China’s rise as a global tech leader
All eyes are on China as it emerges as a new global leader in technology. Startups are sprouting up in Shanghai and Shenzhen with most successful ones going public at staggering IPO prices. In my recent visit to China, my attempts to connect to the outside world proved to be a challenge. I found this ironic amid the country’s exuberant tech scene.
China’s efforts to filter online traffic with the Great Firewall means no one can enter apps like Line and Facebook. Even access to Google and YouTube is not allowed. The days of using virtual private networks (VPN) to bypass the firewall are also numbered as authorities have begun to close them down.
The Chinese government has prevented these global firms from operating in the country. Instead, it has allowed Chinese versions of all the platforms mentioned above to flourish. In China, citizens use WeChat in place of Facebook for social media. They navigate with Baidu for searches without Google. People use Youku to watch videos over YouTube. And all have proven very popular and successful in China.
From the outside, these decisions by the government seem like a backward step. Critics say they stifle the chance for technology advancement and global connectedness. But this is not the whole story. Chinese tech companies have already moved beyond relying on the government’s protective barrier. Their ability to innovate is what brings me and many other foreign business people here to see technology at the frontier and Chinese home-grown innovation.
How did China, once ridiculed as the land of knock-offs, become a global innovation hub?
First, the government and private firms are serious about research and development (R&D). By 2016, China has become one of the top five countries for spending on R&D. This is on par with France and the Netherlands, as China spent 2.1% of GDP in research. In the same year, Thailand’s 0.6% investment pales in comparison.
Many Chinese tech companies such as Alibaba and Tencent now top the list of firms with largest market capitalisation in the world. These firms have not only grown to become renowned for cutting-edge innovations. They have become well-known for entering new fields, from robotics and Artificial Intelligence (AI) to even clean energy.
Often, these companies started out by cloning ideas from foreign firms. Yet, what sets these firms apart is they do not thrive by only replicating or relying on the government. They have moved beyond their old image of counterfeits to the next level of innovation through hard work.
Take Tencent’s WeChat, which has almost 900 million users worldwide. Starting out as a social media and chat app, the platform tries to connect the online and offline worlds. Over time, it continues to add new functionalities. Users can talk with friends, order food, call a taxi and book a doctor’s appointment without leaving the app. What Tencent has created has helped fuel a cashless society in China that is catching on faster than anywhere else globally.
Another Chinese tech company, MeituanDianping, a deals provider akin to Groupon, was recently valued at US$30 billion. This makes it 10 times more valuable than Groupon, which came up with the concept. This year, the firm opened an offline store where consumers can shop and find fresh seafood using its app. It was an instant hit.
Another factor fuelling the rise of innovative China may partly lie in the success of Jack Ma from Alibaba and other Chinese self-made tech billionaires who have become icons to entrepreneurs. China’s steady economic growth that comes with business opportunities and a vast consumer market also helps fund these entrepreneurs’ hope and dreams.
But that does not mean Thailand has to copy China to shut foreign firms and use a single internet gateway to oversee online content. Doing so would be disastrous for consumers and hurt businesses more than encouraging innovation. Instead of taking extreme measures, the best answer to innovation is for policymakers to focus on research.
Thai consumers, like Chinese consumers still face the same problems that need to be met through unique products or services. This means there are still business opportunities to enhance the consumer experience. The Thai government should focus on providing a healthy environment to firms for years to come.
Thai firms need to also avoid the copying of intellectual property that has long plagued China’s reputation. Counterfeits are still prevalent and can affect businesses large and small. Viable products pitched on crowdfunding sites in the US often appear in China a few weeks later. Even when fake products are cheaper, it comes at the cost of stealing from those who have worked hard to create them.
With this in mind, Thai authorities must protect intellectual property through strict enforcement. This means going beyond raiding pirated DVD stalls once in a while. For an innovative culture to settle, firms need to learn how to take legal precautions too. Businesses will need to develop products that are both unique and hard to replicate.
China’s technology is catching on and will surpass the capability of the West. It is important Thailand learns to adapt from its giant neighbour.
Walking the right path towards entrepreneurship needs to happen with R&D, not just replication of technology. The combined effort of all stakeholders from policymakers to laws and enforcement to banks can provide a great tailwind for Thai innovators to have a chance to compete in this fierce global market.