Not “Go West” anymore, but “Look East”, or why we should be looking at the Chinese market

We are used to thinking that innovations and the best examples of modern business should be found in the United States, in the Silicon Valley, where both the largest and most famous technology companies and thousands of small startups have their headquarters. This is the place of origin of Google, Facebook, Apple, Microsoft, Amazon, Twitter, Uber and all the other tech giants whose services we use every day. However, when some of us are still looking at the West for trends and inspiration, the leadership of the Western companies have long been looking at the East, that is at China, and it is not only the matter of finding a huge market for their products and services – China has become the place where many new business models, monetization strategies and solutions that are copied by the Western companies are developed. It is also taking the lead in the Artificial Intelligence race. Last August, Eric Schmidt, a former executive chairman of Google and Alphabet, once again warned that China would surpass American AI capabilities. This contest is not about whose algorithms will be best at recommending the content on social media or on streaming platforms, but about global economic, political or military domination. In the article published by Project Syndicate, Schmidt recalls this year’s pandemic and explains how AI was used to manage the coronavirus situation – the whole population of Hubei province (60 million people) were put in lockdown, AI was tracking residents’ movements and was used to scale up testing capabilities. Chinese tech companies quickly developed apps monitoring people’s movements, their health status to determine if the person concerned could be in contact with the virus and thus should be quarantined. According to Schmidt, AI played a critical role in overcoming the coronavirus crisis, while in US the technology was used mainly as a buzzword.

How did this happen that from the country that many still associate mainly with counterfeit products and infringement of copyright, China became the leader of the modern economy and of the development and use of cutting edge technologies? Kai-Fu Lee, the author of “AI Superpowers. China, Silicon Valley, and the New World Order” gives a fascinating answer to this question. Lee, a Taiwanese-born American, is a businessman, a computer scientist and has an extensive experience in technology and artificial intelligence. He worked for Apple, Microsoft, Google, and over a decade ago he launched Sinovation Ventures, which invests in Chinese tech startups. In his book, he describes the way China has changed in recent years and explains how local business culture, residents’ attitude towards privacy, and finally the attitude of ruling authorities caused the development of such a powerful competition to the Americans. The current AI is based on neural networks and deep learning, which were developed several decades ago but have got traction only recently. Lee acknowledges they were created by US researchers but points out that it is China that can be the biggest beneficiary of this revolution because of the transition that took place: from the phase of discovery to the phase of implementation, and from the age of expertise to the age of data.

In the early era of the internet, Chinese entrepreneurs were indeed copying solutions known from Western countries – “the Facebook of China”, “the Twitter of China”, other messengers or online stores. QQ, the messenger created by Tencent, was originally named OICQ and it clearly alluded to ICQ which was owned by AOL. American (then) internet giant threatened the Chinese (then) small company with the trademark infringement lawsuit, and the name of the instant messenger was changed. 20 years later, Tencent is sixth on the list of the most valuable companies in the world (with capitalization around $ 620 billion) and AOL was acquired by Verizon for $ 4,4 billion in 2015. Chinese (now) tech giant is a great example of the evolution of the local digital industry – it started with copying but throughout the years it has built the business model and the portfolio of services that are now used by over a billion people. Tencent is the owner of WeChat, the super app hat has 1,2 billion users (and that has become the subject of political game between Donald Trump and China in recent weeks). Kai-Fu Lee explains that the copycat era taught Chinese startups the baseline engineering and digital entrepreneurship skills but afterwards they began to develop the local services, tailored to the national needs, competing fiercely against each other and using harsh and unfair practices. Lee calls them “gladiators” deploying tricks and tactics that “would make Uber founder Travis Kalanick blush” (which means the situation was really intense). This lesson of ruthless business life resulted in forging a generation of the most relentless and tenacious entrepreneurs on earth, the ones that have a great chance to dominate the race to find innovative and profitable deep learning implementations.

Next week, in the second part of the article, we will share the insights on how China is surpassing United States in the amount of collected and analyzed data, what are Kai-Fu Lee’s recommendations for the reduction of AI’s negative effects, and how the trends of inspirations between United States and China have changed in recent years.

Is China Winning the AI Race? by Eric Schmidt & Graham Allison – Project Syndicate
Inteligencja sztuczna, rewolucja prawdziwa. Chiny, USA i przyszłość świata – Oceny, opinie, ceny – Kai-Fu Lee – Lubimyczytać.pl