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DECEMBER 7, 2018 //     

AI drives tech in China: Dispatches from the “Saudi Arabia of Data”

Credit: CNBC.comBy: Paul Mottram

As trade tensions between the United States and China dominate economic news, the world’s second-largest economy has accelerated in terms of tech. Artificial intelligence (AI) is the engine, and data is the fuel. And China has become, quite simply, the Saudi Arabia of data.

Those were the sentiments of Chinese and international tech leaders and investors who gathered at CNBC’s East Tech West conference at the Nansha new economic zone of Guangzhou in late November to investigate and discuss the outlook for China’s tech sector.

A series of speakers illuminated the reasons why. The Chinese consumer is the hero. Consumer spending now represents almost 66 percent of GDP -- a huge shift from the country’s traditionally investment-dominated economy. Consumers are also young, accepting of technology and increasingly demanding. Central, provincial and local governments actively support innovation. And there’s a critical mass of tech talent, both entering the workforce and returning from overseas.

AI as enabler

Alibaba Chief Machine Intelligence Scientist Wanli Min described AI and cloud technologies as the “twin turbo drive engine” of the new Chinese economy.

Take urban transportation, for example. China’s dominant ride-hailing service Didi handles more than 30 million trips every day, which in turn generates more than 100 terabytes of data. Didi not only has the data to plan trips in real time, but also claims to accurately forecast traffic patterns 15-30 minutes in advance. Meanwhile, a system pioneered by Alibaba controls traffic signals in the city of Hangzhou and reduces average ambulance arrival times by 48 percent.

Another example includes cutting-edge software development accompanied by hardware. New 5G mobile infrastructure enables the low latency necessary for effective autonomous driving applications, while AI-enabled chipsets allow vision systems to increase simultaneous recognition from around 20 discrete objects to more than 100.

This kind of technology and experience favorably positions Chinese companies to extend their reach overseas. As one AI company CEO pointed out, driving is rules-based. And if systems can be developed for relatively relaxed – in other words, unpredictable – societies, they will have fewer problems in more orderly places like Europe and North America.

“If you can do autonomous driving in India, you can do it anywhere,” he said.

Retail, banking and healthcare

In addition to transportation, tech-enabled transformation is also increasingly happening across other sectors in China.

Events, such as the annual Singles Day, have already brought Chinese e-commerce to the world’s attention. But speakers at East Tech West talked mostly about completing the retail system to encompass developments in payment and logistics and transforming shopping as we know it. While technologies, such as facial recognition, may appear to give retailers new, tailored sales opportunities, the ultimate power in the retail relationship will shift to consumers on the one hand and manufacturers on the other. Salespeople will act as mediators, but stores themselves will be simply showrooms and warehouses.

Similar fundamental shifts have begun in consumer banking. As Yang Qiang of Tencent’s WeBank pointed out, “on the Internet, everyone is a VIP customer.” He predicted banking is not so much being disintermediated as much as being more integrated into people’s lives.

“Banking will be like oxygen,” he said. “In your pocket, in your home and in your car.”

China’s healthcare system is one sector speakers agreed is most ripe for innovation. With more than 8 billion annual healthcare visits in China, that’s a lot of pain points – literally and figuratively. Machine learning and AI play a significant role. One smartphone picture of your eye can be used to diagnose more than 1,000 vision conditions and disorders. And as more data is gathered, the more effective the system will be.

Desensitizing data

In healthcare as with financial services, a key recurring concept was the “desensitizing” of data, whereby useful personal information collected by big-data systems is effectively separated from the identity of the user. While the topic of government access to data was studiously avoided by speakers and interviewers alike, there was clear recognition of the need for privacy and trust in the commercial world.

Overall, two days of presentations painted a picture of optimism and opportunity backed up with concrete examples of innovation impacting people’s lives now. Macroeconomic headlines and geopolitical realities weren’t ignored, but it will clearly take more than a trade war to stop the Chinese tech juggernaut.

Paul Mottram is managing director of All Told, Asia Pacific.

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