China is Choosing Innovation and the Information Age as a Key Pathway into the Global Economy
Last night I was asked to present at the launch of a Chinese developed Artificial Intelligence big data capability and business service for the Australian market.This was a remarkable event for two reasons.
The first is that AI is becoming mainstream and is often described as the ‘new electricity’ - that is, it will soon become a ubiquitous capability in our everyday business and personal lives and we will wonder how we ever managed before it existed!
The second is that this big data capability has been developed and is being delivered by a Chinese company using Chinese infrastructure. Outside of Huwaei telephone network switching system we have not seen this level of high technology service offering being presented by Chinese companies to non Chinese markets before. Importantly there is nothing ‘catch up’ in this capability. It is leading edge, significant in its capability and inspiring in what it can analyse and predict for businesses.
China Enters the Information Age
We often hear about China's strategy for the One Belt and Road infrastructure initiative to create new trading routes and global linkages but I propose that the investment and approach to innovation and the information age that China is making is no less important.
Having had the ability to compare many international markets I would argue that the reason that we should all look seriously at the China innovation sector is simply because it is like no other, it is acting like no other, and it has forces applying to it, and driving it forward, that is like no other. Therefore we should not consider it along the same principles as other more traditional global innovation centers.
The Harvard Business Review refers to China as a ‘parallel digital economy’[1] and I often use the description ‘economic tsunami ‘ and maybe for the purpose of this event an ‘innovation tsunami’ is a more appropriate term..
So let me put this into some perspective and then relate to how it affects innovation and commercialization of capability between China and other global economies:
· Firstly we all know that the size, capability, desire and will of the Chinese Government and its industrious people to influence it economic development is without peer in terms of its clear directions and targets, its speed and its comprehensiveness.
· But China historically had some timing good fortune in terms of Government policy looking outwards just as global technology evolved – for example the GSM mobile networks in the 1990’s where China quickly became the world's largest mobile user, followed by broadband and smart phone driven mobile internet, ecommerce and social media in the early 2000’s. Now as we move into the information age; big data, artificial intelligence such as being offered by Global Tone , robotics and network and service personalization through social media have taken their place and are the leading edge of innovation.
· That is - just as the world became flat, global and digital according to Thomas Freidman, China began looking outwards at the new opportunity to compete globally it was given. Referring to India but equally applicable to China and the lens by which we need to view it he said:
“By 'flat' I did not mean that the world is getting equal. I said that more people in more places can now compete, connect and collaborate with equal power and equal tools than ever before.” [2]
· But also the Chinese Government and society’s preference for centralizing control of Internet activity – both in terms of restricting foreign participants and largely waiving privacy rights has allowed for the emergence of major local social media and ecommerce player behemoths and opportunities for companies like Global Tone presenting their capability in Sydney today.
· China is a very large single market and not an economic union market. This is a unique benefit to China's companies in developing critical mass solutions. Only India and the US can create and deliver new services based around the same volume levels as China. Using its domestic market as leverage then gives China as a producer of innovation for the information age significant advantages in both developing and sustaining value in its product set and allows it to address huge new markets coming towards us – such as in the countries of Africa for example over the next few decades.
Key Elements of the 13th Chinese Plan Priorities
China understands this and innovation is a cornerstone of the 13th Chinese Plan priorities .
The plans priorities are focused in the following areas:
· Health and Aged Care – China’s middle class is growing rapidly and is seeking better quality health and aged care services. Recognising that the Chinese Government alone cannot meet the increasing health and aged care demands of its citizens, the Plan promotes the idea of a “Healthy China”, encouraging the participation of the private sector in the establishment of an integrated health and aged care system.
· Financial Services – the Plan recognises that there is still room for further development and improvement of China’s financial services sector. The Plan details measures to address the dual aims of financial reform and maintaining financial stability.
· Agriculture – the Plan for agriculture builds on the previous theme of modernising the Chinese agriculture sector. It reiterates the intention to restructure China’s agriculture sector and introduce improved technology innovation and effective agricultural socialisation service systems.
· Infrastructure – in line with China’s ambitious One Belt, One Road strategy, urbanisation and infrastructure investment remain high priorities with plans to coordinate regional development and road, rail and port infrastructure to tie the country together. The Plan also highlights a strong focus on innovative infrastructure and green development.
· Environment – the Plan emphasises a cleaner and greener economy, with a strong commitment to environmental management and protection, clean energy and emissions controls, ecological protection and security and the development of green industries.
· Innovation, Internet Plus, new media and information technology – the Government has recognised the importance of China developing new industries based on the Internet and e-commerce. The Plan encourages the integration of the internet with traditional sectors of the economy and promotes Internet-based innovations.
But China Also Has Big Plans for AI
So let's talk specifically about AI.
China is developing artificial intelligence in improving the capabilities of robotics, developing driverless cars, divining consumer preferences, inventory forecasting, selling enhanced products, and marketing goods and services. According to the Ministry of Industry and Information Technology, China has thus far applied for 15,745 AI patents.[3]
The Ministry of Science and Technology stated recently China plans to launch a national AI plan, which will strengthen AI development and application, introduce policies to contain risks associated with AI, and work toward international cooperation. The plan will also provide funds to back these endeavors. Some municipalities also support AI research programs. Beijing, for example, is home to the CAS Institute of Automation, a consortium of universities and firms that provides venture capital funding of 1 billion RMB ($US150 million) to AI development. And companies like Geely Automobile are using intelligent manufacturing and internet marketing services based on AI to boost sales.
Closing
So in closing I believe that China and China’s capability is perfectly poised to move into the next big era of the information age of big data analytics services. We are witnessing in effect the beginning of an ‘innovation tsunami’.
We all can understand the potential value of creating new service solutions of big data around the Internet of things, weather events, healthcare or even financial transactions.
But providing a ‘cross language big data service with cognitive and analytical solutions for global users’ as being offered by a Chinese company like Global Tone is something that has been thought about for a long time but has until now always been out of our technology and service reach.
The applications for this capability as companies enter new markets – not just China reaching out to global markets but global markets reaching into China as well - means that these sorts of cross language tools for business interpretation can only become increasingly important as the information age spreads not only in established markets but to new markets like Central Asia or the countries of Africa as well.
End
[1] https://hbr.org/2017/07/60-countries-digital-competitiveness-indexed
[2] https://www.brainyquote.com/quotes/quotes/t/thomasfrie416670.html
[3] https://www.forbes.com/sites/sarahsu/2017/07/03/china-is-investing-heavily-in-artificial-intelligence-and-could-soon-catch-up-to-the-u-s/#f96944d53844
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