A Glimpse Into China’s New Tech Empire

January 18, 2018 - 9 minutes read

China’s reaching for the stars; the country is hedging its bets on artificial intelligence (AI), automation, big data, and cloud computing to turn Beijing into a smart city of the future. This wasn’t by coincidence, though. China has been working on improving its standing in the tech scene by attracting top talent to its growing startups and indomitable tech giants.

China’s Electronics Show

The Consumer Electronics Show (CES) is held annually in Las Vegas. Developers and engineers flock to the event to see the latest tech innovations. The show gives companies the chance to show off prototypes of possible future inventions and get a gander at their competition’s product evolution. China’s growing technology power becomes more apparent with each new year’s iteration of CES. The presence of Chinese companies and consumers grows substantially year over year.

This year, more than 25% of companies at CES were Chinese tech companies. Consumer-wise, almost 1/3 of attendees were Chinese. And more than 10% of all companies present had the name “Shenzhen” in their name, which equated to nearly 500 companies. Shenzhen is China’s manufacturing capital, where millions of gadgets destined for the U.S. and Europe are created and assembled.

This plethora of Chinese companies was comprised of both old and new organizations. One new stand-out is Byton, which makes electric cars. Founded by ex-BMW and Apple employees, the startup has quite a few accomplishments already: Tencent, the Internet tech conglomerate, is reportedly already investing in their “truly smart” cars.

The “truly smart” cars were revealed at CES this year, and they come equipped with facial recognition, a high-tech dashboard, and a very high battery life. The startup plans to launch the car for $45,000 in China next year, with plans to enter the U.S. and U.K. in 2020.

Established companies like Tencent, Baidu (China’s answer to replacing Google), Huawei (a smartphone company) and Alibaba (the e-commerce giant) were showcasing products, delivering high-profile keynotes, and revealing future plans that often overshadowed those of their counterparts from other countries. The main reason why? Confidence. This year, many Chinese companies fostered a level of transparency regarding their grand ambitions. This is in stark contrast to the common company approach to shroud their latest developments in an air of mystery to generate hype.

Domination, Innovation, and Production

But Chinese tech companies aren’t just “talking the talk” better. China is inching closer to dominating technology through constant innovation. And as manufacturing and production fall in revenue, technology is booming in China.

Beijing, in particular, is on its way to becoming a top smart city of the future, one that new smart cities will look to for inspiration in creativity as well as lessons from pitfalls. It wasn’t always this way, though; technology startups only seriously started springing up in Beijing in 1996, after a 1995 government-issued development strategy. In fact, Tencent, Alibaba, and Baidu were born in 1998, 1999, and 2000, respectively.

By 2006, however, China’s technology sector was stagnating. There were plenty of investments, but innovation was lacking. China became known for copying Western technologies that they’d blocked. That same year, the government demanded a technology portfolio restructuring, asking technology leaders to segue into a “firm-centered” innovation system.

Since then, startups have flourished and grown themselves into tech leaders. Alibaba’s 2014 IPO remains the largest ever in U.S. history. And the company’s explosive growth hasn’t slowed down in the slightest; it’s capable of generating over $25 billion in sales in one day.

With Great Power Comes Great Responsibility

China’s tech companies are providing cutting-edge products to Chinese consumers (and soon, foreign nations too), but they’re also collecting and storing incredibly valuable data on its customers. China’s government has always kept a very close eye on its citizens, and the data that its tech companies collect is not excluded from review.

As such, data privacy is a major concern for usually-complacent Chinese citizens. Looking at WeChat, Tencent’s app for nearly everything (and we mean everything), the company can collect data from a variety of actions consumers take. Between paying bills, ordering taxis, leaving reviews, buying plane tickets, and more, the amount of unique, multi-dimensional data that Tencent and WeChat collect is enormous and heavy with responsibility. WeChat is now a “must-have” app for most Chinese consumers, supplying the app with more data than ever before. It’s certainly come a long way from being an app developed to compete with WhatsApp.

Even though Chinese companies and citizens are accustomed to government censorship and its watchdog behavior, there should still be inquiries into how much data is collected, stored, and subsequently used and sold. Data is quickly becoming the currency of our digital future, and China has an infinite well of it.

A Data Dystopia?

China has almost 180 million closed-circuit cameras working at any given time to record, monitor, and store the daily events around millions of locations. These cameras utilize facial recognition technology and AI technology that was developed by tech startups in China. Because of this fact, Chinese startups, especially those founded by nationals who’ve worked abroad, shoulder the duty of speaking out when technology is being misused or abused.

Since June, China has required network operators to store all data on home-based servers. These companies must also hand over any requested data when the government asks for it.

Now, a new type of credit system is slowly being rolled out across the nation. The system, which takes into account social aspects of creditworthiness, could potentially be used to control citizens’ lives and basic freedoms, like buying travel tickets, applying for loans, and purchasing real estate. It leaves affected Chinese citizens helpless, hopeless, and clueless about how to fix their situation, as there’s no one in the government that you can discuss your score with.

Fortunately, there is a glimmer of hope. Citizens are speaking up when they feel their data is being threatened; when Alibaba’s Ant Financial automatically enrolled its customers into the social credit system, a public outcry prompted an apology from the company.

But this type of response is sporadic; if Chinese citizens spoke up regularly, the government couldn’t fight the numbers in time, and companies could quickly enact changes. As long as Chinese consumers remain complacent, the government can collect data in droves and use it for eventual societal control.

China’s Top Competitor

China’s not the only country ramping up its technology sector. Its top competitor in both innovation and creativity is the United States. But although the U.S. is barred from doing most of its regular business in China, China is free to enter the U.S. for CES, become nearly-majority shareholders in major U.S. tech companies, and send its citizens to work at American companies to pick up knowledge from U.S. developers and engineers.

The next few years will be pivotal in determining the pioneering countries leading the way for many disruptive technologies being developed today. It will be an interesting and intense competition to watch. But in the long run, hopefully, the whole world stands to benefit from these tech rivalries.

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