It seems like everyone in Asia has a wearable. From Hong Kong's Kowloon Park to the East Coast Park in Singapore and Tokyo's Yoyogi Park, Asian cities are full of joggers and runners sporting some kind of fitness tracker. But wearables go a lot deeper into Asian society than that.
"Asia Pacific is the single largest market for wearables in the world," said Gerard Tan, commercial director for Singapore-based research firm GfK Asia at the IFA 2017 Grand Press Conference. China, Japan, Korea and Australia are the big players in a market that is in something of a purple patch. Wearables in Asia grew by 51% last year, with 42 million smartwatches, fitness trackers and other devices sold - impressive considering the worldwide estimate is around 102 million. That rate is expected to slow slightly this year to 38% according to GfK, but Asia will still be where most wearables are sold.
Asia will still be where most wearables are sold
So why is Asia so hot for wearables? Tan thinks it's because people in Asia adapt more quickly to the latest tech trends and innovations. Others even reckon it has something do with the region's inherent interest in video games. "Fitness trackers thrive on the willingness of people to engage in the gamification of the quantified self," says Ian Hughes, analyst for Internet of Things at 451 Research. "However, outside of basic pedometer readings they are of little use unless people are engaged in self-improvement sporting activity."
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China – by far the largest market for wearables – doesn't have much of a fitness industry historically, but that itself is growing and there are other forces at work. "China has a significant gadget-consuming culture, which drives wearable demand," says Mariia Konovalova, research analyst at Futuresource Consulting, though it's mostly cheaper activity trackers and smartwatches that sell well in the country.
Hughes thinks that another contributing factor to wearables' success in Asia is down to something lacking in the rest of the world: intense advertising. "There is a marketing drive for trackers, such as Fitbit launching on Alibaba in China up against the dominant local brands," says Hughes.
Alibaba is an Amazon-style online retailer that has taken Asia by storm, but it's not just Apple, Samsung, Garmin, Fitbit and Polar battling it out for domination of the wearables market in Asia; just as important are local brands including Xiaomi, Huawei, 360, Lifesense and Okii. Take, for example, the Xiaomi Mi Band 2, a fitness tracker that sells for as little as $20.
A gadget loving middle class
Fast catching-up with Fitbit in terms of global sales, Xiaomi could soon be the world's biggest wearables brand. Not surprisingly, Asia Pacific is also where the most money is made in wearable tech. Projections suggest that $76.4 million will be made in the region this year, far more than the $54.1 in the USA and $22.2 million in Europe. Those figures stem not just from a jump in disposable income in Asia in recent years, but from an endemic enthusiasm for electronics.
"A growing middle class with disposable income tends to demand gadgets," says Hughes, who think that the West is harder to impress. "The initial waves of wearables have generated gadget fatigue in the rest of the world, but China and Asia Pacific are getting them for the first time."
Over the last decade China has become a leading adopter of new tech, from phones and 4K TVs to VR headsets and wearables, but overall it's still making up ground. "Overall penetration is lower than other developed markets, but the scale of China's population makes the market sizes relatively huge," says Konovalova.
In 2016 a mere 3% of people in China used a wearable device, as opposed to 22% in the US. "In China people buy new tech quickly, cheaply, and domestically," says Konovalova, adding that price is a critical factor. "Over 90% of wearables are made in China."
Alibaba is not alone; aggressive Amazon-style online retailers like JD, Tmall and Suning account for over half of wearable tech sales.
Don't forget kids trackers
Wearables in Asia are not just about fitness; they're increasingly becoming a way of life, infiltrating areas of society that seem improbable. Almost a quarter of the sales of wearables in Asia are of a product almost unheard of in Europe and the US: kids trackers. While 55% of wearables sold in Asia are fitness trackers and 17% are smartwatches, a stunning 24% are locators. Over 10 million of these trackers were sold in China in 2016, with the five leading brands all local.
"We understand local governments and schools have pushed these products to monitor children's' location during playtime, school trips, etc., as well as parents buying them," says Konovalova.
These kids trackers come in the form of wristbands that use a 3G SIM to communicate the geolocation of the wearer to a parent. So are parents more worried about their children's safety in China than in other countries? Possibly so. "It has been suggested to Futuresource that China's one child policy might have something to do with the stronger demand for these products than in other countries," says Konovalova.
If there is a lull in the thirst for wearables in Asia, it's with the smartwatch. One of Huawei's rotating CEOs, Eric Xu Zhijun, didn't do smartwatches any favours at the company's Global Analyst Summit 2017 in April, saying: "I am always confused as to what smartwatches are for when we have smartphones." He added: "When the smartwatch team in Huawei presents their ideas to me with great excitement, I keep reminding them to consider whether there are tangible needs [for these products] in the market." The Huawei Watch 2 was recently launched to mixed reviews.
Ironically it's wearables like the 4G-connected Huawei Watch 2 that may help the genre grow. "Wearables and the function they provide need to become more interconnected because at the moment most devices are trying to be the sole device, using the mobile phone as their gateway," says Hughes. "With the promise of 5G connectivity more modular devices will come to the market, and interact more seamlessly." 5G networks – due around 2020 – promise downloads speeds of well over a gigabit-per-second, but will also mean up to a million devices per square kilometre can get online.
5G could be a game-changer for wearables, and it's a game that will kick off in Asia. The major telecoms giants currently working on 5G networks include China Mobile, Japan's NTT DoCoMo and Korea Telecom (KT). The latter will host the 2018 Winter Olympics in PyeongChang in January 2018, and use it as a platform to launch the world's first 5G trial service.
Expect 5G-enabled VR streaming from cameras strapped to skiers, bob-sleighers and luge teams, in-stadium 4K streaming and super-fast 5G internet access on bullet trains. KT has recently helped create two other novel wearables; a connected mountain jacket that uses sensors to detect movements of a wearer in distress, alerting emergency services, and a life-jacket for boats that monitors and communicates the wearer's identity, heart rate, and location.
So fitness trackers and kids locators are what's making Asia the best place to shift wearables in 2017. But East Asia is becoming a hotbed for all types of exciting wearables, and it's fast becoming a test-bed for the next generation too.
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