Consultant’s Corner

by Joe

Growing Your Business in China

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When it comes to pursuing a growth strategy in China, the “right” strategy for your company really depends on the perspective of your foreign partner.  This includes company values, business culture, negotiation style, networking, and socioeconomics.  In this month’s blog, Word4Asia shares some of the strategies we’ve seen successful companies employ in China.

To appreciate how challenging it is to build a successful business in China, one need only consider the list of companies who have tried and failed there.   For instance, Amazon, after slogging through for nearly 15 years, pulled the plug in July 2019.  Home Depot lasted nearly six years before calling it quits in September 2012.  Most companies who failed there had not fully realized the competitive barriers they would face, nor the difficult, and subtle nuances of the Chinese culture.  Misunderstanding the significant cultural differences has been a common problem, in no small part because American companies are geared for speedy execution. But this approach does not support a bottom-up approach, and this is a violation of what the Chinese call “guanxi”.

Guanxi is best translated as “network” or “relationship.” Developing personal relationships leads to trust; without trust, American businesses fail in China.  It is essential to build a network of friends and supporters at many more layers than is necessary in America. The process of establishing trust usually means negotiators will be conducting many more personal meeting and conversations. 

It’s only been in recent years that China’s economy has become more consumer driven.  Traditionally, the Chinese were more apt to invest their money in stocks, land, and other assets to pass wealth to their children.  So, the Chinese don’t demand the same product selection that American consumers do.   A conservative and successful American strategy has been to introduce older models from the US market to Chinese consumers.  Apple did this in 2012 when they introduced an older model of the iPhone, and by 2015, they saw a 71% increase in quarterly profit.   

Food and business services have achieved success in China by way of Chinese franchising.  KFC, Starbucks, and McDonalds are just three American mega-brands that have established a massive global presence, which also includes China. 

 

Of course, lots of American companies have pursued foreign markets purely from a sales goal perspective – a sheer drive to steal market share from domestic competitors. At times, American brands that have tried this strategy have failed in this strategy, because the local consumers decide to protect their country’s home-grown brands.  To win in this game, your brand must have an important competitive difference – either quality, or functionality or price. 

One final option is to buy one’s way into the market.  Various companies have attempted this through acquisition of channel members (retailers, wholesalers).  Likewise, it’s possible that a foreign market entrant may purchase its direct competition.  For instance, eBay did with EachNet (a Chinese e-commerce company and online trading community like eBay).

Given that trade relations with China have been difficult, and remain so, pursuing a growth strategy that includes one or a combination of these preceding strategies requires a determined business philosophy.  At least three have been identified, including:

  • China is just too big a market to ignore.
  • China has too much to offer the rest of the world, especially exciting models, new products, and lucrative market segments.
  • China provides an opportunity for the advantages your company uniquely delivers. 

The Chinese philosopher Sun Tzu said, “In the midst of chaos, there is also opportunity.”

With that in mind, here are a few additional points of advice.

Instead of introducing American products into China, develop unique products for the Chinese market.

Many companies have done this already, in fact there are now over 2,000 multinational R&D centers in China. For example, since 2008, Nestlé China pioneered a direction that other food and beverage companies followed when they opened their Beijing R&D center in 2008.  Nestle’s food scientists conduct basic research and applied product development work at the center. 

Possible Business Models

Manage From Within China

This is what the most successful multinationals already do.  There are five building-blocks to this.  It starts with local management.  As an example, Coke has made Coke Greater China and Mongolia one of nine global zones that report directly to the company’s chief operation officer. Empower local management to manage the business without having to pass most decisions through global headquarters.  Chinese executives now head the China units of Nestlé, Procter & Gamble, and other large multinationals.

Speed to Market

It’s impossible to overstate how important speed to market is in China.  Competition is fierce.

In low-tech markets like food and beverages, it’s common for competitors to develop knock-off products and launch them in under three months.  In more complicated/ tech-intensive categories, it’s been done in as little time as a year. 

Embrace Online Business Models

Chinese shoppers have embraced online shopping more than any other consumers in the world.   E-commerce sales made up more than 40% of total retail sales in 2020. About 40% of all food is ordered online. Chinese smartphone users spend four hours and 34 minutes per day on their smartphone, 48 minutes more than US adult smartphone users spend.  If your company is going to sell products or services to these consumers, having a convenient, attractive, and uniquely better online business model will be among your top priorities.

A few examples will paint the picture.  Pinduoduo is a mobile-only marketplace that sells produce items to Chinese consumers across China.  It is one of China’s top social media platforms although it did not exist five years ago. Today, it is one of China’s leading platforms in terms of monthly users. Tiktok is known as Douyin in China and it has been the fastest-growing platform by gross merchandise volume, representing a new content-based e-commerce model.

Kimberly-Clark has grasped the importance of speed to market.  They’ve grown in China by  engaging online with millions of new Chinese moms every year.  They are heavily investing in digital media (including e-commerce, social media, short videos, and vertical apps) to convert new consumers and they use state of the art analytics tools to continuously measure campaign and media effectiveness.

Our objective at Word4Asia is to help our clients succeed in mainland China.  We’re proud to have been doing this for over twenty years, even in challenging times like we’ve seen since 2020.  Is your organization thinking of China as a new focus area, or are you thinking of a new approach to work you’ve already been engaged in?  We’d love to talk with you about it.  Contact me, Gene Wood, at gene@word4asia.com.  I’m happy to share the insights I’ve gained, and the ways we’ve helped our clients succeed!

Aging

by Joe

Working after 70…only 4%!

This blog is the second part in a continuing series. If this peaks your curiousity, we suggest reading part one, which you can find here on this LinkedIn page, too.

Facts:

  • Life expectancy continues to increase. Starting at age 25, and assuming that one’s health continues more or less problem-free, and further assuming that one wishes to continue working, impactful work could continue until age 78.  Compared to the usual retirement age, the percentage of added “working years” is significant.
  • Medical care and health products are affordable and readily available for general aches and pains. Maladies which were a short time ago were a death sentence are now curable and easily corrected. Think “lasik” surgery.
  • Fewer jobs/careers involve challenging physical labor, compared with the world our parents lived in.
  • Post-pandemic job opportunities are everywhere and second career opportunities are abundant in this “work from home/anywhere” world.

Advantages /reasons for working longer:

  • You can easily postpone collecting Social Security until age 70. This means an increase of 30% income for the remainder of your/your spouses’ lifetime.
  • By working longer, one gains both physical and mental health benefits. There are many articles on this. Use Google!
  • Continue socialization continues to develop us mentally and spiritually. We don’t realize how much of our social interaction comes from work until we are removed from it.
  • Self-worth. Hopefully, you’ve made your living doing something you believe “makes a significant difference” to society, and possibly even to eternity. Some folks refer to this as self-actualization.
  • More money. Depending on your situation, this could mean caring for basic needs; however for most of my readers, these funds will be used for travel, entertaining, passing along to those you love (sharing) and even philanthropic generosity. If you’re fortunate enough to own a business, the income it generates can provide spectacular income for the people you care about and, If you’re reading this, I suspect you’ll find the last option to be the most attractive one. The happiness and joy that your generosity creates for the causes you believe in could be the most motivating reason to continue working. For me, nothing adds purpose and meaning like philanthropy does. I find difficult to replicate in other ways.

Working keeps our world larger, longer.

  • Work can be an adrenaline rush- it’s fun! If you’re like me, work gives you a reason to wake up in the morning.
  • If you’ve chosen wisely, you sincerely enjoy, like, and possibly even love the people you work with. Staying engaged in work means you get to stay connected with people in your industry/work space/career. In the best cases, our professional relationships inevitably lead to authentic friendships, stimulating conversations and life-long relationships. These special people will likely be the among the few who attend our funerals and who continue to demonstrate care and love for our family once we’ve have passed.

So then, with all of these advantages, why have 96% of all people over age 70 stopped working?  

My research has revealed a few reasons.  For instance:

  • Illness or some incapacitating issue(s).
  • They were fired or corporate policy dictated an end to the position (such as partners in a few firms)
  • They took a break and found it difficult to re-enter their profession at a level equal to where they left off.
  • They are looking, but have set their salary goals so high that they cannot find anything. It’s possible that by over-valuing themselves, these people have left good money on the table.
  • Previously, they were in a small business that went bankrupt or shut down for any of a multitude of reasons.
  • They had a financial wind-fall (gift, estate, lottery, home equity loan, etc.) and now that the financial need has diminished, they’re finding it challenging to get motivated again.
  • Alcohol or drug dependency.
  • For some people, work never was the motivating, invigorating experience I described above. Since they hated their job, they’d rather live on less than work again.
  • They’ve been burned out by the stresses or physical demands of the job.
  • Technology changes have made their skill sets obsolete and they’re no longer needed in the work place. Think about phone booth repairmen or computer card programmers for instance.
  • Automation has phased out market demand for their type of work and other types of work tey do know well have become too competitive to find a job.
  • Staying home to care for parents or children.
  • Some folks are just plain lazy and its easier and more lucrative to live off government handouts/”entitlements” and people’s charity than to work.
  • Retirement is something that these people have saved and planned for over their lifetimes. Now is the time they’ve waited for.  They don’t want to trade away these precious years to volunteer, travel, watch the sunrise and enjoy time with loved ones for a paycheck.  For them,  retirement is the life they’ve been waiting for, and they wish they’d done it sooner. These people remind us that no one has said on their death bed “I should have spent more hours in the office.” They also remind us “you’ll never see a hearse pulling a U-Haul” (a not so subtle reminder that all our ‘stuff’ cannot help us when we die).
  • Some people have so many hobbies and other responsibilities that they simply do not have time to consider working again – nor do they have any desire to do so. The most common statement is “I don’t know how I found time to work.”

NOTE: My research reveals the first four bullet points in the above list probably account for upwards of 65% of those who quit work. Most under 50 will claim they have no plans to retire or that retirement will come at an age much older than 65 or 70.

 

This claim is likely driven by looking at their savings and the heavy projected cost of living a long time. Total your savings and figure you can extract 4% for the rest of your life. Add that to your social security and/ or other income streams. This is what we can count on having to last us until our final days.  After doing the math, the most common solution is “I hope I can work a long time.” 

This is not a good financial strategy neither is it the reason that I’m addressing the topic. I’m actually more interested in those of you who really do NOT need to work for financial reasons!

So, which category do you fall in?  Are you intrigued by the possibility of joining this 4% minority group of successful and happy +70 careerists? What intentional steps should you take before you hit that birthday?

It is rare enough it probably will not just happen. As an advocate and one who has chosen work with great intentionality, who feels blessed, content and looks forward to the decade ahead, I am an unabashed “evangelist” for the cause!

Frankly, I can say that, if you join the four-percenters, you do not necessarily need to give up much.  You just might enjoy a healthier, more fulfilling life than if you retire. Also, you do not need to have regrets on your death bed. Work is not a dirty four-letter word. Is work for everyone? Of course not. Could it be a pleasant reality for say six or seven percent of us?  I think so. Perhaps you are one of us. Where in thunder did we get the magic age of 65 anyway? The answer: the government handed it to us decades ago when the average citizen died around that age. No joke. Google it.

Now it’s your turn!

Are you approaching an age where retirement has at least occurred to you as a realizable option?  If so, are you thinking of taking that step, and if not, why not?  

I hope you’ll take a few minutes to think about this issue, and if something interesting occurs to you, how about sharing it with the rest of us?  Leave a comment on this page…. who knows, you might inspire someone else to also give the issue a closer look!  If you’d rather keep your thoughts a little more private, perhaps email me at gene@word4asia.com

All the best,

Gene

Beijing Targets Change In the 996 Work Week

by Joe

Chinese Labor Practices Part 1

Please see the writer’s editorial statement at the end of the article before closing.

If you think you’ve been working long hours since the pandemic began, or maybe just generally,  you should see what Chinese, white-collar tech workers have been facing for years! 

Millions of Chinese employees work a 9 a.m. to 9 p.m. schedule, six days a week.  This is referred to as a 996 work week.  Employers, Alibaba for example, believe it is a critical part of the success they’ve enjoyed.  From management’s perspective, the 996 schedule also played a major role in the rapid growth of the Chinese economy.   There are variations on this schedule, including a 995 schedule, alternating weeks of 996 followed by a 995 schedule, and even a 997 schedule.  While this massive effort has helped propel the success of many Chinese tech giants, it has also taken a human toll.

The prevalence of a 996 work schedule has been creeping into China’s tech sector since the early 2000’s. This was the period when Chinese tech companies started experiencing rapid growth.  It was so rapid, in fact, that the firms could not hire new workers fast enough to keep pace with expanding sales.  In various corporations, temporary stop-gap solutions, such as increasing overtime hours gradually became the norm.  Additionally, China’s main economic advantage over other nations was lower wages.  They had set customer expectations that basically backed themselves into a corner.  Maintaining or expanding global market share requires tight control of labor costs – and the 996 schedule became the status quo, regardless of labor laws guaranteeing a 44-hour work week.

A few anecdotes will explain the situation that many tech workers have faced since then.  In 2015, a Tencent developer collapsed and died while walking with his pregnant wife. A year later, a 34-year-old deputy chief editor of the Tianya online forum suffered a fatal cardiac arrest at a Beijing subway station. In 2018, a 25-year-old employee at drone manufacturer DJI also died from a cardiac arrest.  Even if workers are not dropping dead, most are experiencing significant ‘burn-out’ and some have begun communicating their frustration and exhaustion on Github, an opensource community for software developers.  Developed by Microsoft, it’s the one Western social media site that the PRC has not blocked.  Posts like these are most often left by younger employees.  Increasingly, these burnt-out employees are advocating for ‘lying flat’; rejecting the pressure and ambition that defined the lives of earlier generations.

Communication about the 996-work week has been closely managed so that it does not become a movement that would alarm China’s central government.  However, the growing discontent has recently (August 2021) resulted in a series of communications from the PRC. These pronouncements, pointed at firms where 996 is in place, remind managers about Chinese labor laws that limit the work week to just 44 hours, not 72. 

While older workers are resigned to the 72-hour week, some of China’s younger workers are seeking a work/ life balance that would allow them more time off for personal activities, and more rest.   Management, as you would probably suspect, is pushing back strongly.  For instance, Alibaba’s billionaire founder, Jack Ma, said this about the 996 schedule:

“[It’s] a huge blessing that many companies and employees don’t have the opportunity to have.  If you join Alibaba, you should get ready to work 12 hours a day, otherwise why do you come to Alibaba? We don’t need those who comfortably work eight hours.”

 

Effecting change to ensure all workers receive a 44-hour work schedule would mean changing the prevailing philosophies, psychologies and incentive structures present in 996 businesses.  For example, Huawei is a massive Chinese telecommunications firm.  Their corporate environment has been called a ‘wolf culture’, and it’s a ‘kill or be killed’ place to work.   Senior management believes that by pitting their employees in competition with one another, productivity will be much higher, and the company will be better at fighting external threats.  Huawei is not a leader in unique technologies.  They follow others.  They believe that their speed, cost control, and flexibility are the keys to their success, and they believe 996 game them their competitive edge.  Companies like Huawei believe that their willingness to work as hard as they do, in contrast with competitors who have more traditional 40-hour work schedules, is a badge of honor.  Huawei’s employees are required to take a ‘striver’s pledge’.  Basically, it’s an ‘oath’ to work a 996 schedule, despite the existing labor laws.  This ‘striver’s pledge’ is just one example of how Chinese companies are skirting the law to drive their employees to near-constant labor.  Financial incentives are also used.  Annual dividends more than hundreds of thousands, sometimes even millions of dollars are paid out to individual employees, in many cases eclipsing employees’ salaries.   In some Chinese companies, carrot-and-stick MBOs meant to encourage spectacular performance for spectacular incentives are based on unattainable goals.  This puts more power in the hands of the manager to determine if they deem the ‘effort’ of the employee to be satisfactory.  This practice is more common among local Chinese firms than among China’s MNCs.  The other side of the coin is that other companies do not pay their workers for the overtime hours, but they still demand the time.  Companies in this category are savvy about the loopholes and exemptions that allow them to evade legal obligations.

Keep in mind, the 996-work schedule is technically illegal.  Smart companies are not going to publish that schedule in their employee handbooks.  There are more subtle, but clearly understood ways of communicating this fact of life to employees.  Examples  you will find among China’s tech giants today include:

  • Companies provide free evening meals to their employees.
  • Companies reimburse employees for late night taxicab rides home.
  • To attract and retain younger employees, firms like Tencent and Alibaba pay very attractive wages that exceed five times the going market wage. The extremely high cost of living in China’s big cities practically demands salaries in those lofty altitudes.
  • The law of the Chinese tech sector jungle says career advancement will fall to those who make touch sacrifices like a 996-work week.
  • Chinese corporate culture places priority of the job and company over the family. To the Chinese worker, the company is a close group of colleagues who are making the same sacrifices.  In essence, personal relationships between workers are closer than those between spouses or parents and children. 
  • Urban tech workers increasingly recognize that there is fierce competition for their jobs coming from the rural areas. Workers from China’s interior are especially eager to make the hard sacrifices and work a 996 week because opportunities in the farming regions where they come from are so limited.

Like all our blogs, this description about working conditions in China is intended to be accurate, factual, and fair.  We are constantly working to present an accurate picture of China to you, our readers.

Finding appropriate work expectations is an age-old challenge for every country. 

However, I want to balance what has been said in this blog, with another observation about Chinese culture that I have always been struck by, and that it is the nearly universal commitment to hard work that is pervasive throughout China.  It is one the traits about the Chinese that I most sincerely admire. While there are, as everywhere, exceptions to the rule, I believe that the exceptions only make the rule that much more obvious.  So, please do not misconstrue anything said in this article as critical.

During my drives along gravel and dirt roads, I’ve never seen people sitting or lounging. Instead, they WORK. I have seen many people busy sweeping dirt.  At times I was not sure why, but people were consistently working.

Call me “old school” if you choose, but I take my hat off to anyone who is willing to work hard.

We keep a close eye on the changing landscape in China, because we know it’s important to your understanding of this fascinating market place.  For over twenty years, Word4Asia has been helping organizations like yours achieve their objectives through consistently solid consulting and  hard work.  If you’ve got China in your sights for 2022, we hope y you’ll reach out and start a conversation with us!  You can reach me, Dr. Gene Wood, at gene@word4asia.com.  

Sources

Artificial Intelligence

by Joe

Behold the Wooden Horse

When Servants Become Masters

He was granted power to give breath to the image of the beast, that the image of the beast should both speak and cause as many as would not worship the image of the beast to be killed. He causes all, both small and great, rich, and poor, free and slave, to receive a mark on their right hand or on their foreheads, and that no one may buy or sell except one who has the mark or the name of the beast, or the number of his name. Here is wisdom. Let him who has understanding calculate the number of the beast, for it is the number of a man: His number is 666 (Rev. 13:14–18).

If you’re not a techno-geek, you may have missed the dawn of the “Age of Surveillance Capitalism” – a recent book by the author, Shoshana Zuboff.  However, think about these recent events:

  • An English online newspaper, The Guardian, reported that an Amazon Echo Dot advice in London had awakened itself, and began to randomly spout off a series of ecommerce transactions that the device’s owner had recently executed using the device.  Among these, train tickets were booked, and the Echo Dot programmed the recording of television shows.  
  • A woman in Portland, Oregon reported that her Alexa device had ‘overheard’ private conversations, record them, then email them to an acquaintance.   

 

Given tech products that are already easily available, and what is being now being developed in research labs in countries all over the world, it’s easy to see that our species is standing at a new crossroads.  AI is going to play a central role in how society continues to develop, and like all technologies, whether it is for good or bad depends entirely on how mankind chooses to use the technology.   There are two camps; the one that says, ‘all’s well, fear not’, and the other side that says, ‘proceed with caution’.  Some researchers contend that AI will never deliver significant, practical value.  Someone once said that those who ignore history are doomed to repeat it.  To that point, take this excerpt from a 1911 article in the Saturday Evening Post, written by one of the early inventors of the automobile (there were many). 

 

“Things are very different today. But in the ’[18]90’s, even though I had a successful bicycle business, and was building my first car in the privacy of the cellar in my home, I began to be pointed out as “the fool who is fiddling with a buggy that will run without being hitched to a horse.” My banker called on me to say: “Winton, I am disappointed in you.”

Artificial Intelligence is about to make everything about today's world look as quaint as the horse and buggy.

Today, the United States leads the world in total investment (private and public combined) in developing Artificial Intelligence.   In 2020, total US investment was exceeded $23 Billion.  China is in second place, with close to $10 Billion and while the gap is still significant, the Chinese government has made it a very high-level priority.  They are keenly interested in speech and image recognition.   Since 2015, American firms have raised 56% of total global capital that has been invested in AI.  In China, most of the development comes from the universities and research institutes, most of which are government owned or sponsored.  To really see how hard the Chinese are working to close the gap, just look at China’s global share of published AI research papers; in 1997, their contribution was just 4.3%.  In 2017, they published 37,343 papers (27.8% of all published research papers, globally).   The Chinese are focused on speech recognition, speech synthesis, and vision (image/ video recognition).     A recent article by the Chinese journalist, Xiaomin Mou states that 73% of Chinese investment in AI has benefited the B2B Services, Lifestyle & Consumption, Transportation & Automobile and Health industry subsectors.  In the United States, the National Science Foundation, along with Amazon, Google, Intel, Accenture, the Department of Homeland Security and USDA are cooperating to operate these new NSF AI institutes:

  • for Collaborative Assistance and Responsive Interaction for Networked Groups
  • for Advances in Optimization.
  • for Learning-Enabled Optimization at Scale.
  • for Intelligent Cyberinfrastructure with Computational Learning in the Environment.
  • for Future Edge Networks and Distributed Intelligence
  • for Edge Computing Leveraging Next-generation Networks
  • for Dynamic Systems
  • for Engaged Learning
  • for Adult Learning and Online Education
  • for Agricultural AI for Transforming Workforce and Decision Support
  • for Resilient Agriculture

China’s relative command of the application of AI in their consumer markets has been an important insulator against foreign market competitors.  The Chinese have mastered the use of machine learning and a sophisticated AI engine to analyze all available data points, including the millions of conversations consumers have about the brand online, which can be challenging because of the firewalled Chinese internet.

China’s marketers have an important advantage in understanding consumer brand and product sentiment and  more importantly how sentiment changes over time. They use a combination of social listening and sophisticated modeling of how changes in sentiment impact purchase patterns. China’s brands use this technology strengthen their brand strategies and tactics, and it shows up in retail sales.  China’s consumers have also rapidly adopted many products in the IOT (internet of things) category.  These products range across a wide, and ever-increasing range of products such as smart phones, smart refrigerators, smartwatches, smart fire alarms, smart door locks, smart bicycles, medical sensors, fitness trackers, smart security systems and so on.  By the end of this decade, more than 8 billion IOT devices will be connected to China’s firewalled internet.  Capable of observing, measuring, and recording everything imaginable, these devices will be inescapable.  Of course, those same products are growing in popularity in the United States, too.

This great leap forward in China’s development of AI was made a policy in 2017, when China announced in its ambition to become the world leader in artificial intelligence (AI) by 2030.  China is now making faster progress in AI than either the US or the EU.  Central and local government spending on AI in China is estimated to be in the tens of billions of dollars.   In this field of research, there are two overwhelmingly important assets,  data and computer science and engineering talent.  China has strengths in both areas. 

As AI is of strategic importance to China, the nation’s government has instituted an array or policies to support its growth. These policies send a clear signal to different AI stakeholders, including entrepreneurs, investors, and even researchers, that AI is a field that is being backed by the government and is worth corporate investment.  China’s approach to AI development and implementation is fast-paced and pragmatic, oriented towards finding applications which can help solve real-world problems. Rapid progress is being made in the field of healthcare, Chinese corporations are investing in several areas; healthcare applications, such as AI Doctor chatbots, machine learning to increase the pace that pharmaceutical product development occurs at, deep learning for medical image processing (useful for early detection of certain diseases, such as cancer), and surveillance, and military applications.  Two-thirds of global investment in artificial intelligence is pouring into China, one of the reasons that the AI industry there grow 67% last year alone.

These are the top five Chinese AI firms:

 

As developing AI is a top-down,  centralized imperative, cross-sector partnerships connecting tech companies and research institutions have been developed at the local city, and regional levels.  Municipal and provincial governments across China are establishing cross-sector partnerships with research institutions and tech companies to create local AI innovation ecosystems and drive rapid research and development.  By 2025, all industries in China will be securely connected in an AI network; company control, and production will be AI-reliant.  

AI will balance supply and demand.  China has planned for an entire ecosystem that will support AI; legal frameworks, resources, goals, local-level adaptation – and of course, the capital to support continued growth in AI are all coming together rapidly.   Government, too, plays a vital role.  There are local and provincial incentives for the administration and politicians to assert themselves in the AI industry and to seek higher levels of responsibility.  At the university level, hundreds of new AI professorships have been established, and hundreds of thousands of schools are being created.

As developing AI is a top-down,  centralized imperative, cross-sector partnerships connecting tech companies and research institutions have been developed at the local city, and regional levels.  Municipal and provincial governments across China are establishing cross-sector partnerships with research institutions and tech companies to create local AI innovation ecosystems and drive rapid research and development.  By 2025, all industries in China will be securely connected in an AI network; company control, and production will be AI-reliant.  AI will balance supply and demand.  China has planned for an entire ecosystem that will support AI; legal frameworks, resources, goals, local-level adaptation – and of course, the capital to support continued growth in AI are all coming together rapidly.   Government, too, plays a vital role.  There are local and provincial incentives for the administration and politicians to assert themselves in the AI industry and to seek higher levels of responsibility.  At the university level, hundreds of new AI professorships have been established, and hundreds of thousands of schools are being created.

 

If this sounds like science fiction to you so far, meet Hua Zhibing, a student enrolled in Tsinghua University in Beijing. Hua has been in love with literature and art since birth, she says.  At six, Hua can write songs, poems, and draw.  She is expected to be able to create websites soon.  By the way, did I mention that Hua is also an AI-powered virtual student whose image has been seen around the world on Weibo — China’s answer to Twitter — and other social media?  Hua absorbs data such as text, images, and videos.  She is believed to has some reasoning and emotional interaction abilities.  In another year, she will have the intellect of a 12-year-old, and she will continue to develop after that, too. Researchers involved in the project hope that at some point, she will have a higher EQ (emotional intelligence) so that she will be able to communicate like a real human.  The AI software that runs Hua uses 1.75 trillion parameters that allow ‘her’ to simulate conversational speech, write poems and understand pictures. It surpassed the record of 1.6 trillion parameters set by Google’s Switch Transformer.  It’s not science fiction, and it’s happening faster than most of us can comprehend.

 

We’re converging on a point where science fiction and reality are becoming the same thing.  It’s only a matter of time before robots and AI replace humans in manufacturing, design, delivery and even marketing of most goods, lowering costs to a tiny fraction above materials costs.  AI-driven robots will self-replicate, self-repair, and even partially self-design. Houses and apartment buildings will be designed by AI and use prefabricated modules that robots put together like toy blocks. And just-in-time autonomous public transportation, from robo-buses to robo-scooters, will take us anywhere we want to go.  In 2020, Forbes magazine published statements from a report by the World Economic Forum; their prediction is that by 2025, 85 million global jobs will be replaced by automation (AI and robots).  To raise concerns more, WEF also projects that the current 70/30 split between jobs done by people vs. machines will also have switched to a 50/50 split.  Consider the kinds of work that technology, produced by these leading Chinese firms, is already capable of producing:

There was a time when machines were clearly tools to make people’s paths easier.  For millennia, they mostly served our needs,  although there were always occasions for their utility to be turned in harmful directions.  The great cellist, Pablo Cassals once made a comment that seems especially insightful now, though, “Man has made many machines, complex and cunning, but which of them indeed rivals the workings of his heart?”, and those are the words we’ll use to end this month’s blog.

 

 

Word4Asia is a consulting firm that assists organizations with strategic growth plans focused on mainland China.  We’re proud of the relationships we’ve enjoyed, and the service we’ve provided our clients for more than twenty years.  Perhaps your eye is on China, too?  We hope you’ll reach out to us.  I’d be happy to talk with you and see if there is anything in our experience that benefits you.  I’m pretty sure there is!  Contact me at gene@word4asia.com.

 

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