Amid US-China trade tensions, tech companies and investors paint picture of an irreversibly globalized tech world.
In the first East Tech West conference hosted by CNBC, Chinese and Western tech companies and venture capitalists gathered in the southern Chinese port district of Nansha to discuss new areas for growth.
Tech leaders who spoke noted that while a handful of giant brands already dominate sectors like e-commerce (Alibaba, JD.com) and ride-hailing (Didi Chuxing) in China, there are plenty of offshoot services and new fields up for grabs. They include AI and other tech applications to the health sciences, fintech and manufacturing.
Nansha is close to the manufacturing and tech powerhouses of Guangzhou and Shenzhen, in an area that used to be called the Pearl River Delta but which China has rebranded as the Greater Bay Area to rival Silicon Valley in the US. Nansha has ambitions of becoming a hub for artificial intelligence-related businesses.
Geopolitics loomed large over the three days. At almost every session, CNBC hosts asked about the impact of US-China trade tensions. Tech brands and investors acknowledged road bumps, but stressed that with Chinese tech companies – not to mention tech investors – already operating globally, the momentum may sputter but is unlikely to reverse.
“We are at the start of a new phase. Political tension will exert a huge impact on collaboration between the two countries,” said Duo Yuan, founder of Blue Stone Asset Management, one of China’s biggest private equity funds. But long term, he added: “the financial markets will be more integrated.”
The conference was held just days after US President Donald Trump’s administration urged allies to avoid using Chinese telecoms giant Huawei because of national security concerns, and just before the G20 summit in Buenos Aires.
Qiu Heng, president of global marketing and CMO for Huawei’s enterprise business, noted that Huawei has customers in more than 170 countries, including more than 40 of the world’s telcos and more than 200 Fortune 500 companies. “We believe,” he said, “our customers and the world will make their own right choice.”
Here are a few major themes from the conference.
New Retail will soon be Most Retail
New Retail – a term made famous by Alibaba founder Jack Ma – where online and offline stores work seamlessly along with innovations such as unmanned stores, facial recognition for payments and AI applications – will soon be the norm for all major retailers in China.
Jun Yang, co-founder and Chief technology officer of Dada-JD Daojia, a grocery delivery firm part owned by online retail giant JD.com, said when his company started offering one-hour delivery a few years ago, he expected customers to want the service only for perishable goods like vegetables, fish and meat. “We thought for shampoo, body lotion, you’re OK with two-day delivery,” he said. Not so. “We found people wanted everything in one hour.”
Yang predicts that “within five years, for all existing retailers, 50% of their sales will be online and delivered within one hour. They will all be omni-channel retailers,” including Walmart and Carrefour.
Chinese consumers are becoming more sophisticated. Nowadays, “price is not the only thing,” said Ling Chenkai, Vice President of JD.com. “It’s important, but quality, authenticity, customer service becomes more and more important.” He added: “Chinese consumers are spoilt!”
Asked about US-China trade tensions, Ling noted that JD.com has a partnership with Google in the US, but “going forward, the focus is more on Southeast Asia.”
Chinese consumers are also already able to easily search for and buy things they see on TV or on social media. Yi+AI, a company that calls itself a computer vision engine, provides software for object, facial and scene detection that can recognize and recommend products with 99.83% accuracy. “You can watch TV while shopping,” said founder and CEO Zhang Mo.
Platforms are diversifying
Tech platforms that have spent the last few years amassing users are now offering these users offshoot services such as banking, loans and wealth management.
WeChat, China’s giant messaging, social media and mobile payment service, has a financial arm, WeBank. Meanwhile, Phoenix TV has launched Phoenix Financial. They’re not just scooping up customers whom traditional financial institutions may regard as too small or too much work, they’re offering superior speed and service with the help of technology.
At a traditional bank, customers could wait more than a week to hear if their loan application’s been approved. WeBank can give them an answer “in microseconds,” said Yang Qiang, an AI consultant to WeBank and a professor at the Hong Kong University of Science and Technology.
And while traditional banks rely on one or two sources for credit scores, “with internet technology, we can get them from hundreds of sources, and provide different angles for assessing an individual’s risk,” Yang said. He added that 100,000 requests come in to WeBank everyday from clients, and 98% are handled by robots.
Yang sees banking becoming integrated into other services, whether at a mall, supermarket or at home. “Banking becomes air, becomes oxygen,” he said.
Hong Kong-based Phoenix Television, which has 400 million viewers on the Chinese mainland and Hong Kong, is doing the same with its unit Phoenix Finance. Personal wealth in China is growing, yet millions don’t have credit cards and are new to concepts of wealth management.
Vince Zhang, President of Phoenix Finance estimates there are 150 million people in China with between $50,000 and $1.5 million in wealth who have not been traditionally targeted by banks. Many in this group are thinking about how to pay for their children’s education, or their parents’ upkeep. For now, “the bottleneck is client mentality which looks at short-term returns and not at a portfolio approach,” said Zhang.
Health tech to bridge the urban-rural divide
The Chinese health care system doesn’t have enough doctors, equipment and facilities, especially in rural areas. Many tech companies are looking at how they can stretch resources by using technology.
For years, ophthalmologists have taken a picture of the back of the eye with a retinal camera and read it manually for eye health and function. Nova Vision Group, which owns China’s biggest chain of optical retail stores, Baodao Glasses, this year introduced a service that uses an AI algorithm instead of a human to read the scans.
Jim Wang, Chairman and founder of Nova Vision Group, said they are able to screen for more than 1,000 diseases. Of these, 800 are rare diseases for which the company doesn’t yet have quite enough data. But for the 200 common diseases, the Nova AI algorithm can screen them with 97% accuracy, he said.
Nova is currently doing free screenings in the community and at enterprises to raise awareness, he said.
Finally, it’s not just Silicon Valley that’s debating the ethics of how they do business including issues like gender equality.
Jane Jie Sun, CEO of China’s biggest online travel agency, Ctrip, told attendees she’s conscious of being one of the few women tech leaders in China, and has put in place family-friendly work policies to keep female talent.
Before China relaxed its one-child policy in 2016, Ctrip employees who were fined by the government for having a second child were offered interest-free loans by the company to pay the fine, Sun said. The company also gives employees a cash gift to welcome each baby and a further cash gift for education. What’s more, “if an employee decides to have her eggs frozen, Ctrip will pay for that,” said Sun.
Ctrip, whose brand outside China is known as Trip.com, has 300 million registered users and recently bought U.K. travel price comparison website Skyscanner.