Featured faculty: Wu Jing, George Yang, Johnny Li, and Lisa Wan
Written by Putro Harnowo

The world started 2026 with a complex mix of opportunities and risks. Global productivity and economy have slowed down, but the Organisation for Economic Co-operation and Development expects emerging Asian markets to be resilient.

Following the recent US-China tariff truce, China achieved a record trade surplus exceeding US$1 trillion last year, setting the stage for intriguing developments in 2026. Meanwhile, sustainability backlash dominated 2025, with significant environmental, social, and governance (ESG) investment outflows in the US, leaving the sector trajectory uncertain.

Rapid demographic ageing in Asia and Europe will transform the insurance industry, with developed markets projected to see 35 per cent more individuals aged 65 and older by 2050 compared to 2025. Amid declining birth rates, younger consumers shift their priorities to products and services that provide emotional satisfaction, fueling the “emotional consumption” trend that continues to shape business.

Against these backdrops, we present our 2026 outlook by gathering insights from the Chinese University of Hong Kong (CUHK) Business School faculty. The first outlook highlights the hottest topics in technology, and the second part looks into economic and consumer behaviour that will redefine businesses.

1. New global order with a fragmented yet innovative world

Trade frictions between the US and China have already driven global firms toward diversification, prompting a shift away from reliance on Chinese manufacturing. However, Wu Jing, Professor at the Department of Decisions, Operations, and Technology, explored in his study that complete decoupling remains challenging due to entrenched dependencies.

“Currently, the most prominent strategy is ‘China plus one’ where companies maintain a baseline of production in Chinese Mainland but diversify into other emerging markets,” he says. “Relocating operations to allied or nearby countries appears to mitigate geopolitical risks, but their long-term sustainability is uncertain.”

A notable example of such dependencies is the controls over high-end computing chips by the US, which may not survive without the supply of rare earths from China. This tug-of-war was resolved at a summit of the two world leaders last year, but the truce is seen as a temporary fix, as Singapore’s Prime Minister echoed that the intense competition will continue.

“Companies are increasingly forced to navigate multiple, often conflicting regional supply chains, each governed by its own set of rules. In practice, this often means maintaining dual systems, one aligned with Western standards and another with China, which significantly drives up operational costs as they must build production lines and logistics networks to comply with different regulatory regimes,” Professor Wu adds. “If relations deteriorate further, a bifurcated supply chain system is probable.”

Not only posing a risk to global economies, Professor Wu sees geopolitical fragmentation likely to hamper sustainable supply chains by disrupting the flow of critical materials, driving up costs and creating inefficiencies. However, he believes there would be a silver lining. “Fragmentations may accelerate innovation through competitive investments, as companies facing disruptions would be incentivised to develop innovative solutions and technologies.”

2. Green finance is recalibrating

The US political polarisation, coupled with EU regulatory adjustments amid corporate and governmental pressure, drove much of the ESG backlash last year. Elsewhere, ESG investments face stricter rules: China’s new framework requires listed companies to disclose their decarbonisation plans this year, while firms listed on Hong Kong’s Hang Seng Composite LargeCap Index are mandated to disclose carbon emissions from their suppliers.

These developments underscore resilience, refining the field by weeding out superficial approaches. “Maximising ESG value is not only about disclosing and reporting, but also about what the companies are actually doing,” says George Yang, Professor at the School of Accountancy. “Firms need to be transparent and provide credible and verifiable evidence to stakeholders, especially investors.”

One of the main criticisms is that green investments may obscure the potential earnings. Professor Yang’s recent study finds that prioritising ESG information can make a company’s stock price less accurately reflect future returns, since investors may overlook traditional financial metrics. This finding reveals implications that extend beyond the surface.

“Sensible ESG initiatives are intended to be aligned with corporate strategies and shareholder values, including profit maximisation. However, in the value maximisation of ESG investments, we need to pay attention to a longer time frame than in the traditional approaches,” he adds.

Value maximisation of ESG investments involves incorporating ESG factors to achieve optimal financial performance. As opposed to traditional approaches that typically focus on maximising profits in the short term, ESG investments often take a longer time, even years, to deliver full benefits for shareholders.

Such a gap calls for the need to manage and balance shareholders’ expectations. In this regard, Professor Yang emphasises financial analysts’ crucial role in linking sustainability goals to investor decisions. “Financial analysts should pass investors’ concerns and expectations to the firm and help the firm to improve its actual ESG initiatives.”

3. Insurers’ battle for the ageing population

As the proportion of elderly citizens rises in some parts of the world, the insurers face mounting pressure to manage spiralling claim costs and a wave of soon-to-retire customer base. Johnny Li, Professor at the Department of Finance, observes that only those who master the art of extracting valuable insights from large and intricate big data can survive.

“Insurers aim to accurately categorise individuals with different health profiles into appropriate risk categories and corresponding premiums effectively. Those that fail to leverage data analytics for this purpose will be crowded out of the market,” he says.

To illustrate, Insurer A charges US$100 for all customers, and Insurer B uses predictive analytics, leveraging health history, lifestyle, and medical records, to assess the risk of each policyholder and charges US$50 to healthy customers and US$150 to less healthy ones. Healthy individuals would choose Insurer B, leaving Insurer A with high-risk clients, rising costs, and eventual failure.

“In practice, there are no insurance products that can be called unique,” Professor Li says. “Many insurers are already using predictive analytics, but those that are willing to invest more to have more refined models can put customers into finer categories, and they tend to have a better competitive advantage.”

Professor Li has developed a new method to forecast longevity risk, a financial risk of a person living longer than their savings, for China’s population. The country only saw the insurance industry emerge after 1979, making its population data inconsistent. As a comparison, insurers in Western markets have collected risk data since the 18th century.

He notes that China’s vast territory leads to regional differences in longevity risk, and these trends are likely to diverge further as socioeconomic disparities persist. Therefore, predictive analytics is essential for insurers to thrive. “With limited data available in the Chinese market, factors such as gender, city of residence, and income may be incorporated into a machine-learning-supported model.”

4. Emotional connection is the prime consumer driver

2025 has seen collectable plush monster toys called Labubu taking the world by storm, with teenagers and adults lining up at stores. In Hong Kong, a Japanese character series, Chiikawa, has captured fans’ hearts through themed cafés and pop-up events celebrating its cute and comforting charm.

While AI has integrated itself deeper into our daily lives, human emotions remain utterly irreplaceable and may become more profound in consumer behaviour. For example, a recent report by the AI Security Institute shows that a third of UK adults have turned to AI chatbots for emotional support.

Lisa Wan, Associate Professor in the School of Hotel and Tourism Management, observes modern customers increasingly seeking deep emotional connections and value beyond the product’s functional benefits. “In the case of Labubu or Chiikawa, the appeal lies beyond the toy, but the surprise in the blind box, scarcity from limited editions, and social buzz increase the emotional drive to buy,” she says.

Emotional connection also matters in the tourism industry. Professor Wan’s study highlights how emotional factors, such as thematic storytelling and colour cues, drive customers’ impulsive buying behaviour. Travellers also often form emotional bonds with a destination even before they arrive, sparked by captivating articles, social media, or heartfelt stories shared by friends and loved ones.

Applying an emotional touch may also be useful for Hong Kong, which has seen hotel occupancy rebound, but retail spending and hotel stays are lower than pre-pandemic levels. The city could consider shifting away from mass shopping toward cultural and authentic experiences to foster emotional connection.

“Hong Kong has unique cultural assets, including the mix of East and West, Cantonese heritage, street markets, and festivals,” says Professor Wan. “More attention should be given to how visitors feel connected to the region and the Greater Bay Area. With economic headwinds and more cost-aware consumers, emotional consumption means shifting from luxury for luxury to emotion-driven value, where deep and meaningful experiences matter, even in moderately priced stays.”

Professor Wan elaborates that when customers feel emotionally attached, they become advocates, community members, repeat visitors, and co-creators of value. “Their loyalty goes beyond ‘I like the hotel’ to ‘I feel connected to the brand and destination.’ Loyalty isn’t just about returning customers, but also making them willing to recommend to others.”

The post China Business Knowledge’s 4 market forces in 2026 first appeared on China Business Knowledge.

Featured faculty: Choi Sungwoo, Kim Keongtae, Francisco Cisternas, Philip Zhang, Michael Zhang
Written by Pan Jingyi

Technology has been playing a pivotal role in shaping the business landscape in 2025. The world’s first law to regulate artificial intelligence (AI) by the EU is expected to be fully in force this year, while AI companies like Google, DeepSeek, and OpenAI have rolled out their latest models in rapid succession. Down under, Australia has also made history as the first country to ban social media for kids.

Meanwhile, US and Chinese companies have ramped up AI integration in their e-commerce to make “apps for everything,” and Nvidia’s CEO says quantum computing, which can solve problems too complex for classical computers, is approaching a critical turning point from early research to practical, scalable application. In hardware side, robotic companies around the world are vying for dominance.

Building on this surge, we bring together insights from the Chinese University of Hong Kong (CUHK) Business School faculty on how technology will redefine the future of business in China and beyond. In the second part, we will also share perspectives on other hot topics relevant to economics and consumer behaviour.

1. Future service robots: Humanlike interactions vs. humanlike bodies

Robots are no longer merely helpful assistants in factories. They have also become tireless servers at restaurants and dazzling performers on stage. A Morgan Stanley report estimates that the number of humanoid robots, or robots that mimic the human body, will likely reach nearly 1 billion by 2050, with China expected to have the highest number by then.

However, for human-centric service industries, such as hospitality and tourism, Choi Sungwoo, Assistant Professor of the School of Hotel and Tourism Management, offers another perspective: “I don’t necessarily think humanoid robots represent the primary direction for the future of service robotics.”

His recent research examined how assistive robots can empower employees with disabilities, but also highlights the importance of personal interaction. Robots can help with daily tasks, but customers still crave genuine human interactions and emotional connection, something that robots can’t truly replicate. Therefore, hiring humans in the hospitality industry remains crucial, even with the rise of robotic technology.

“Although a large body of research has demonstrated the benefits of humanoid robots, the goal of most companies is not to make robots physically resemble humans. Rather, it is to enable machines to interact with customers in more natural and humanlike ways, through tone, language, and behaviour.”

Therefore, Professor Choi expects AI-powered chatbots to lead the way in hospitality and tourism by increasingly interacting with customers, moving beyond simple tasks to take on more engaging roles. “By handling routine call centre-type tasks like answering frequently asked questions, handling bookings and check-ins, and scheduling appointments, chatbots can help free human staff to focus on more value-added and personalised services to create memorable experiences.”

2. Blockchain-verified AI agents bolster stablecoin safety

Blockchain is a decentralised digital ledger that records transactions across many computers, making it secure and transparent. As AI spreads across industries, its combination with blockchain could reshape finance by making systems more autonomous and interoperable, according to Kim Keongtae, Professor of the Department of Decisions, Operations and Technology.

His previous study shed light on the rising cryptocurrency and its influences on other technologies, underscoring the impact and functionality of blockchain on a wide range of applications. As AI takes on human tasks like trading and customer service, its ability to operate across platforms securely becomes critical, but without a universally accepted and verifiable digital identity, the AI programme cannot easily interact with other platforms.

“Blockchain provides the missing infrastructure, a neutral and verifiable identity layer for AI agents,” Professor Kim says. “The synergy extends to fraud detection and trust assurance. As AI models detect anomalies and suspicious behaviour, blockchain provides a tamper-proof source of truth to verify and cross-reference identities, transactions, and behavioural patterns.”

This secure, interoperable foundation also matters for a type of cryptocurrency called stablecoins, which are pegged to a stable asset like a fiat currency or commodities. As Hong Kong implemented a new regulatory framework for stablecoin issuers in August 2025, Professor Kim notes that its smooth launch is crucial for accelerating broader blockchain adoption and establishing the city as a regional leader in digital finance.

A cautious start by limiting issuance to a few trusted and well-funded companies can help establish standards for governance. “Over time, a broader range of HK$‑ or Chinese yuan‑pegged stablecoins could unlock local use cases and reduce reliance on US$‑backed stablecoins,” he adds. “In the near to medium term, investment and trading purposes are likely to remain the dominant use of stablecoins.”

3. More personalised e-commerce experience and smarter algorithms

E-commerce platforms nowadays deliver not just personalised product suggestions, but entire experiences tailored to consumers’ interests, making shopping feel personal, fast, and seamlessly woven into everyday life. Looking ahead, the momentum will only build.

Francisco Cisternas, Senior Lecturer of the Department of Marketing, anticipates that smarter models fuelled by richer data will allow more accurate predictions and better-timed offers. His recent study proposed a new budget-conscious model that can make the online retail recommendations more accurate. “Most routine tasks, such as recommending products, setting prices and designing creatives, are now already handled by algorithms,” he adds.

While AI is moving from a helpful assistant to the main decision-maker in e-commerce, Dr Cisternas points out that this doesn’t mean humans are out of the loop. AI often outperforms humans on repetitive and data-rich tasks, but it can falter when preferences are diverse or the data is scarce. “AI will be the central engine for many day-to-day decisions, while human and AI hybrids are the optimal mode,” he says.

In China, e-commerce giants have built a thorough ecosystem that integrates shopping, payments, logistics and social media under one roof. In the future, the country’s retail sector will continue to push the boundaries of seamless multi-channel integration, Dr Cisternas notes.

However, e-commerce must pivot from the old “right product, right moment” mantra to “right relationship, right lifetime” as shoppers look for more than just a quick purchase. “Personalisation that focuses on building long-term relationships with customers will outperform aggressive one-time price promotions,” Dr Cisternas adds.

4. Low-effort entertainment content dominates on social media

For most of us, social media isn’t just for connecting with friends, but also to see the world. Yet, it also often harbours a darker side that harms mental health and well-being. The Australian ban on social media has highlighted how “predatory algorithms” encourage youth to spend excessive time on screens.

This ban sheds light on the crucial role of humans as social media continues to evolve. “In the age of AI-driven tools flooding social media, humans will not compete with technology, but rather to distinguish themselves through superior judgment by knowing which content truly matters and defining the values and priorities that guide meaningful discourse,” says Philip Zhang, Associate Professor of the Department of Decisions, Operations and Technology.

Professor Zhang’s recent study shows that although AI can generate content and enhance social media consumption by filling missing metadata, it still falls short of matching the boundless creativity of humans. Human role would be even more crucial in the future, as Professor Zhang anticipates that social media will increasingly prioritise effortless consumption.

“If I were to imagine boldly, social media might instead evolve into a brain-computer interface one day,” he says. A brain-computer interface creates a direct communication channel between the brain and an external device, allowing users to control machines with their thoughts.

To complement the preference for low mental effort, simpler and more entertaining content would flourish greatly. This will make it harder for serious material to compete for attention—but not impossible.

He cites a podcast as an example and highlights the needs of seeking uninterrupted and insightful experiences. “While different platforms converge on similar features, the key is to identify niche audiences with specific and underserved needs.”

5. AI won’t fundamentally transform most industries yet

As elaborated above, AI has been used across industries. Our other recent articles have also explored how AI has and will continue to change our lives, from doing our jobs, data analysis, to supply chain management, with the vast majority of AI adoption remaining in early stages, rather than enterprise-wide scaling that reshapes core operations.

While there is lingering concern over the so-called “AI-winter”, where funding, interest, and excitement in AI dwindle, Michael Zhang, Wei Lun Professor of Business AI of the Department of Decisions, Operations and Technology, remains optimistic about its near-term impact. “Over the next few years, AI will undoubtedly boost productivity, especially in language and data-related tasks, but it is unlikely to fundamentally transform most industries, as current large language models still lack robust logical reasoning capabilities,” he says.

“Sectors closely tied to text and language processing, such as content creation, translation, legal documentation, and customer service, will experience the most transformative impact from AI in China,” Professor Zhang adds.

The post China Business Knowledge’s 5 tech waves to watch in 2026 first appeared on China Business Knowledge.