China’s Rise in the Tech Industry and Artificial Intelligence

Published on: 19 Feb 22:08

Photo by Edward He on Unsplash

China’s Tech-Market became a strong competitor to Silicon Valley. The USA was originally the one who lead the Tech-Industry, but since Chinas increase in production and export became so powerful, doubts arose. Is the USA still able to keep its leading role in competition to China? To impede the way for China, Trump imposed duties on Chinese goods and made stricter controls on Chinese investments in the US market.

For a long time Silicon Valley has regarded China's technology companies as irrelevant, industrial spies, or even imitators. But not a long time ago, the gaze towards China has changed and has been given a leading role. Not to forget that the Chinese government plays a major role in the whole process, especially through its support. In a speech with the message "mass entrepreneurial spirit and mass innovation" by politician Li Keqiang (2014), the imposed effect of over 1200 new founded companies have taken place. China has gained a foothold and is competing with the US (keyword: Silicon Valley). The Chinese city of Nanjing is a strong competitor and counts as a pioneer in the competition with Silicon Valley.The background is that China's technology companies have established themselves faster and better than expected.

Returning international entrepreneurs recover from their business trips and are overwhelmed by China's rapid progress and drive. The supportive measures of the Chinese government are intended to empower the population and to encourage to start businesses among their citizens. Opinions about government subsidies are controversial. Yasheng Huang, a professor of International Management at MIT's Sloan School of Management, says: "The country is playing by a different set of rules than the U.S." "The Artificial Intelligence processes are supposed to be driven, it has priority for the government, so we can move forward so fast. We test first and then we adapt everything as needed," so Hocking Xu, an International Business Machines Corp. and SAP veteran in the field of the Artificial Intelligence. These statements can be continued with Kai-Fu Lee, a Taiwanese pioneer, who says: "If you come to Nanjing to find a job or create your own start-up, you can enjoy favorable policies."

Such beneficial policies could be: Talent Recruitment, subsidized rent, tax benefits and more. Basically, security is given to start-ups, so there is no risk of loss in any way and individuals are strengthened with confidence. The supportive role of the Chinese government is essential and the core – in the process of research, development and progress, as measured by the rest of the world and especially the field of Artificial Intelligence. Apparently the opinions about the supportive government are controversial.

Nevertheless, despite its progress, China has technology bottlenecks, but its two forerunners, Alibaba and Tencent are outstanding role models for small to medium-sized e-commerce companies in China. Alibaba Group Holding Ltd. and Tencent Holdings Ltd. have already made it into the top 10 most valuable companies in the world market alongside Apple Inc. and Inc. Even among the four main companies (startups),are three from China!

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Artificial Intelligence in China with the example of WeChat Pay

China is thinking strategically as well as forward-looking and aims for long-term goals. In addition to the goals of the 12th Five-Year Plan they pursue to be the leader in the field of Artificial Intelligence by 2030. China has also taken steps towards its goals, notably in the fields of e-commerce and mobile payment systems. By this even America has been replaced from its rank.

To emphasize how serious it is for China to be the leader displays its overall approach. Normally, new inventions are replaced after a certain time, when they run out of date and new inventions enter the market. An example is the simple hand over beginning with the tape recorder, the CD player followed by the MP3 player and iPod. In contrast, the development in China is progressing at a faster pace, due to the fact that generational leaps prevail. For example, credit card payments were dominated by the mobile payment system (WeChat Pay, Alipay, etc.) and were directly replaced. The value of mobile payment systems in China has already reached the $ 16 trillion mark and has surpassed the United States more than 100 times.

WeChat Pay is a good example to illustrate which three major hurdle China has overcome, so that WeChat Pay could spread so quickly and safely (about 395,000 WeChat logins every minute).

1. Onboarding. Large parts of the population are already registered on WeChat and can be identified as an individual on the application.
2. Distribution. Users have full access to their WeChat contacts and can share their content with each other with all its functions.
3. Payments. Users can easily purchase with WeChat Pay uncomplicated process (shopping and pay).

China is one step ahead of us in the commercial sector, as fully automated stores are planned in the near future, in which physical labor is not needed anymore. Although this vision of the future exists, China is aware of and promotes the importance of physical retail as before. Fully automated retailing is more likely seen as just to be a complementary model to the physical retailing.

China is pursuing its goals ambitiously and climbs up the ladder of success. The salient difference between China and the rest of the world is the government's influence. In no other country in the world is the support of the government as intense as in China. It might be raised the question of whether or not these subsidies are manipulative, even if the purpose of the Chinese government is to act in the sense of its people.
Moreover, Artificial Intelligence is one of the top topics that will redefine the future in some fields of life. For China, Artificial Intelligence will mean major changes: "AI is the one that transforms everything in China, from business operations to customer experiences." That's why there's an interesting question: who will exertwhat kind of influence (Artificial Intelligence) and which effect will it have on the rest of the world?