The internet is yesterday's news in China

The internet is yesterday's news in China.png

In this article, we're going to talk about China's digital leap forward and the fact that it has been developed for so long and become so advanced, that even the internet is just yesterday's news.

Back in 2013 the business community in China started discussing the second half of the mobile economy era. I’m talking about internet businesses specifically. They had a great sense of determination, and urgency was common among them. The main thought was ”either we adapt to the fast evolving technology of artificial intelligence and big data analysis and computer chips and upgrade - or be destroyed”

As a result, since 2017 - after this period between 2013 and 2016 - the new keywords that were dominating the public discourse in China were “data” and “intelligence”.

Now, across just about every industry sector Chinese companies are investing heavily in R&D of the latest digital technology. The fact is, the largest internet companies such as Alibaba, Tencent and Baidu have all invested billions in building new research centers, hiring experienced AI experts and young data scientists - setting up labs to work on the algorithm developments.

The “Four CV Dragons” in China

While all of this was happening, technically savvy and internationally educated entrepreneurs with compelling tech had easily attracted venture capital to set up a bunch of startups that brought niche artificial intelligence apps to a broader market.

A couple of examples are

  • MegVii

  • SenseTime

  • Yitu Technology

  • CloudWalk

These startups are collectively referred to as China's “4 CV Dragons”.

CV, in this context, means “computer vision”, and apart from the more common AI tech like facial recognition, for example, these CV companies have also used AI technologies to transform a variety of other industries.

Tencent, the highest value company out among the dragons, has roots in gaming and online services and was strictly consumer-facing, but in 2018 it made dramatic changes in response to this new trend. For the first time in six years they announced a major restructuring to move from a consumer business towards one that caters to industries as well.

The restructuring included a bunch of things. The biggest takeaway would be the creation of a new cloud and a smart industries group. This group was focusing on AI, cloud services, big data, and security. On top of that, Tencent formed a new technology committee to better coordinate fundamental technology research at different departments within the company.

This is very important because almost all the Chinese tech players today are heading into the same direction as Tencent. Better put, they're in a rush to learn how new digital tech, including the internet of things, AI, blockchain, cloud computing, data analytics, etc, can be integrated into their businesses to unlock value from non-traditional angles.

From a consumer-focused to an enterprise-oriented internet

So in shorter terms, China's consumer-focused internet is now transforming into a more enterprise-oriented internet characterized by more advanced digital technologies and faster 5g mobile networks.

We're seeing a lot of novel inventions, things were never seen before, that they are spearheading and the advancements in 5G is extremely important in order to achieve these novel ideas.

So this transformation of businesses has been very profound, to the extent that the Internet today simply feels like old news compared to the things that are popping up now.

All these new technologies is just a result of this transformation from a mobile economy to a digital economy.

So how do we differentiate the two?

Mobile economy versus digital economy

The main identifiers of the mobile economy is that its base is on 4G mobile networks and it is led by consumers. In China, the inflection point for the mobile economy happened back in 2014-2015.

The transformation over to the digital economy - its key differentiator - is that it's led by enterprises instead of consumers, and it's on 5G mobile networks instead of 4G mobile networks. The inflection point started in 2017-2018.

This transformation has profound implications not only for China, but for emerging markers that are looking at China as a reference case when they work on their own digital transformation. That means that the players in these emerging markets need to look beyond mobile phones and the digital wallet.

What they need to focus on is positioning themselves for the next phase, which is AI and the digital economy, and they need to do that now. China's leaping forward may also give these emerging markets a sense of urgency as well. It may also be a leap frogging opportunity for them if they embrace the new technology revolution.

What's truly extraordinary with the Chinese case is the decisive commitment from the Chinese government back in 2015. There was one hot key word that the government made popular - “Internet plus”.

Soon, the Chinese government announced a sweeping vision for AI and digital economy excellence through a series of policies and initiatives. They released something called the next generation AI development plan back in July 2017, so by 2019 “Intelligent plus” was the new keyword du jour.

So, from “Internet plus” to “Intelligent plus” - that's the main distinction.

Why global dialogue and cooperation is key moving forward

The digital revolution may impose significant challenges for many smaller countries, especially those lacking technology resources and with large labour forces that might be replaced by AI.

These less developed countries and emerging markets all face an uphill battle as late comers to the AI game, but with a limited amount of infrastructure they can build these infrastructures very fast compared to the European Union, for example.

The EU already have its 4G network 40% owned by Chinese companies. If they were to move over to 5g they are forced to continue to do so with China. Now, all the talk in media about the EU and the US trying to boycott China is worrying if the EU chooses to move forward with the boycott. If Europe is going to have a plan to move into 5G without China, that means they have to destroy 40% of their current infrastructure and foot the bill themselves to rebuild all of that, if they really want to extend its structure to 5G.

The only thing is, AI runs on data and that correlation leads to a cycle of consolidation within industries.

Simply put: the more data that you have, the better your product. The better your product, the more users you will gain. The more users you gain, the more data you have.

This cycle is important to be aware of.

That's why I personally think there should be no government interference when it comes to breaking up the big tech companies, because their size and the accumulation of data that they have gathered throughout all these years is one of the main factors that their products are so good.

The better products you will be able to offer, the more it benefits humankind. It benefits society as a whole.

This is why global dialogue and cooperation has ever more importance for the next phase of the global digital economy a shared digital future not government crackdowns and boycotts, but a shared digital future that we can all benefit from.