How China companies develop AI under US sanctions – Winston Ma

 

Winston Ma

US sanctions on China make it harder for Chinese companies to develop large-scale AI systems because they lack access to finance and computing power, says Winston Ma, adjunct professor of law at the New York University School of Law. But they will focus on AI applications and their commercialization rather than developing the big systems, he tells CNBC.

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Why Amazon's kindle might not catch on in China - Shaun Rein

Shaun Rein

Amazon is trying to return to China, but business analyst Shaun Rein doubts severely whether China's consumers are waiting for the elsewhere so successful Kindle, he tells in Abacus News. China's Xiaomi could be more successful as a competitor, but has problems of its own, he adds.

Abacus News:

Analysts say smartphones have an edge over dedicated ebook readers in China. Unlike Americans, who adopted the Kindle to read ebooks before smartphones became widely popular, Chinese people leapfrogged e-readers and went straight to using smartphones, according to Shaun Rein, managing director of China Market Research Group.

“They’re much more comfortable reading books off a mobile phone interface than something specifically for books like the Kindle,” he said... 

“Because salaries are a little bit lower in China, people are less likely to buy a TV, a mobile phone, a Kindle reader, and many multiple devices,” said Rein. “So they’re willing to spend a larger proportion of their monthly salary on, say, a mobile phone than Americans would… They’re putting all their money into mobile phones.”... 

“I think Xiaomi has potential, but I think Xiaomi in general is just one of those companies that has way too many product lines,” said Rein. “Basically they try to get into every product category there is and just spread into their internet of things, but they don’t necessarily have a cohesive strategy.”

More in Abacus News.

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Why the investors did not buy Xiaomi's valuation - Paul Gillis

Paul Gillis

The Hong Kong IPO of China's success story Xiaomi disappointed greatly. Beida accounting professor Paul Gillis explains at Quartz why the investors did not buy the company's valuation. "I think it is hard for investors to buy the valuation."

Quartz:

What accounts for the listing’s tepid response? One read is that retail investors didn’t buy Xiaomi’s pre-IPO narrative any more than early subscribers did. In the run-up to the IPO, found Lei Jun described the company’s business model as a “new species” and a “triathlon model” with three components—smartphone sales, third-party hardware sales, and “internet service” sales, namely ads and media. While smartphones drive most of the revenue, the company hopes that internet services will eventually drive most of the profit (currently at about 40%)... 

It’s an unprecedented structure with many uncertainties. The Android smartphone business is notoriously unstable and has turned giants like Sony, HTC, and Nokia into casualties. Meanwhile, there has never been a tech company to successfully sell undifferentiated, commodity hardware as a means to boost an internet business unit—which might account for investor skepticism. 

“I think it is hard for investors to buy the valuation. The company has to transform to justify the valuation and there is too much uncertainty about whether it can do that,” says Paul Gillis, who teaches accounting at Peking University in Beijing.

More at Quartz.

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Top-20 blockchain companies in China - Rupert Hoogewerf

Rupert Hoogewerf in Shenzhen

Over the weekend, the Hurun Report chairman Rupert Hoogewerf presented in Shenzhen his latest report, together with Xiha Finance, on the top-20 blockchain companies in China, with Waltonchain as the winner, according to the Medium.com.

Medium.com:

This is the first time in the history of the Hurun that blockchain technology has been embraced. As the starting point to enhance the value of the blockchain technology, blockchain projects have become the focus of this awards ceremony. Waltonchain, as the winner of the Hurun Blockchain Innovators 2018 award, was invited to attend the awards ceremony. 

More than 1,000 industry leaders from all over Asia gathered at the conference. These included blockchain practitioners, experts, investors and big names such as Huawei, Ant Financial and Xiaomi. The focus was on new trends and how to construct a brand-new blockchain ecosystem with a new mindset — thinking outside of the box. Some hot topics were innovative applications, future development trends and risks of blockchain. 

As the winner of the Hurun Blockchain Innovators 2018 award, Waltonchain was also invited to attend. Waltonchain CSO Welson Wong accepted the award on behalf of Waltonchain. It is a fact that, having its excellent technical strength, Waltonchain has already become a leader in the blockchain + IoT industry. 

At present, the blockchain industry is rife with chaos and hype. Fortunately there are projects that are consistently recognized for their solid foundations and what they have actually accomplished in the real world. The Hurun Blockchain Companies List focuses on the essence of “chains” and helps serve the real economy and energize the blockchain ecosystem. 

As a leader in blockchain + IoT, Waltonchain aims to promote the healthy development of blockchain technology and strives to build a brand-new business ecosystem.

More at the Medium.com.

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Europe lags behind China digitally - Mark Greeven

Mark Greeven

China is way ahead of Europe when it comes to its digital transformation, says Zhejiang University professor Mark Greeven, author of Business Ecosystems in China: Alibaba and Competing Baidu, Tencent, Xiaomi and LeEco to the NRC. Europe is way over-regulated compared to China, he says, and companies get in China much more leeway to experiment.

Mark Greeven:

China is more innovative than most people think. Europe is over-regulated while China is one large experimentation group for new companies, technologies and innovations. One of those areas of interest is digital technology, in particular digital payment. Despite – or because? – a centrally led economy, entrepreneurs are the digital innovators. 

We have seen nothing yet: Malong Tech’s artificial intelligence, Lens Technology’s leading thin glass, Mobike’s bike sharing, Hikvision’s global market leadership in security technology and Zongmu Tech’s technology for autonomous driving. The list is long and expanding.

More in the NRC. (in Dutch).

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What if your customers cannot pronounce your name - Shaun Rein

Shaun Rein

Chinese brands like Huawei and Xiaomi have not only legal problems to enter the lucrative US market, says business analyst Shaun Rein, author of The War for China's Wallet: Profiting from the New World Order. It would also help if potential buyers would be able to pronounce the name of the product they are expected to purchase, he tells the South China Morning Post.

The South China Morning Post:

Huawei isn’t alone. Xiaomi, aiming to revolutionise China’s consumer electronics along the style of Apple, is almost impossible to pronounce. Xiaomi literally means “little rice.” 

Or take Tsingtao Beer, arguably the most internationalised among China’s brewers, its distinctive green bottle often the only Chinese brand found anywhere outside mainland China. Its name, spelt in the Wade-Giles system for romanising Mandarin, is the name of its home base of Qingdao city in Shandong province. 

Chinese brands need to be “something that roll off the tongue easily” to succeed, said Shaun Rein, founder and managing director of the China Market Research Group in Shanghai. Names like Huawei or Xiaomi, which “haven’t created English names that Americans and western Europeans can memorise or pronounce easily” have a bigger problem breaking into the market, he said. 

Americans spent US$14,564 per person on retail spending in 2014, more than three times the per-capita spending by Chinese consumers in the same year. That underscores the attraction of the consumer market in the planet’s biggest economy, even if its population is a quarter of China’s size... 

There are exceptions. DJI, the world’s largest producer of recreational drones, is headquartered in Shenzhen in southern China. Its full name, spelt out, is Da Jiang Innovations, inspired by the Chinese adage “Great ambition has no boundaries”.

But the company rarely goes by its full name in English, preferring to obscure its origins. It has an estimated 75 per cent share of the world’s market for drones, with the US among its biggest market. 

“American consumers sees DJI and they don’t know its heritage,” said Rein. “DJI is easily memorised by Americans and I think that’s the reason why Alibaba and Tencent do reasonably well, at least in recognition by Americans investors. Because their English names are easily memorable.”

More in the South China Morning Post.

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Ant Financial, Didi Chuxing and Xiaomi top 2017 best Chinese unicorns - Rupert Hoogewerf

Rupert Hoogewerf

Ant Financial, Didi Chuxing and Xiaomi made it to the top-3 Chinese unicorns in 2017 on a list of 120 most successful unicorns in Greater China, announced the Hurun Greater China Unicorn 2017 Index last week. Beijing is leading the pack, says Hurun founder Rupert Hoogewerf, followed by Shanghai, Shenzhen, and Hangzhou. Keeping up with the amazing growth is tough, Hoogewerf tells AsiaVenturepedia.

Asiaventurepedia:

The Hurun Research Institute released today the Hurun Greater China Unicorn Index 2017, where Ant Financial, Didi Chuxing, and Xiaomi top the chart. The report listed out 120 best unicorns in the Greater China region that are valued over $1 billion as of the end of November 2017. 

“We select the companies valued over $1 billion based on the initial definition of a unicorn startup. However, for many investors nowadays, only those valued over $10 billion or over $15 billion are considered unicorns,” says Rupert Hoogewerf, chairman of Hurun Report, in a statement. 

It’s worth noting that Beijing accommodates the most unicorn startups, holding up 45% of the companies on the list, followed by Shanghai, Hangzhou, and Shenzhen. Among the selected companies, 17 of them are from the internet finance industry with valuations totaling RMB 700 billion (roughly $106.5 billion). 

On top of that, the list also sees a slew of startups from the internet service and e-commerce sectors, both of which account for 18% of all the listed companies. Startups from the entertainment, transportation, and health sector are active as well. 

Also, among the top 10 unicorns, eight of them are valued over RMB 8 billion ($12 billion). Sequoia Capital, on the other hand, became the venture capital that invested in the most unicorns, followed by Tencent and MatrixPartners China. 

On the list, Ant Financial, Didi Chuxing, and Xiaomi are named the top three unicorns with valuations respectively at RMB 400 billion ($60.84 billion), RMB 300 billion ($45.63 billion), and RMB 200 billion ($30.42 billion). The other unicorns include China Internet Plus, Toutiao, CATL, Lufax, DJI, Koubei, Cainiao, JD Finance, and Ele.me.

More in Asiaventurepedia.

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How China becomes a global leader in AI and driverless cars - Mark Greeven

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China's high-tech companies like Alibaba, Tencent, Xiaomi and Baidu are pushing the country to become a global leader by developing new business models, says Zhejiang University professor Mark Greeven, author of Business Ecosystems in China: Alibaba and Competing Baidu, Tencent, Xiaomi and LeEco to the South China Morning Post.

The South China Morning Post:

Greeven, who co-wrote Business Ecosystem in China: Alibaba and Competing Baidu, Tencent, Xiaomi and LeEco with Wei Wei, said Chinese companies have found a new method of organisation that will help it become a global innovation leader. 

The business ecosystems of Chinese companies differ sharply from those of US juggernauts such as Google, Amazon, Facebook and Apple, according to Greeven, whose book came out in September. 

In the US, one company usually creates a platform which outside companies either plug into or use. In China, an outside company does not plug in, but becomes part of the business as one of hundreds of players in an ecosystem, Greeven argues. 

A distinct trait of a Chinese innovation ecosystem is the “glue” that exists between all the participants. For example, in the case of Alibaba – the owner of the South China Morning Post – the payment function is shared in its ecosystem. 

The five companies in the book’s title are all digital driven, but they mix hardware and software, online and offline and old and new industries. They include relatively old companies such as Tencent, which was set up in the 1990s, and younger companies. 

What they have in common is an aversion to adopting the standard metrics structures used by most multinationals. Greeven found. Their unique ecosystem, under which suppliers, distributors or customers become partners, helps them achieve early success in a highly uncertain business environment.

More in the South China Morning Post.

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How cheap China became a business disruptor - Bill Fischer

Bill Fischer

For long China has been displacing Western companies by cheaper products. But many have failed to see how this displacement has been overtaken by disruptive business models, writes IMD professor Bill Fischer in the Harvard Business Review.

Bill Fischer:

China has not been a huge technology innovator, despite being the world’s second-largest investor in R&D, but Chinese businesses have found ways to use innovations in processes, business models, and customer experience to their disruptive advantage. Xiaomi’s phones are not technologically disruptive in hardware terms, but they are revolutionary in customer experience terms; customers come to expect and appreciate their weekly OS updates. Technologically, Tencent’s WeChat may seem like a WhatsApp knockoff, but it allows users to do a multitude of things that other messaging apps cannot. Again, this is true disruption (although not particularly successful outside of China so far). Haier’s organizational reinventions allow it to accelerate the time to market for its Tianzun advanced household heater/air conditioner/air purifier — a potentially disruptive advantage in what is a slow-moving industry. 

We in the West have long prided ourselves on our business process acumen, strategy savvy, and customer centricity while stereotyping Chinese competition as being nothing more than low cost. As a result, we have missed China’s transition from displacer to disruptor. Today China’s businesses are becoming considerably more disruptive than we have given them credit for, making Chinese competition more formidable in the future. This is not to say the road ahead for China will be a smooth one. The major barrier the country must overcome is entrepreneurial. We spoke with several Chinese entrepreneurs in Kunshan last month — young and old, working in both the private sector and the public. They consistently characterized their peers as too short-term oriented to create truly disruptive change, and the country’s cumbersome state-owned enterprises as too slow. Entrepreneurs in Chinese industries from animated media to applied medical research said that China’s insistence on domestic standards are resulting in less-ambitious innovation and that the education system is not supporting appropriate talent development. The former country head of a major multinational pharmaceutical company (a Chinese-American one) observed that “made for China,” rather than “made for the world,” often is easier, cheaper, and more profitable than pursuing truly disruptive changes, an observation echoed by the Chinese managing director of an internationally funded pharmaceutical venture capital fund operating in the China market. This emphasis on “made for China” is also a peeve of a “returnee” chaired Beijing University professor who pointed out that some returning young Chinese scientists are avoiding new challenges, preferring instead to “continue their advisor’s work.” 

Nonetheless, there are enough suggestions of business model disruption appearing in China that it is highly conceivable that soon we might be entering a period of two-speed change. The first will be continued displacement by ever-more-competitive Chinese companies who compete on cost. The second will be disruptive business model innovation occasionally appearing in less-familiar sectors of the Chinese economy, powered by emerging entrepreneurs. 

This presents Western companies with a fresh challenge. Displacement can be combatted in a number of ways, from process improvements to government trade actions, and cost advantages tend to be temporary sources of competitiveness, but disruption presents a more profound challenge. It calls for real transformation in incumbent companies — something that is notoriously difficult to achieve.

More in the Harvard Business Review.

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Xiaomi picks fight with Apple, Samsung - Ben Cavender

China´s smartphone maker Xiaomi has launched its first tablet and business analyst Ben Cavender sees the company doing well in the 15-35 year bracket of consumers who never used a PC. Apple and Samsung should start to worry, he explains in Bloomberg TV.

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