Space Race 2.0, The Global Battle for AI Superpowerdom

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Image via South China Morning Post

In recent years, China has emerged as a major contender in the global race to use AI to spur economic progress. If developing AI technology is the 21st century’s answer to the space race, then China is the player who has a laser focus on becoming the world’s preeminent AI superpower. Automating workplaces with AI could add 0.8 to 1.4 percentage points to GDP growth annually, and that’s just the beginning of how economically and socially impactful the all-encompassing AI revolution could be for China, and the world.

According to Goldman Sachs, there are four key areas where development is needed to create value in AI: talent, data, infrastructure, and computing power. China already has the first three, and is poised to maximize its potential in computer power. In the realm of data generation China has a huge advantage. With a vast and largely m-internet savvy population and a high degree of Internet penetration throughout the country, China is expected to produce 20-25% of global digital information by 2020, up from its current 13%. Many say that data is the “lifeblood” of AI, and with its massive volume of data, along with superior lines of coding and its large pool of talent, China is nicely positioned to adroitly leverage its data stores to develop and advance its AI capabilities.

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Data Localization, Cybersecurity, and What It All Really Means for China

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Image via Techcrunch

“In China’s view, data originating from China ought to be kept inside China’s borders because it is not safe elsewhere, period.”

Josh Horwitz

Effective June 1st, 2017 are new regulations mandated by Beijing which require increased protocols with respect to data transfers together with an increased degree of data localization.  This will have notable implications for foreign enterprises operating within the Mainland.  

Essentially, within certain parameters, companies deemed “network operators” or “critical information infrastructure operators” (CIIOs) will be required either to store user data within China, or to export that data to China.  The new measure not only extends the frontiers for cybersecurity law in China, but also demonstrates a growing trend regarding the sovereignty and global significance of digital data.  

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Selling Cross Border To China: 3rd X-Commerce Micro Conference

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On Thursday, June 8th, 2017, BorderXLab, creator of the Beyond别样 App, hosted the third edition of the Selling Cross Border To China: 3rd X-Commerce Micro Conference in San Francisco. Bringing together partners, brands and thought-leaders in the U.S.-China cross-border space, the conference focused on emerging trends, pain points, and solutions in the burgeoning B2C Haitao market, which is anticipated the topple the $50 billion USD mark by the end of 2017.

I was asked to participate in the second panel, entitled “Selling to China: An Ecosystem Partner’s Perspective.” Along side was Jin He, Senior International Business Manager at Union Mobile Finance and Peter (Bei) Qin, Chief Operations Office at SV Insight.  Moderated by Angel Zhou from the BorderXLab marketing department, below is a brief sketch of the questions and the answers that I supplied via my representation of 360zebra and the overall e-commerce logistics industry as a whole.

Question: What are the pain points for brands selling to China and how do you help?

Answer: There are many pain points for brands selling to China, including but not limited to poor efficiency of overseas logistics, China customs clearance regulations and fluctuations in policy, intensifying competition amongst same categories, difficulty in cultivating customer loyalty and overall high barrier of market entry. 360zebra helps by providing state of the art logistics solutions to e-commerce players, managing every mile of the product movement from first mile to last mile. Specifically, we help American companies clear customs in an effective and efficient manner and help increase their overall logistics efficiency via consultation and service implementation.

Question: Can you give an actual example of a company you’ve worked with? If you need to keep their name confidential, please share the industry.

Answer: Keeping the names confidential, we work with the majority of major platforms in China providing them with logistics solutions, acting as the official 3PL provider. Additionally, we are currently working with a major international platform, helping Western merchants better expand to China via providing shipping and logistics solutions.

Question: What do you see as some of the major regulatory and legal challenges facing the cross-border trade with China? How much do you feel like your current model of doing business could be affected in the near future by such changes?

Answer: E-commerce is still a relatively new industry and the Chinese government is still in an experimental phase in terms of implementing regulations and caps. There are three major channels for shipping and customs clearance to China: BC (Business to Consumer), CC (Consumer to Consumer) and UPU (Universal Postal Union). All have different benefits and pros and cons. For BC, there is a 20,000 RMB spending limit per individual. If a retailer ships an item to a customer who has exceeded the cap, there is no way for the item to clear customs. Many retailers choose the CC model to send items; however, it is likely that this model will change in the near future, which would require more and more e-commerce enterprises to migrate over to the BC or UPU channel. In essence, e-commerce customs clearance channels will likely see an optimized overhaul in the coming years, which will affect the way and the choices available for e-commerce players to ship to China. However, regulations will likely make the process more efficient and we embrace such changes.

Question (To 360zebra): Recently, It’s reported that some big logistic players in China, including SF express and YTO express, have pending fraud allegations. Their affiliates are working with some factories making fraudulent goods and selling them as products from overseas merchants. Say People find a “Daigo” online to purchase overseas goods for them and the “Daigo” only offers shipping service with those fraud making affiliates, then it becomes very easy for the Daigo to cheat on customers and gain money from it. What is your comment on that? How do logistic companies win customers’ trust?

Answer: It can be difficult to win over customers’ trusts when the situation you mentioned regarding the grey market and fake goods and information are all too common in China. The best way to earn customers’ trust is to consistently provide a high level of transparent, high and dependable service. From there, word of mouth, via customers and the brands service, will help increase the overall trust. For 360zebra, we pride ourself in our commitment to a zero policy of errors and hold ourselves to high standards in making sure every package reaches its final destination in a timely and cost-efficient manner. Having the right consumer-facing partner is important too. For instance, Bieyang’s business model is extremely attractive to Chinese consumers, bridging cultural and technological differences and preferences between the US and China. Innovative one-stop solution platform such as these with great consumer experiences also help win customer’s long-term trust.

Overall, the panel and the conference proved to be thought-provoking a great chance to exchange ideas with movers and shakers in the China cross-border e-commerce industry.

 

Chinese KOL Landscape

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Image via Business of Fashion

As our global marketing economy becomes increasingly intertwined with influencer marketing, where sharp focus is placed on key individuals and their connection to a specific audience rather than the old fashioned approach of directing broad attention toward a large target market, a greater and greater allocation of budget and branding considerations is being directed toward these clout-wielding digital denizens worldwide.

Brands such as Revolve Clothing, platforms like rewardStyle, and agencies such as Digital Brand Architects (DBA) and ParkLU have all been at the forefront in engaging this nascent sector.

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Hollywood, China, and the Future of Chollywood

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Image via The Great Wall Official Site

 

“It might indeed be the case that Hollywood tentpoles increasingly are catering to Chinese tastes, yet Chinese taste long has been molded by Hollywood, which ultimately sells American, not Chinese, dreams.

Dr. Ying Zhu

In an age of all too rapid digitization, China and Hollywood have officially begun their cooperational tête–à–tête, trying to best figure out the way that these two very different, very distinct and very divergent economic powerhouses can work together on the socio-cultural front and produce quality entertainment for, essentially, the global audience.

Let’s start with the good news. Both sides seem to have the best intentions and a genuine desire to partner effectively. The not-so-good news is that, at least for the moment, this blockbuster rapprochement is still very much a work in progress and many kinks and operational procedures need to be ironed out. Thus far, no movie from the joint efforts has resulted in a product that has received global acclaim, both financially in terms of revenue and critically with respect to industry opinion.

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Future Factories

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Image via MIT Technology Review

 

China is heavily investing in a robot workforce. In the coming years, countless of manufacturers in China, and around the world for that matter, are planning to transform their production processes by using robotics and automation on an unprecedented scale.

Why?  Because it is necessary to their future survival.

Factory wages in Shanghai have doubled in the past seven years and this, combined with increasing competitive pressures from lower wage countries in Southeast Asia, such as Vietnam, has resulted in many Chinese factories struggling to keep their contracts. Moreover, the costs of other inputs to Chinese production also continue to rise.

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VR in China

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Photo via mojing.cn

VR (Virtual Reality) is booming in China, to say the least. According to China research firm China Skinny, “Virtual Reality” was the number one tech term searched on Baidu, China’s most popular search engine, in 2016. Furthermore, the VR market in China is anticipated to reach a value of $860 million by the end of 2016, and a projected value of $8.5 billion by 2020. However, there has yet to emerge a market leader for a sector with such an enormous potential value.  

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Western Expansionism: The Success of Sephora, The Missteps of Marks & Spencer

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For many Western brands, especially those of the retail orientation, China represents a potential gold mine. However, more often than not, companies opt for expansion strategies that are not adequately tailored to the local Chinese market. The result? In the quest to win over the cash-rich and consumption-hungry Chinese shopper, the foreign entity often ends up spending more than they gain. For instance, Britain’s massive e-tailer ASOS closed its China operations this year at the hefty price tag of 10 million pounds. So, the question remains, what makes or breaks a Western brand’s success in China?

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Single’s Day 2016: Smashing Records Once Again

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“Shopping has become entertainment,” Alibaba Chief Executive officer said during the star-studded gala leading up to this year’s biggest retail event, Single’s Day. The ever-growing Chinese shopping festival, also known as 11/11, shattered records again this year, coming in at a total GMV tally of $17.8 billion (RMD 120.7 billion).

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