China will change us

The more I read, the more I realize that those of us in the “Western” world really don’t understand what’s happening in China, and how it’s going to rewrite the rules whether we like it or not. This is partly to do with technological development, but even more so with the culture around tech and communications.

For example, I’m going to Beijing next year to teach e-commerce. I already have the textbook, which is based – as you would probably expect – on the Western (largely US) history of e-commerce. Yet, reading blogs, tech news sites, and so on, I’m beginning to see that the way the Chinese are approaching e-commerce is going to be rather different.

I’ve been mulling this over for a while, but Niti’s post on Chinese aid to Africa has spurred to finally blog it! As she suggests, this is all about design insight drawn from market experience. China has a vast market with no pre-existing infrastructure, a hunger for Western-style affluence, and third-world budgets. Since Chinese factories already make pretty much everything for everyone in every cost range, the manufacturing capacity is present to make vast numbers of anything that can be designed to target this market.

This is leading to design innovation through rapid evolution: make lots of different designs, get them onto the market, and see what works. It produces products that are cheap, effective, and demand-driven – rather than overdesigned and over-marketed “solutions”. Result: Chinese-designed tech products that are only intended for the domestic markets, and yet find a world-wide demand – because they’re affordable and meet real needs.

As Niti’s post shows, this means that it’s Chinese-designed technology that’s being sought out in other developing countries. This is important as we go into 2008, I think, because all the indications are that the US, and perhaps Europe, will experience an economic slowdown or recession. However… the indications also seem to show that the rest of the world will not. The BRIC economies, for example, will carry on doing just fine and, since China in particular will continue to need raw materials, other developing countries will also continue to do well.

So what does this all mean? China will become the technological focus of attention for much of the world… I’m curious as to whether Chinese tech culture will also be exported, because it seems that this is where there are significant differences from the West. Some examples:

• Massively distributed collaborative tasks: Rick Martin on C|Net discusses guerrilla translation projects for pirated films. How else could this culture be harnessed or adapted? It would seem to be an open-source dream… Could it be used for coding? Design?
• A crowd philosophy. Chinese internet culture is developing along the lines of constant presence. As Professor Guo Liang of the Chinese Academy of Social Sciences outlines in a very interesting interview:
  

  The interesting thing is that in China about more than 30% Internet users don’t have an email account. Less than 30% of those who have an email account check their emails every day. It does not necessarily mean that they don’t communicate with others. They prefer instant contact by QQ, which is a Chinese version of ICQ. People used to only have address on their business cards. Then, they have phone numbers or even fax numbers. And then, they have email address. Now, many people put their QQ account number on their business cards.

• Let’s not kid ourselves: the future of internet access in China is phone-based. As Professor Guo also says:
  

  Firstly, I would say Internet use is growing very fast in China. Currently, there are about 123 million users in China, ranking the second largest Internet country in the world after the US. Secondly, there is the issue of the digital divide, which many Western scholars are interested in. In theory, rich people and better educated people are more likely to need a computer and they can afford it. So they may access more information and may have more opportunities to get even richer. But I think the digital divide is not mainly because of digital but economy. According to my research in small towns, a lot of people don’t have to buy a computer. They just go to the Internet café for RMB 1 (US$0.12) per hour. In large cities, it’s something like RMB3 per hour

  So: most Chinese internet users don’t have their own computer, they use a cybercafe. When they get to the stage where they want to go online outside a cybercafe, I suspect they are most likely to want to do this via a mobile phone – because they already have one, they regularly upgrade it, and in most of China it’s the only available communications technology. This extremely interesting CNN article shows how competitive and ambitious the mobile market is in China.

Now this is where I get speculative. As we can see, the trends are that:

• Chinese internet users are most likely to be online through their phone, which they have with them at all times;
• Chinese internet culture is such that users like to be constantly connected to their friends, and are open to approaches from strangers;
• Chinese tech culture is increasingly collaborative and distributed.
• Chinese tech manufacturers are predisposed to developing lots of different technologies and throwing them into the market to see what works.

Now I want to throw into the mix something I wrote about before: augmented reality and extended consciousness. The technology exists, and is about to hit market at a fairly low price, to turn the internet into something we are immersed in, 24/7. It’s western-developed, and – I think – still searching for a niche outside uber-geeks. Very largely, it seems that it’s being directed at gamers. In mainstream western cyberculture, we’re still thinking of the social web in terms of Facebook etc, sites you go to visit; the immersive internet is not likely to catch on.

Once gaming brings this technology to China, I suspect we might see very different results. The Chinese internet experience is already immersive; this will just take it to a new level. Can this technology be adapted for phone-based internet access? I suspect we’ll see Chinese manufacturers and service providers willing to give it a try. Will it take off? Who knows. It seems to have a good chance of success.

If it does take off… it will be something unlike we’ve seen before. And let’s not forget where this article began: other developing countries are adopting Chinese technologies and trends, because it’s affordable and meets their needs.

The Chinese onion effect, revisited

Lots of internal references in this post, as it brings together a few themes I’ve been following for a few years now.

I wrote this back in August 2005; the earlier post was lost when I moved this blog to WordPress.

I blogged over a year ago about the ‘onion layer’ theory of the Chinese economy, and here it is in practice. As the article mentions, even the second-rank cities are facing stiff competition from India, Indonesia and other developing nations, so there will be pressure to move ever-further inland. I say this is good because it will bring greater prosperity to the poorer areas of China, and hopefully stem some of the human tide moving from these areas to the coast. Both will help to shore up social stability in rural China, which is vital for China in the long run if it is to be a peaceful member of the international community…

I don’t remember what had inspired the first one, but in the 2005 post I linked to an ATOL article about a report from Jones Lang Lasalle China.

The topic of the need for China’s manufacturers to move inland in search of lower costs comes up again today in this post from Richard Florida, who talks about Rob Gifford’s article in The Prospect.

One thing Gifford mentions is the rising labour costs in the coastal regions – which I saw mentioned in 2004, back when this blog was still on Blogger. The IHT article I mention there doesn’t appear to be online any more, but you get the gist of it from the quotes.

If labour is too expensive on the coast, then manufacturing must move inland. Consequences:

• Money and jobs arrive in inland regions. More people can find good work near their homes, which may reduce migration and income disparity across China. This will work boost social stability. Good.
• Local officials get a bigger pot of money to loot, which will decrease stability: “the mountains are high, and the emperor is far away“. Bad.
• Currently undeveloped and clean regions develop and become polluted, damaging health and quality of life, possibly leading to the kind of unrest we’ve already seen elsewhere. Bad.
• The overall rise in wages – though less than it would be if the manufacturing had stayed at the coast – is joined by the coast of getting goods overland to the ports from where they head to the West. This raises costs to the point where India and other countries become competitive, as Gifford points out. The way around this? Put a deep-sea port in easy reach of the Chinese interior. Two plans to do this are underway. The first: the Three Gorges project, which will open up Chongqing and Wuhan to deep-water ships. The second: heeelllooo Myanmar!

Singapore’s main competitor?

Whenever I think about Singapore’s future and its competitiveness, the name of a potential challenger keeps coming up: Dubai. I’ve mentioned this on a number of occasions, so I’ll add in a link to a long and insightful article from the New Left Review: Fear and Money in Dubai. It gives a detailed account of Dubai’s strategic direction, and looks at some of the methods used to achieve it – and some of the consequences. Singapore gets mentioned a few times. Hmm, I wonder what an article with the title Fear and Money in Singapore would say?

Collaborative innovation in China

 IBM’s Innovation Factory is going to be working with China Telecom to set up a research centre in Shanghai. What I find interesting is that the centre will be based around collaborative media and social technology, pulling in knowledge from not just the two partners but also their customers, suppliers and the rest of their extended human networks.

It will be fascinating to see how this works. Much of my experience in China suggests that Chinese employees still tend to be knowledge-hoarders by instinct; the market right now is still lending itself to job-hopping and the search for a better salary above all else, and that encourages talent to try to maintain its value by not sharing. I looked at this for my HRM course at Tsinghua two years ago, and the tendency hasn’t changed.

Indonesia: potential unused

Philip Bowring had an interesting piece in the IHT recently about Indonesia – its potential wealth, its potential global influence, its cultural strength, its importance overall.

Where does the money go?

• Tomorrow: Typical millionaire (in Singapore).
• Typical millionaire (source for the above).
  
• Cap Gemini report

Recently, two different friends from widely separated parts of the world have been raving to me about how cool Indonesia’s music scene is. Sadly, even as Indonesia’s day draws closer, at least one person I know who’s highly active in the growing cultural scene there is considering moving to Singapore. Why? Disillusionment with rampant corruption…

The death of supertankers

As you might have guessed from my last post, I see supertankers on a regular basis. Our civilization depends on supertankers, because our civilization depends on oil and supertankers carry oil. What happens to these marine leviathans, these gargantuan products of industry, when they become too old to work any more? No doubt you imagine some sterile high-tech knacker’s yard, a supertanker slaughterhouse, putting these giant ships to rest.

Not at all! They are left, literally washed-up and derelict, on a beach, to be cut up piece by piece by a swarm of barefoot, illiterate workers, until nothing is left but fragments on the sand.

Take a look at this photo-essay from Foreign Policy, drawn to my attention by Wil Wheaton.

A view from Asia

Recently, I got asked to write a piece, in 300 words, about the global economy. A tall order! Bearing in mind that the target audience isn’t likely to be particularly aware of what’s going on in Asia, I couldn’t assume any prior knowledge. So, I decided to pitch it in a personal narrative format. On the basis of this, I’ve been asked to rewrite it in a longer form, with a more political spin, which I’m working on. Anyhow, here’s the original version (all rights reserved, copyright claimed, yadda yadda yadda!):

It’s 7am in Singapore. The view from my desk looks over a patch of jungle to the sea, flat and glowing gold in the early tropical sunlight. In the distance are palm-fringed islands, part of the Riau archipelago. Through the open window, the birds chirp and whoop; whiffs drift in of the incense being burned by the elderly caretaker at the Taoist altar in the car park, many floors below.

It might be a Joseph Conrad story – apart from the gargantuan cargo ship, stacked high with containers, which floats lazily just offshore. It’s one of dozens that will pass my window today on their way to China, carrying scrap metal, pig carcasses, telecoms equipment, water treatment plants, and Swiss watches: the lowest and highest ends of what Europe produces. Later, the tide will turn, and yet more ships will slip into the channel between Sumatra and the Malay Peninsula, heading for the Indian Ocean, and carrying – well, most of what you’re going to buy anytime soon.

Also in view is Singapore’s Art Deco railway station, the terminus of a line that will soon be able to take goods and travelers non-stop through Malaysia, Thailand, Cambodia and Vietnam, up to China’s Yunnan Province. From there, one way leads to Myanmar and the new Irrawaddy shipping lanes, or on to India. Another way leads up to northern China, and onwards to the Central Asian ‘stans, or the Karakoram highway to Pakistan.

Asia is reconnecting itself, and forming once more into a market that’s been disrupted since the Europeans first arrived. As barriers fall, incomes are rising, creating an internal economy that might someday overtake the EU and US. There is a definite energy and optimism, as people look forward to a better future. Of course, there are less positive sides to this development – but there’s a lot of good news too, and today, it’s pleasant to watch the ships and trains pass on their way.

China moving up the value chain

I’ve been thinking about buying a new MP3 player recently, but I know that I won’t use it all that much once I buy it: it’s something I want to use on the bus into work from time to time, not a major lifestyle accessory. That being the case, I really don’t want to spend too much on buying one, and that probably rules out an iPod – at least, at full price. So I was a bit surprised to see Carrefour selling an iPod Nano at what seemed to be a knockdown price. It turned out not to be an iPod at all, but a clone from a Chinese manufacturer called Meizu. It looks identical, and the feature set seems to be the same.

I’d never heard of Meizu before, but by chance the name re-appeared today, in an excellent article in Popular Science: China’s iClone. This is required reading for anyone interested in China’s economy, in intellectual property, or in case studies of economic development. Essentially, Meizu have not only reverse-engineered the iPhone, they’ve extended it and improved upon Apple’s original design – according to the article at least.

One very interesting snippet, which I’ve not seen mentioned anywhere else, is that the iPhone’s killer feature, the touch interface, is not original to Apple in the first place: it’s licensed by Apple from…. the original, Chinese, developers. Who knew?

The article ranges far beyond phones, though, to show how China is moving from cheap fakes, to reverse-engineered copies, to original designs in exactly the same way as China and Korea did before it – but much, much faster.

Once China is producing its own design value, of course, we’ll see much stricter enforcement of IP protection laws, which will in turn probably see the end of the RMB8 DVD, and of the Beijing Silk Market, for example. A small price to pay for China becoming a design innovator…

Oh, and I haven’t yet decided on an MP3 player yet. The Meizu iPod Nano clone is still a contender, but I may go instead for a Creative Pebble, which has FM radio…