China’s remarkable breakthrough in future technologies

Alibaba HQ

Gone are the days when China was content to manufacture low-end products: it now threatens the world’s tech giants.

Hate waiting in line at the supermarket? Be patient! One day, you’ll just have to nod your head as you walk past a payment terminal with your shopping cart and that’ll be it. After scanning your face and verifying that it matches the photo on your ID card, the device will automatically debit your account. This service is not yet available in France, but it is already being tested in a handful of hypermarkets. In Japan? In South Korea? In Silicon Valley? No, in Mao’s country! Researchers from the Chinese e-commerce giant Alibaba have designed it. Everything is not yet perfected: for the moment, a double verification (you have to enter your phone number to confirm your identity) is required by the state, which slows down the process. But customers are reportedly very appreciative of this new service.

If you stopped at the episode where the Middle Kingdom was a simple screwdriver nation flooding the planet with plastic gadgets and endlessly duplicating inventions from Western research labs, you are going to be surprised. Because Alibaba is far from the only Chinese firm to make sparks fly with its scientists. Thousands of other local companies have embarked on a mad dash for technology. And, as always in this unusual country, they are thinking big. Drones, computers, electric vehicles, robots, smartphone apps, airplanes, satellites… their design offices are ploughing all kinds of terrain. For those who think it would take more to shake our Airbus and Boeing totems: in a few years, China will be able to market its first airplane.

AI robot made in China

800% increase in R&D spending

One figure is enough to measure the revolution underway in the land of chopsticks: in ten years, R&D spending has increased by 900% and is expected to reach $400 billion by 2022. The world’s major scientific journals are now filled with studies written by Chinese researchers, and the list of inventions and scientific advances made in China is growing. According to the World Intellectual Property Organization (WIPO), China now ranks second in the world for the number of patents filed, just behind the United States, but ahead of Japan. If Xi Jinping’s country continues at this pace, it should take the gold medal from the United States within three years. Before we were looking at Silicon Valley, now we are looking at China: it has gone from being a follower to a leader.

The Chinese are, for example, particularly well placed in the race for artificial intelligence (i.e. all the techniques that allow machines to imitate the cognitive processes of human beings), which, after the steam engine, electricity or computers, will most certainly be the engine of the next industrial revolution. And for good reason! The government has put 13 billion euros on the table since 2017 to boost this sector and has drawn a plan inspired by the American one last year. The result: half of the world’s investments in this technology have been made between Beijing, Shanghai and Guangzhou! “This summer, at the World AI Conference in Melbourne, a third of the papers were made by Chinese laboratories.” The country even has its own “Silicon Valley” in Zhongguancun, a district of Beijing.

The state has launched the “Made in China 2025” plan.

But how on earth did the world’s most populous nation transform itself so quickly into a tech giant? For one thing, the state is taking an incredibly proactive approach there. “The government clearly wants to take the lead in all these new sectors.” Competing with even more low-cost countries in its position as the world’s factory, the Asian giant has chosen to follow the example of its Japanese and Korean neighbors, who have long since converted to sophisticated industry. The state has a very strong hold on the economic sphere. Once the decision has been made, all it has to do is launch a new five-year plan to completely reorient its economy.

After having put a lot of emphasis on research activities, developed the training of its engineers on a large scale, encouraged the brains that had left abroad to come back to the country and showered companies with money to buy technological nuggets, the authorities accelerated the pace in 2015 with the launch of the “Made in China 2025” plan. The aim: to hasten the automation of factories and develop strategic sectors to wean itself off dependence on foreign technologies.

China tech industry

E-commerce, smartphones… powerful Chinese companies

The second reason for China’s fantastic breakthrough is that the country has an extremely powerful and dynamic industrial fabric with considerable financial capacity. Starting with its web giants, the BATX (Baidu, Alibaba, Tencent, Xiaomi), the Chinese equivalent of Gafam (Google, Apple, Facebook, Amazon, Microsoft). Unlike those of the European Union, Chinese leaders have chosen to block some of the American platforms at the border, which has allowed the emergence of local companies, able to invest a lot of money in the technologies of the future thanks to their mountain of cash. Like their American counterparts, these companies are on the lookout in all areas. Alibaba, the Chinese Amazon, is an example: the group’s main activity is still e-commerce, but the company has expanded its field of activity to include payment, “new retail”, logistics, cloud, smart cities and autonomous vehicles.

The Huawei conglomerate is also a perfect example of the incredible dynamism of Chinese companies. Along with ZTE (China), Intel (USA) and Mitsubishi (Japan), it is one of the four companies that filed the most patents last year. Not content with having established itself as the third largest cell phone vendor, this telecoms champion has launched a race for innovation against Samsung and Apple. And not just to make up the numbers! At the time of writing, the young dragon seemed to be on the verge of beating the Korean behemoth by being the first to release foldable smartphones. With the casualness of challengers, the group had the luxury of announcing that it would create the first intelligent assistant capable of empathy.

Chinese people are fond of high-tech

Alongside these giants, the Middle Kingdom is teeming with start-ups, accounting for nearly a third of the world’s unicorns (young companies valued at more than $1 billion). One of them, SenseTime, specialized in artificial intelligence for facial recognition, has just raised nearly 600 million dollars! The growth of these technological nuggets is extremely rapid: according to a report by the Boston Consulting Group, Chinese start-ups need only four years on average to become unicorns, compared to seven in the United States.

A willing state, giant companies bloated with cash, an incredible fabric of start-ups… And one last player to ensure success: the population. In addition to being numerous (1.4 billion), constituting a gigantic market and being very well trained, the Chinese are indeed particularly fond of new technologies. While we in France are still struggling with contactless payment, they are already converting to mobile payment on a massive scale. To the point where they have practically ousted cash in their country. In China, the population has switched to the most innovative payment methods by skipping the credit card stage. Moreover, it is the young, more inclined to buy new technologies, who have money there, and not the older ones as in the West.