Chinese VR/AR executives face technology, organization and leadership challenges as virtual reality sector progresses, according to 2017 Virtual Reality Industry Report.
CEOs in China are increasing their investment in immersive technologies and enterprise applications, according to Greenlight Insights, the leading provider of virtual and augmented reality market intelligence. The 2017 Virtual Reality Industry Report, produced in part with iResearch, the leading provider of online audience measurement and consumer insights in China, forecasts the domestic Chinese virtual reality market will generate $11.3B in spending in 2021. The annual market report finds that the success of internet-born Chinese companies, such as Alibaba and Tencent, encourages more entrepreneurs, enterprises and government agencies to participate in China’s VR ecosystems.
"The year-long study finds that Chinese internet and industrial sectors alike are firmly focused on re-inventing their business models through the use of VR, AR and other immersive technologies, and want their businesses to reap the benefits of what we are calling the new Experience Economy," said Clifton Dawson, CEO of Greenlight Insights.
The report features insights from Greenlight Insights Virtual Reality Industry Monitor Survey, which is an annual survey that gathers data from thousands of VR/AR professionals worldwide, including all major technology sectors. Nearly 300 VR/AR executives from China responded to the survey last fall. Chinese companies are generally more optimistic about monetization, compared to US respondents. According to the survey of Chinese VR application developers, 60% of respondents think that their companies will become profitable in the next twelve months, whereas only 45% of US respondents believe that they will be profitable in the following year. However, as more Chinese enterprises join VR/AR ecosystems, Chinese executives are facing challenges in technology, organization, and leadership, according to the Greenlight Insights survey.
Policymakers Should Invest in Ecosystem-Building Initiatives
The lack of standards for virtual reality, like in many places, in China has led to the establishment of new standards setting initiatives by the Ministry of Industry and Information Technology. However, despite state efforts to accelerate the development and implementation of industry planning and policies, 28% of Chinese respondents indicate that multiple formats and fragmentation due to competing platforms is a top challenge facing the industry, which is 40% higher than the global average.
China VR CEOs Must Close the Skills Gap
In contrast to their global peers, Chinese executive respondents rank talent/skills issues as a top barrier to their success. Insufficient talent is a top challenge industry-wide, according to 37% of Chinese respondents. Despite the fact that a large proportion of professional class working in the Chinese technology sector and the government’s strong support for VR/AR as an economic priority, there is a critical shortage of engineering and design talent in the domestic labor market. This is leading to concerns from many Chinese CEOs about their ability to hire, retain and develop the talent needed to produce high-quality, diverse consumer and enterprise VR/AR applications.
“VR enterprises in China often distribute downstream, from HMD equipment to content, which gives rise to a lack of competitiveness compared with foreign technology companies who invest significantly in R&D,” said Eddie Lou, China Market Analyst for Greenlight Insights. “To address these issues, Chinese VR technology companies should focus their R&D efforts on core technology development rather than on integrating foreign, open-source technologies.”
A Need to Understand Business Priorities
While customer focus is among the top five business priorities of global enterprises surveyed, Chinese enterprises do not rank it in their top considerations. Accordingly, understanding what content and applications customers are willing to pay for is among the top five concerns of global VR/AR executives, but not in the top five concerns of Chinese survey respondents.
Greenlight Insights clients can learn more in the report: 2017 Virtual Reality Industry Report.
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