On September 20, 2018, nearly 200 executives from multinational companies, technology startups, and nonprofit organizations converged at the inaugural AmCham China Technology and Innovation Summit (T&I Summit) at the InterContinental Hotel Sanlitun to discuss the opportunities and challenges of corporate transformation in the digital era, and the best practices of applying disruptive technologies – Artificial Intelligence (AI), blockchain, Internet of Things (IoT), etc. – into varied industries and functions.
Throughout this full-day conference, over 30 speakers shared their insights on global technology development trends, US-China collaboration, traditional industries’ digital transformation strategies, the reshaping of corporate functions with emerging technologies, and the cooperation between large corporates, startups, and research institutions. In the current climate and ever-changing global economic environment, the Summit set a positive tone in seeking common interests and win-win collaboration among multinational companies, while encouraging mutual understanding and active communication in all business sectors and at all levels, especially in developing and adopting disruptive technologies and innovative business models. This inaugural event laid a solid foundation for AmCham China’s endeavor to serve members in relevant technological arenas.
Big Pictures: AI, Cloud Computing, Blockchain, 5G, Cybersecurity, and More
In his keynote speech “The Era of Artificial Intelligence”, Kai-Fu Lee, Founder and CEO of Sinovation Ventures, introduced the Four Waves of AI: Internet AI, Business AI, Perception AI (digitized physical world), and Autonomous AI. While AI is becoming a toolbox and a new platform similar to the Internet, Lee explained that there are five prerequisites for the development of AI. These prerequisites are massive amounts of data, accurate and objective tagging, singular domains, sufficient computational power, and top AI scientists. In regard to these prerequisites, though Silicon Valley has historically dominated the innovative world, the “Chinese Miracle” that has taken place over the last 10 years is shaping up to disrupt the existing hierarchy.
“China's market size and the large amount of capital infusion, plus very tenacious entrepreneurs, have created brilliant companies like Alibaba and Tencent that continue to build more products to attract even more people online. And this loop continues with a very techno-utilitarian policy from the government to encourage that development,” says Lee.
In his new book, AI Superpowers: China, Silicon Valley, and the New World Order, Lee explicitly analyzes China’s advantages and disadvantages compared to the US, and predicts that the future of AI is, in fact, a two-sided story dominated by both countries. And despite the unprecedented wealth and prosperity that AI will bring to society, Lee cautiously raises concern for the challenges that AI will bring to job markets, offering suggestions for the regulators, policy makers, and citizens of the world to prepare for these eventualities.
In addition to AI, cloud computing, 5G, and blockchain were also considered with massive promise and potential by expert speakers in the Summit’s following panel, “C-Suite Dialogue on Prospects and Challenges in the Development and Adoption of Digital Technologies in China”. Xu Mingqiang, CTO of Microsoft Greater China Region, believed people’s attitudes towards AI and cloud computing are at two extremes in terms of quick adoption and bringing concrete benefits to industries.
Cloud computing has always been underestimated, whereas AI is probably overestimated – at least as far as current capabilities are concerned, says Xu. With misconceptions surrounding threats to job security, there is substantial resistance in many companies – especially from IT professionals – to adopt cloud computing. But practically speaking, cloud technology significantly increases the productivity and involvement of IT professionals, and like with most technologies, advances the career paths of those who embrace it.
Huang Ying, Vice President of Lenovo Group, compared the development of cloud in the US and China, and noted that China has experienced a late-mover advantage in adopting these technologies since Chinese companies, unlike their American counterparts, do not have huge legacy investments or mature and rigid IT infrastructure already in place. The approach to cloud in China has actually been more of an interesting experiment in digital transformation, deploying the emerging technology in drastically innovative ways.
Huang also highlighted that 5G systems, as an important infrastructure for the future development of cloud, commercial Internet of Things (IoT), smart manufacturing, and autonomous driving, will have a more holistic impact on our society. “There is a saying that 4G is changing our personal life, and 5G is going to change our society. That’s why the US and Chinese governments, as well as tech companies, are all interested in making themselves relevant players and suppliers in the construction of 5G, its infrastructure, and widespread application,” says Huang.
Discussing blockchain, Jerry Cristoforo, Executive Vice President and CTO of State Street Corporation, explained that cryptocurrencies are only one aspect of this technology. The more important aspect is distributed computing or distributed ledger systems, where more advancements have been made with greater resulting impact.
One example of this is shifting administration profiles and the adoption of digital IDs in customer management. As a large custodian bank, State Street works closely with local regulators and uses blockchain technology to manage the identities of customers, and track changes in millions of transactions. Blockchain can also be used in managing charity, tracking donations and the end use of the money. Because of its traceability, security, transparency, and authenticity, bockchain has the capacity to empower most all businesses through the integration of these characteristic features at a fundamental level.
For many people working closely with ICT or emerging technologies, there is always the specter of cybersecurity regulation lurking in the shadows. To Ramesh Moosa, PwC Cybersecurity & Cyber Forensics leader for China and Hong Kong, China’s new Cybersecurity Law (CSL) imposes very stringent enforcement on both multinational and large local companies, and is probably the most complex and rigorous cybersecurity law in the world. The law has very unique requirements, primarily stemming from national security and public interest. However, the law poses a great deal of challenge for companies when trying to ensure compliance.
Even though the law was passed more than a year ago, many key implementation rules and guidelines are still being drafted without clear boundaries or specific requirements. “I think fundamentally the CSL is not an IT operation issue, it goes beyond IT. Actually, it forces multinational companies to rethink their systems and data architecture, to rethink their business operations, and to revisit their supplier relationships,” Moosa said. He also introduced the 3E Concept for CSL compliance: education (understand the law and its impact), executive support (IT staff can’t deal with it all by themselves), and effect transformation into the business (take measures to ensure compliance).
The panelists also discussed how to partner with local companies and the local innovation ecosystem, how to effectively communicate with the headquarters to educate them about the situation in China to align efforts, how to encourage and leverage innovation in the company, how to utilize the innovations from the Chinese market into a global context, etc. Across the panel, it was believed that China’s digital transformation would not only boost efficiency within Chinese society, but also bring opportunities to every organization and individual on the planet.
Traditional Industries, Unconventional Innovations
Energy, healthcare, and financial services are historically considered traditional industries, but things have changed with the advent and adoption of new technologies. In the panel, “How Traditional Industries Select and Adopt Disruptive Technologies”, Celina Chew, President of the Bayer Group in Greater China; Denis Depoux, CEO of Roland Berger Greater China; Zhang Xiaochen, President of Fintech4Good; and Cui Hongyu, General Manager of Technology and Innovation at Microsoft China, shared their strategy and insights on the disruptive changes that emerging technologies are brining into their industries.
When asked about what the most important technologies and innovations will be for their sectors in the next two years, Celina suggested AI and smart wearables, which can eliminate the distance between doctors and patients, and reduce the costs of scientific experience and laboratory discoveries. In the financial sector, blockchain and other fintech developments will have a drastic impact, transforming society from a centralized one into a decentralized one, and improving financial inclusiveness for the lower class, according to Xiaochen. But for the energy sector, Depoux remarked that the industry has always been slow in the adoption process, so the two significant changes would be the mass decentralization of energy generation and improvements in energy efficiency.
However, Depoux noted, they are unlikely to be fully developed or take full effect within the next two years. The 3Ds and 1F: decarbonization, decentralization, and digitalization in energy production and storage, and frugality in social mindset (consume less rather than consume more), are the key factors in energy revolution, stated Depoux.
For the panelists, the biggest challenges in selecting and adopting new technologies are four-fold. The first is to see it coming. The disruptions do not always come from the competitors or other players in the industry. Sometimes a technological breakthrough disruptive to your own sector or business model comes from an unrelated source. Or, it’s a rejuvenation of some long-existing technology that can suddenly disrupt your business and catch you by surprise, such as the rapid development of fracking or solar panel technologies to traditional drilling.
Mindset and cultural change in the organization is the second challenge. When current profits are still substantial under existing business models, regular KPIs are already stressful for staff, or there are many internal bureaucratic struggles to convince of the benefits of adopting new technologies, it takes great courage and motivation to think and act outside the traditional organizational framework.
The third challenge is the lack of human capital for the interdisciplinary application of emerging technologies. For example, the adoption of blockchain-based smart contracts requires experts who not only understand programing and coding, but also financial regulation and compliance – a class of professional that is few and far between.
Finally, the quality of data to make business decisions and the patience for long-term progress are crucial in upgrading traditional industries, but require company-wide cooperation and collaboration that must sustain over extensive periods of time.
On the other hand, the panelists did offer some solutions to address these challenges, including encouraging and incubating internal innovation, partnering with external open innovation organizations, experimenting with pilot initiatives, building a hopeful and confident corporate culture, and so on. In terms of measuring success, there is a common sense that traditional KPIs are not applicable to new transformations. On this note, Depoux stated, “If you're starting to measure the success of your innovation initiatives simply by looking at the size or profitability of your business, there will probably be a lot of disappointment. I’d rather you point out whether we have identified new business models.”
Policy and Social Ethics Implications for Emerging Technologies
In the development of emerging technologies, governments are playing an important role in guidance, facilitation, and regulation. As such, AmCham China designed the last session of the day to focus on the policy and social implications of emerging technologies, asking the audience to think outside of the business box. In this panel monitored by Doug Young, Managing Director of Caixin Global, Deputy Secretary General of China Development Research Foundation (CDRF), Fang Jin explained that the regulatory approaches in China are usually more reactive in nature than they are proactive, with regards to new technologies and innovation.
The government is trying to understand disruptive tech, while also learning how to regulate it by reaching out to foreign regulators, academia, and various industries. “One of the reasons why China’s digital economy has grown so fast and has been leading the world in many applications is that there is a lack of regulation,” says Fang. “But on the other hand, there are also under-regulations regarding consumer protection and anti-competitive behavior in both traditional and new industry.”
Dick Rinkema, Microsoft’s Regional Director of Competition and Innovation Law & Policy for Greater Asia raises awareness for the social ethics concerns caused by AI development, which is still rarely discussed in the Chinese society. Since the wider adoption of the AI tech is linked to public trust, the tech companies must address the ethical issues right from the beginning in their product design and deployment, as well as analyze the impact AI will bring to labor market and social stabilities. Mei Luo, Tsinghua University Associate Professor at the School of Economics and Management discussed how the Chinese government is encouraging the development of blockchain technology and its applications in non-cryptocurrency businesses, since the latter challenges the status of the renminbi.
The panelists also suggested that the government level the playing field for all kinds of companies in China, no matter whether they are foreign or domestic, state-owned or private, with a comprehensive reform to address the over or under-regulation related to economic development. It will also bring the best outcomes for massive innovation if the regulators become tech experts and engage with industry and academia as much as possible.
As a crucial part of the newly launched Technology and Innovation Initiative, this Summit will join the Chamber’s annual calendar as a signature event, joining the HR Conference, Annual Appreciation Dinner, and many more.
We would like to thank our Terabyte Sponsor InitialView, Gigabyte Sponsor Chengdu Shuangliu Innovation & Pioneering Enterprise Services, and the Digital Circle Partners Microsoft, PwC, Intel, and AcceleratingBiz, for generously supporting the Summit. We also appreciate the efforts of our Organizing Partner Beijing Northhead Consulting, Technology Partners GTCOM (AI machine translation service), and Microsoft (live polling service), Media Partners China Money Network and Caixin Global, Excellence Partner Alliance Development Group (ADG), and Supporting Partner Canada China Business Council.