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What are the most recent impactful innovations in China that could be world game changers?

What are the most recent impactful innovations in China that could be world game changers?

Mobile payment and the Online to offline (O2O) model as well as the introduction of several sharing apps like Mobike (摩拜单车) can be world game changers. But also innovations in supercomputing and Artificial Intelligence (AI) in China are affecting the world.

These are not true innovations of China? As the previous answer correctly illustrated, in the modern age there are very rare inventions solely made by the Chinese like the paper or gunpowderbefore. However, innovation doesn’t equal invention, which is the creation of a whole new product or process (like the introduction of paper in ancient China, for instance). An innovation, on the other hand, can also be viewed as the application of a better solution, e.g. to meet unmet market needs or new requirements. And China is a champion at this.

The innovative use of mobile payment with O2O models and sharing apps

Anyone from the West will know the struggle when paying in cash in a supermarket. The pressure one is feeling collecting the change while there is a large queue waiting behind one. Even when paying with debit- or credit card, it takes a while to pay because one has to show an ID or sign. In China, especially in the Tier-1 and -2 cities, one can barely see this. Mobile payment in China became the norm and it can be a real world game changer. Not only that it can save consumers from stress while paying in a supermarket, whole new business models are developed on the basis of it which is the real world game changer. Models like O2O or sharing apps are only thriving because of the rise of the mobile payment in China and the use of mobile payment services such as Alipay (支付宝) and Tenpay (财付通), the WeChat Wallet. Compared to the US, China shows a far higher affinity to mobile payment with a transaction volume of US$ 5.5 trillion (US: US$ 112 billion).

The example of bike sharing apps such asMobike or Ofo (共享单车) show how China didn’t invent one but innovatively applies a service.Sure, there are also bike sharing apps in other countries – however, the way it is used in China is different. Consumers in China connect their phones via the above-mentioned services with their bank account and simultaneously, it can be connected with the apps. Therefore, the setup of the app is a lot easier than in other countries, where, e.g. a credit card needs to be connected (which involves a lot of security checks). This increases the number of users a lot.

A latest figure by Daxue Consulting showed that since the introduction of the bike-sharing models last year, the number of users is constantly increasing – with a month-over-month growth of more than 100% in March this year. Because of this ease in terms of accessibility, China became global leader in the whole on-demand transportation market (bike- as well as car ride-sharing), accounting a share of incredible 67%. This success shows how the Chinese model can change the way people use transportation systems globally.

An ‘Ofo’ bike easily unlocked on the streets of Shanghai

The O2O model is another example of how the innovative use of mobile payment in China can change the world’s game. In a world where it was commonly believed that offline brick-and-mortar shops will be absorbed by e-retailing, China shows how one can merge these two. Again, let’s have a look on a common problem in the West. For instance, the e-retailer “Zalando”, who is very popular in Europe for selling every kinds of shoes, clothes and accessory, advertises with the convenience of being able to send back everything for free. However, the consumer still has to go to the post office and wait for the next delivery. In fact, a model where the consumer could return, for instance, the shirt he just bought in-store of the particular brand and try on and purchase another one, would be more convenient. China picks up on that.

In general, O2O can mean several things in China as the consumer expects a holistic service. First of all, O2O describes ‘click and collect’ services where physical goods are purchased online and collected in-store. As of 2016, according to a research of Daxue Consulting on O2O in China, 72% of the Chinese consumers expect the opportunity to buy online and return or exchange offline. Also, the majority of the Chinese consumers wants to buy coupons online and redeem them in-store. Further O2O services involve offering product customization online before the purchase, checking the physical store stock status online as well as the possibility to purchase a good in-store and have it automatically delivered to the consumer’s home.

The latter shows again how the combination of mobile payment and the QR code technology in China is changing the game. While brick-and-mortar shops were assumed to vanish because consumers either buy the good online immediately or only go to the offline shop to evaluate and then find the best offer online, this innovation gives those shops an economic sense again. Implementing QR codes next to a product in the particular shop, enables the consumer to see detailed info about it. For instance, the consumer can see the traceability of a certain product to buy with more confidence. An example is Leyou (乐友), China’s largest retailer of baby products, who implemented QR codes so parents can track the product and get additional information to be sure it’s the best for their baby. With mobile payment such as Alipay being standard, not only these information can be seen but the products can be easily purchased and delivered home.

Another innovative way of how mobile payment in China connects the offline stores to the online world would be Dmall (多点),an application that turns nearby supermarkets into virtual ones. The app shows the stocks of the supermarkets and the consumer selects the desired goods. Consumers pay via Alipay or WeChat and the goods will be delivered within one hour. In doing so, it can change the way consumers worldwide purchase their food and householditems. Especially, if one recalls the comparison from the beginning with the supermarkets and their large queues, this can be an extremely effective innovation. Firstly, for customers saving the effort of shopping themselves, secondly, for supermarkets to not potentially loose customers to others because the offline store might be too crowded right now and thirdly, it creates further jobs.

If the rest of the world is able to adapt this innovative use of mobile payment in combination with the QR code technology, it can change the way people purchase, consume and share things globally. Hence, it affects the whole world’s economy as companies need to overthink their business models (e.g. effectively connecting online and offline operations) and startups with completely new business ideas based on mobile payment will arise all over the world.

Other technological innovations that could be world game changers

But not only mobile payment and its facilitation of sharing platforms and O2O is changing the world’s game. Chinese supercomputersare by far the fastest and hence, influence the way scientists and engineers can use supercomputers all over the world. Supercomputers are high-level performance computers measured by how many calculations they can do in a second (FLOPS, floating-point operations per second). Nowadays, supercomputers can do quadrillion calculations per second (PFLOPS), with two Chinese supercomputers leading the ranking of the fastest computers worldwide. The fastest supercomputer, Sunway TaihuLight (神威·太湖之光), located in Wuxi (无锡), runs at a speed of 93 PFLOPS, which is almost more than 5 times faster than the first non-Chinese supercomputer from Switzerland with 19,5 PFLOPS, according to the latest Top 500 list released in June this year.

While supercomputing itself is not a sole innovation by the Chinese, it is, again, about how the Chinese apply it. Was the fastest Chinese supercomputer in 2002 only ranked 43rd in the world, China is now reigning the field. In doing so, Chinese supercomputers can simulate the reality not only faster but also more accurate. For instance, supercomputing is used for weather forecasting and climate change research where meteorologists need to analyze constantly changing data as accurate as possible. However, game-changing could be the simulation of how new medications and drugs react to the human body and physical simulations such as calculating the early moments of the universe or airplane and spacecraft aerodynamics. The ultimate goal of supercomputers is to simulate human brain activity. As a matter of fact, China is already developing a new supercomputer in Jinan which is supposed to be able to do quintillion calculations per second, thus being 8 times faster than the current leading supercomputer. By constantly keeping up the pace of building faster supercomputers, China forces the rest of the world to do so, too. In doing so, with developing better supercomputers, calculations and simulations get more accurate and impactful in several industries all over the world.

Related to supercomputers is Artificial Intelligence (AI), the exhibition of intelligence by machines. As far as AI has come, it will probably keep growing in China. In fact, the next big step in AI evolution may come from BAT (Baidu-Alibaba-Tencent, the three major technological companies). Indeed, China is heavily invested in the success of AI, with billions of dollars poured in, between major companies, start-ups and universities. For instance, Liu Lihua (刘利华),[u1] Vice Minister of Industry and Information Technology, assured that China had applied for 15.745 patents related to AI, according to China Daily[SP2] . [u3] Furthermore, China’s AI industry increased by 43.3 percent YoY in 2016, surpassing RMB 10 billion (US$1.47 billion), and is expected to reach RMB 15.21 billion and RMB 34.43 billion in 2017 and 2019 respectively, according to the Chinese Academy of Sciences[u4] (CAS, 中国科学院). Also, just last month on July 20th, China’s State Council[u5] issued the “Next Generation Artificial Intelligence Development Plan” (新一代人工智能发展规划), which foresees an ambitious agenda to become world-leading in AI. The plan will give funds to AI-related projects, such as the CAS Institute of Automation, a Beijing consortium of companies and universities.

Moreover, the goal is to turn China into the global power of AI by 2030. According to the State Council’s report[u6] , China’s target is to exceed a value RMB 150 billion in 2020, RMB 400 billion in 2025 and RMB 1 trillion on 2030 to become world leader and surpass the US. Indeed, Chinese tech giants Baidu and Tencent have established AI research centers in the United States. Baidu, in particular, has been extremely bullish on the industry, at one point hiring Andrew [u7] Ng – a leading AI expert – as its chief scientist.

Artificial Intelligence could play a big role in China’s development, from driverless cars to automated decisions and inventory decisions. Jack Ma, China’s richest man and CEO of Alibaba, claimed that in 30 years, CEOs could be replaced by robots.

AI has become such an important investment for several reasons: first of all, AI is able to predict the needs and behavior of humans or of a company faster than a human, potentially saving millions of dollars for a company, or helping us gain more time (predicting we are running out of milk and buying it online for example). Furthermore, as predicting the near future becomes strategically important, marketing and other departments all over the world would crave such a tool to use it to estimate whether their product will be successful without investing tens of millions of dollars in market studies.

Secondly, with the rise of robotics, AI could become an accessory to do what we can’t or won’t do. One good example is a robot going into a forest fire. Lastly, China also found another way to use AI: for predicting crimes. According to Lin Meng, China’s vice minister of science and technology, crime prediction is one of the most important uses of AI for the Chinese government. With AI, personal data of potential suspects can be gathered and surveillance footage can be analyzed, including “crowd analyzes” to detect suspicious behavior. While this idea is very noble and indeed could change the world in terms of lowering crimes, it is highly doubted the rest of the world will adopt to it due to privacy regulations.

Some tangible “real” recent inventions from China

Nonetheless, China also invented other physical products from scratch in the recent past that changed the world. Most of all the e-cigarette. Hon Lik, a Chinese pharmacist, invented the modern e-cigarette in 2003. Driven by the will to quit smoking himself after his father’s death (which was caused by his smoking habits), he found that he can only stop smoking without suffering through another form of smoking. His breakthrough idea was to usea piezoelectric ultrasound element to vaporize a nicotine solution in a cigarette-resembling device, on which he registered a patent in the US. After the patent was bought by the giant tobacco firm Fontem Ventures, more and more versions of e-cigarettes came up. Nowadays, various flavors, with or without nicotine, can be purchased, helping consumers all over the world to quit or reduce smoking normal cigarettes.

Another recent invention by Chinese entrepreneurs of the company Ehang (in China known as Beijing Yi-Hang Creation Science & Technology Co., Ltd.(北京亿航创世科技有限公司)) is the world’s first passenger drone called Ehang 184(亿航184).It got revealed at the CES in Las Vegas last year and could be a real world game changer. The single passenger drone shall work as an autonomously flying taxi-service. This electric-powered drone is designed to fly up to 23 minutes at a maximum altitude of 3.5km and able to carry a passenger up to 100kg. The passenger creates a route via a tablet inside the drone before the flight and then commands the drone just in two ways: “Take off” and “land”. While this invention is not yet as much implemented in real life as the e-cigarette, it shows a lot of potential for solving transportation issues in metropoles with many traffic jams when more sophisticated.