultation. It also invested US$ 70 million in Dingxiangyuan, a company founded in 2000 that has always focused on eHealth services. Last but not least, it participated in raising US$ 40 million for MedLinker, the social network for doctors willing to share on their fields of expertise.
Lastly, let’s take some time to appreciate Xiaomi‘s position as well. It does not really position itself on the healthcare market yet, barely on the wellness one as seen before (with the Mi Band). It should be noted however that Baidu, Alibaba and Tencent are surprisingly absent from the smart thing segment (except for Tencent’s Tencare Doctor Tang), where massive amount of data is bound to be generated in the future. Xiaomi is fully betting on this segment: Lei Jun’s company is currently developing its very own concept of connected home, the Mi Jia. This could give it an edge in the race for customers’ data, Xiaomi being more tightly connected to its customers thanks to its smart things. Furthermore, actors like Xiaomi, designing tomorrow’s smart home, are also likely to become strategical partners to develop home healthcare smart things, which will undoubtedly need to be compatible with other smart things in the home.
Baidu, Tencent and Alibaba have all penetrated the eHealth market, through a specific entity and investment for Baidu, investments mostly for Tencent and an acquisition and in-house developments for Alibaba. For them all, it is very likely that they identify digital healthcare as a growth engine as well as a critical component of their greater big data strategy. They are betting on a highly digitalized Chinese healthcare system, where concepts such as “online hospitals”, that once seemed crazy, become a reality. Finally, even though Xiaomi is not directly impacting the development of healthcare, it will very likely play an important role in the future thanks to its strategy to conquer the smart home.
Contact the author: