‘B side’ innovations — next investment hot spots

Technology-driven innovations on the “B side” will emerge as one of the key drivers of China’s economic growth in the coming decade, said Kai-Fu Lee, founder and CEO of tech venture capital firm Sinovation Ventures.

The B side refers to businesses that sell products and services directly to corporate clients and enterprises instead of individual customers. Industrial supply chains, enterprise services and logistics are considered part of the B side.

B side innovations will make sectors like industrial automation hot investment spots, he said.

“China is ushering in a golden wave of industrial upgrading, which is driven by technology. Thus, technologyenabled automation, intelligence and cloud computing will become the nation’s core economic drivers in the coming 10 years,” said Lee.

He said that compared with companies such as Meituan, Pinduoduo and Douyin that serve customers directly, the country’s businesses on the B side are lagging behind and most of them remain labor-intensive.

“In the logistics industry, for instance, massive packages during the Double Eleven and Double Twelve online shopping galas still relied on mom and pop delivery stations to be hand-packed,” he said.

“But the COVID-19 pandemic and rising global economic uncertainties have prompted more local companies to embrace artificial intelligence and automation, instead of simple and repetitive labor, so as to reduce costs and increase efficiency,” Lee said.

He also said that with rising demand, automated robotics technology is expected to push China’s manufacturing capabilities to a new high with absolute advantages in global competitiveness.

In the automation industry, China has its uniqueness given the country is a market with the highest intensity in application scenarios and demand, said Yang Xiaolong, partner at Sinovation Ventures.

“Amid such intense demand, B side companies making technological breakthroughs will begin to create a large number of cases and strive to change ideas into a product or solution,” he said.

“Nevertheless, we found that currently, many entrepreneurs aged between 35 and 40 have a global vision and their own ideas on pursuing growth and success, which allows them to develop technology with resilience,” he said.

One such entrepreneurial venture, Beijing Soft Robot Tech Co Ltd, or SRT, a soft robot solutions provider, received nearly 100 million yuan ($15.3 million) in a funding round led by Joy Capital and Sinovation Ventures in late December.

SRT is an innovative tech startup focused on soft robot technology, and is the first company in China to mass-produce flexible grippers.

According to Gao Shaolong, founder of SRT, its soft gripper series can imitate grasping motions of human hands and are able of adjusting according to precise dimensions and shapes of objects.

The soft grippers have been used already in several industries including food production, electronics manufacturing and healthcare.

“With the continuous increase in labor costs as well as in demand for industrial automation upgrades, demand for soft robots is expanding quickly in the country,” Gao said, adding that he is confident on the market potential of soft robots in the coming years.

The soft robot market will reach a tipping point soon, he said.