By Edward Tse
31 December 2018

Gao Feng’s CEO Dr. Edward Tse believes China’s sheer market size and lesser concern for data privacy could prove advantageous – but the US still leads in terms of research and creativity. This is a summary of his speech at the Center for Strategic and International Studies, published with the center’s permission but without Dr. Tse’s prior review or approval.

In the last 40 years since the start of China’s economic reform and opening up, a lot has happened. The most profound development in China is the rise of the private sector.

Compared to the state sector, the private sector contributes much more to GDP and the creation of new jobs. But more importantly, the private sector has been embracing emerging technologies, in particular over the last decade.

Ironically, this decade is epitomized by American inventions. The iPhone and the wireless internet have fundamentally changed China, and that has created a large number of innovations along the way.

China has the world’s largest internet economy. There are more than 800 million active internet users and Chinese consumers do everything online: shopping, ordering food and so on.

Artificial intelligence is another emerging technology. For Chinese people, technology has served us well in the past decade, so why not embrace it?

Vast amounts of data are being generated every moment. Whenever we are on WeChat, we tell the app what we are doing.

Whenever we buy anything on Alibaba or JD.com, we tell Alibaba and JD.com what we are doing. It’s the same thing here in America with Facebook and Twitter. The difference is the scale.

Source: Internet

Artificial intelligence is really about a lot of iterations. The larger the amount of data you have, the greater the opportunities for machine learning and fine-tuning the pattern recognition. Therefore, better results are yielded for commercialization.

Rightly or wrongly, China has gotten itself into a situation where data privacy protection is perhaps not as stringently applied, compared to many of the Western economies.

China fundamentally has a system advantage. It’s not only about the scale of the market, but also the state and the Communist Party.

When someone decides something, they will push it all the way down to the whole country and everybody has to obey.

But that’s not the only thing that happens in China. There is a large number of entrepreneurs, who are coming up with all sorts of innovations.

Chinese companies are investing significantly in new technology. But they’re nothing compared to the Googles, the Amazons and the Microsofts of the world.

The gap is still very significant. Americans are way ahead in terms of creativity and original research. The Chinese certainly would like to close the gap, but only time will tell if they could succeed.

I think China is likely to be a leader in AI, perhaps the leader in commercial applications. But it won’t be the leader in original ideas.

Edward Tse is founder & CEO of Gao Feng Advisory Company, a global strategy and management consulting firm with roots in Greater China. He is also author of China’s Disruptors.