Blurred Lines and Brave New Worlds

In the span of less than two years, China’s bike-sharing revolution has reshaped the country’s urban landscape and deeply enriched its data-scape.

This shift forms a dramatic visual illustration of what China’s alternate internet universe does best: solving practical problems by blurring the lines between the online and offline worlds. It takes the core strength of the internet (information transmission) and leverages it in building businesses that reach out into the real world and directly touch on every corner of our lives.

Building this alternate universe didn’t happen overnight. It required market-driven entrepreneurs, mobile-first users, innovative super-apps, dense cities, cheap labor, mobile payments, and a government-sponsored culture shift. It’s been a messy, expensive, and disruptive process, but the payoff has been tremendous. China has built a roster of technology giants worth over a trillion dollars—a feat accomplished by no other country outside the United States.

But the greatest riches of this new Chinese tech world have yet to be realized. Like the long-buried organic matter that became fossil fuels powering the Industrial Revolution, the rich real-world interactions in China’s alternate internet universe are creating the massive data that will power its AI revolution. Each dimension of that universe—WeChat activity, O2O services, ride- hailing, mobile payments, and bike-sharing—adds a new layer to a data-scape that is unprecedented in its granular mapping of real-world consumption and transportation habits.

China’s O2O explosion gave its companies tremendous data on the offline lives of their users: the what, where, and when of their meals, massages, and day-to-day activities. Digital payments cracked open the black box of real-world consumer purchases, giving these companies a precise, real-time data map of consumer behavior. Peer-to-peer transactions added a new layer of social data atop those economic transactions. The country’s bike-sharing revolution has carpeted its cities in IoT transportation devices that color in the texture of urban life. They trace tens of millions of commutes, trips to the store, rides home, and first dates, dwarfing companies like Uber and Lyft in both quantity and granularity of data.

The numbers for these categories lay bare the China-U.S. gap in these key industries. Recent estimates have Chinese companies outstripping U.S. competitors ten to one in quantity of food deliveries and fifty to one in spending on mobile payments. China’s e-commerce purchases are roughly double the U.S. totals, and the gap is only growing. Data on total trips through ride- hailing apps is somewhat scarce, but during the height of competition between Uber and Didi, self-reported numbers from the two companies had Didi’s rides in China at four times the total of Uber’s global rides. When it comes to rides on shared bikes, China is outpacing the United States at an astounding ratio of three hundred to one.

That has already helped China’s juggernauts make up ground on their American counterparts in both revenue and market caps. In the age of AI implementation, the impact of these divergent data ecosystems will be far more profound. It will shape what industries AI startups will disrupt in each country and what intractable problems they will solve.

But building an AI-driven economy requires more than just gladiator entrepreneurs and abundant data. It also takes an army of trained AI engineers and a government eager to embrace the power of this transformative technology. These two factors—AI expertise and government support—are the final pieces of the AI puzzle. When put in place, they will complete our analysis of the competitive balance between the world’s two superpowers in the defining technology of the twenty-first century.

Posted by Dr. Kai-Fu Lee on Nov 29, 2018 in All Posts China Innovations

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