Keyu Jin: What The World Can Learn From Chinese Innovation



so once upon a time the world looked down upon Chinese technology companies they were considered to be copycats imitators appropriator rather than innovator so that was true the copying was shameless and ruthless what was Facebook was first on campus Sony which became renin which is everybody Groupon was the darling a startup in Silicon Valley for a long period of time was a group it was a group buying business mate Wan the Chinese copy is called group beautiful Yahoo became so who with so being search and YouTube became yuku the exact identical copies of their American counterparts so while the rest of the world sneered China was actually rapidly catching up so today China has the fastest supercomputer in the world its digital payments market is 50 times larger than that of the US China's 500 meter wide radio telescope has joined the global search for extra territorial life Huawei became the biggest issue of new international patents and out of the top ten unicorns seven are Chinese out of the top 20 half of them are Chinese now this woman is just the ones that were the previous unicorns of the five four were Chinese so the revolution technological revolution is happening in China and I find this very interesting because it is actually the first time in history that a developing country with only 25 percent of GDP per capita of the u.s. is actually at the cutting edge of Technology and leading it in many aspects so there are three common explanations for why for why that is for China's success the common explanations are protectionism government protectionism or outright theft or cheap labor now all of these things happened but none of it is true none of it is the real experiment explanation driving China's technological boom the two real reasons are the following the first is competition the brutality and savagery of competition and of the most ferocious kind so mate when I mentioned this group buying business now valued at 30 billion dollars while by the way Groupon is basically nothing more than a shell today is 1 out of 5 tons 5,000 group buying businesses Alibaba of course which kicked out which was the exact copy of eBay but kicked out eBay eventually was one of 12,000 ecommerce platforms today online lending is all the rage and pipe I die is one of 6,000 p2p platforms that are ferociously competing with each other imitation is very easy in China they relentlessly copied each other they drove prices down to the ground they D installed each other's software's they even sent each other CEO to the police that's how competition works in China so this is from this blood-shedding gladiatorial stadium actually emerged the most robust business models and the most resilient entrepreneurs because of competition now I think this is very interesting because we usually think there's imitation the stage of imitation and then there's a stage of innovation somehow one country managed to transition transition from being an imitator to an innovator but the fact of the matter is in China the easy and ferocious imitation actually caused innovation it led to innovation because competition forced companies to constantly innovate constantly tweak their business models endlessly iterate their products invent new monetization models and build very high barriers of entry so that you're protected now when you're in the Silicon Valley and uncontested we're copying is really frowned upon and not the typical practice well it's better and more comfortable to not have that pressure and change so I think that the best way to capture this idea is as always there are three three choices in life the first of course is you know to be lounging your chair on a vacation and doing nothing the second choice is to cannibalize yourself and the third choice is to be cannibalized by somebody else now when three is never possible then you're always gonna choose one over two right you know when you're in a comfortable position and you don't have that competition you always choose one when three is actually a living reality well then it's better better to choose to two rather than choose three and so that is the spirit of the Chinese internet ecosystem constantly changing constantly innovating so that they can survive that's the first factor now for instance that imitation led to a lot of innovation now we Chad is a great example for those of you don't have WeChat I recommend downloading it trying it out it is actually a combination of all these things the combination of Skype whatsapp PayPal Facebook Twitter all on one platform and it works incredibly well and so those people who thought that Chinese were always just innovating or think again there constantly coming up with new features and new models and optimizing the product expanding their product lines and optimizing their their business models and adapting the second factor leading to China's success which has been unconventional is by having no burden of tradition now there's a concept called economic backwardness that I like to go to Alexander Gershon crown is an economic historian and the notion is that actually by starting behind and backward in 1980 you're able to leapfrog further by 2020 now Beijing where I come from has a fantastic airport highways roads when in 1990 it was virtually in shambles or non-existent now no one admires I think no one admires the Kennedy Airport in New York but actually it was a decent airport in 1980 so it kind of just clutched his way along and didn't need to change in China most people don't have access to traditional banking system so they went straight to online banking now Ali pay which is one of the largest unicorns the financial arm of Alibaba has this massive online lending to small companies to households to rule people and it gives you loans much cheaper much faster with a two percent default rate now when you're in the rural area in China you don't even have banks even you know of in your vicinity you go straight to online lending and actually research has found that you have a 40% increase in the likelihood of becoming an entrepreneur through these and financial platforms of online lending so actually FinTech is not only closing the urban-rural gap it's also reducing inequality at a rapid pace so when a country is without the burden of tradition entrenched systems and legacy it is actually easier to adopt innovation when you don't have to break things down before you build them up again it is easier to move forward because dismantling things is costly renovating something is more difficult than starting from scratch so china doesn't have the burden of tradition but it's actually also able to escape any tradition that it has and the first way of doing that is actually by having a different kind of tradition and the distance that the tradition of dysfunctionality if stuff just doesn't work well in the real world and the physical economy then that gives more room for the efficiency gains provided by digital economy in the internet economy so the financial system in china is a mess unreliable households don't really have access to it and this gives FinTech the space to improve basically escapade velocity so the tradition of dysfunctionality actually helped china escape the burden of tradition in the second is the second advantage is the capacity to scale when you have the opportunity to scale tradition recedes in the face of explosive growth when there is no scale tradition and legacy prevail and tend to linger so here is this example or these are some of the facts of the capacity to scale in the mobile penetration in china 772 million Internet users 55.8% penetration rate internet and still growing the new generation most of them are online of course we have 1.3 billion people smartphone 700 19 million users mobile Internet 753 million users mobile payment 527 million years etc etc higher than most countries in the rest of the world so that is the capacitive scale which helps you escape economic backwardness and of course coming down going forward China is investing a lot of course in artificial intelligence with policy ease the government support this is a big data industry so the more data you have the more advantage that you will have as well and that is also another advantage of scale China has risen by defying unconventional by defying conventional wisdom so let me give you to unconventional thoughts to conclude as a summary for what I think has driven China's success now the first is that we usually think about intellectual property protection as a key factor to promote innovation because that gives you the incentive that gives people incentive to innovate because they can harness their profits well actually China has proven that that's not necessarily the case more limited protection of intellectual property is not a failing of capitalism per se but actually may be a contributor to progress in the second and last is that as in many other things it is actually potentially far better to be leading from behind thank you very much thanks very much a you so we've got time for a couple of questions so I don't know if there's anybody in the audience who would like to ask a quick question yes there's a handheld mic just a second so regarding the point about competition so the kind of export of Chinese businesses to the west and vice versa has kind of been somewhat limited so what would you see being the trends in the next couple of years as to how those businesses globalized I guess China's success has been mostly domestic and unlike what most people think which is that the foreigners were not foreign companies were not able to compete in China because government doesn't let them it's actually wrong the example of Alibaba is driving out eBay is a great example of that eBay used to say free is not a business model they sneered they laughed at Ali Baba's business model because you know eBay wanted to charge a price for sellers to list wanted to charge a price for transaction and Alibaba made it all free because it understood the Chinese mentality then everybody went on to Ali Baba's platform and then you ended up having to pay a high advertisement cause or we're paying more just to get higher on your search rank and then Ali actually won over so that's one example where the Chinese companies were very good at focusing on the local market adapting to local conditions and being successful and because of the scale now the same is not true necessarily about exporting that model just as a lot of these Western companies took their standard model and said we can do copy-paste and expect it to work in China it would also be very difficult for China to do the same to other countries because of that understanding of culture and tradition and because China still has to need Chinese companies have to learn the the strength of soft power so I see as a weakness so even if it has international expansion ambitions my guess is that most of the success will still stay domestic any other questions yes maybe a good follow on from that question with the Chinese companies expanding overseas what does do you think of the potential for them to expand via their diaspora or the the Chinese ethnicity outside of China well interestingly enough there is a trend of kind of Chinese returning to China whether they grew up in China even even without growing up in China a lot of them are going back to take advantage of that I I see the Chinese you know kind of the Chinese population as not so much trying to let's put it this way the Chinese government is very interested in kind of expanding you know its influence through the belt road projects or by exporting some kind of its cultural elements through cinema or various things like that but I think that in in in reality the reverse is happening is that a lot more people who have you know lived in the outside of China is returning to the Chinese market where there is that kind of scale and that kind of opportunity to to expand [Applause]

29 Comments

  1. Charles Ip said:

    No biases but a little fact…..She is from Beijing. Her family background must be strong, high ranking officials in communist party. If she graduated from Harvard with a BS, MS, and PhD , and she started her study in early 2000, that was easier in that period of time with donations to school.

    Why does she not stay and has a tenure in a top university in the US ??

    She is just another voice from the Communist party from China to protect their personal and party’s interests.

    More importantly, America needs to continue to lead or would be left behind , like what happened to the automobile industry in America .

    June 27, 2019
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  2. K Chin said:

    thank you. a good lecture

    June 27, 2019
    Reply
  3. Chongqing Alleycat said:

    Lol..Chinese delusion. Only by banning payment processors like visa and mastercard (in violation of earlier agreements) was China able to build homegrown payment processing tech like alipay and wechat wallet. By banning facebook, twitter etc, China grew weibo, wechat, etc. By banning uber, China developed Didi Dache.China simply bans foreign companies in key sectors and lets Chinese companies have sole access to the chinese market…in direct violation of the WTO. Time to remove China from the WTO and let them try to "innovate" without the help of foreign technology companies. I wish them good luck.

    June 27, 2019
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  4. Ben Sun said:

    we Chinese kept learning from western for the last 40 years, and we continue. Seems very difficult for western to learn something from China, to accept and respect China's rise.

    June 27, 2019
    Reply
  5. mGSP 28 said:

    When was the last great innovation that came out of China?? Just look at the products on store shelves; can’t even make a half decent looking product packaging. The 👀 don’t lie

    June 27, 2019
    Reply
  6. Shahani Sham said:

    WORLD CAN LEARN FROM CHINA HOW TO STOP DEMOCRACY FROM PEOPLE 😭😭😭😭😭😭😭😭

    June 27, 2019
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  7. Ming Hu said:

    Drag China down somehow to Make American Great Again, since American cons don't want work hard to catch up.

    June 27, 2019
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  8. go86go said:

    modern Chinese inventions: steal, lie, appropriate, cheat

    June 27, 2019
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  9. John Smith said:

    Wechat is heaps better than Face Book. Skype used to be the best for Internet calls. If yahoo, MSN didn't work Skype always did.

    June 27, 2019
    Reply
  10. Gluluman said:

    Do not over publish , China got to where they are solely based on cheating, stealing and lying.

    June 27, 2019
    Reply
  11. Jame Tariq said:

    You can learn from China is Stealing, Copy, Fake, Lie, and much more

    June 27, 2019
    Reply
  12. tellu why said:

    China is in trouble financially if they do not stop turning their liquid cash into rocks and stones as the result of using unaudited cash to  build empty buildings, factories that produce goods that no one would continue to buy because of its lack of quality control, and doing businesses managed by communist top officials, who do not have business experience needed to prevent hugh financial loss, for the past 50 years due to communism. It needs to go slow enough to allow auditing of its governmental departments yearly to prevent hidden corruptions, and liquid cash loss by communist top officials. A wise businessman would use its capital wisely by only investing half of what profit his venture gained, and keep the other half of the profit to save a rainy day from drowning. And a wise Prime Minister would not allow his government to venture into countless businesses that would suffer due to the lack of business experiences, but rather let the citizens and foreigners invest only to tax 20 percent of their profits according to the holy bible of Joseph, the son of Israel, as the Prime Minister of Egypt, second only to the Pharaoh, and the Israelites enriched Egypt for 400 years. FROM THE MOUTH OF GOD OF JESUS, COMES OUT WISDOM THAT IS KNOWLEDGE THAT COMES UNDERSTANDING.For wisdom in business:Google THE STREAMING BIBLEwww.e-sword.net

    June 27, 2019
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  13. Shashidaren Virasingam said:

    well after polluting your nation, chinese government is now moving to other nations and destroying the ecosistem. the people in china cant question governments move without consulting the citizens . maybe this wont work elsewhere . anyway you block others from accessing information but you want others to share everything .. how can that be fair .. even the trade deals are unfair .

    June 27, 2019
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  14. World Democracy said:

    A Chinese patent has no value because China has no legal system.

    June 27, 2019
    Reply
  15. Teresa Moon said:

    She is justifying stealing and copying business models and technology as an act of "competition". Please have some moral values, China is not innovative. Their political system and education does not make it possible. Creativity comes from freedom of thoughts.

    June 27, 2019
    Reply
  16. Alex San Buenaventura said:

    china government invest on their people thats why they been successful in growing their economy. they are like..my people first before any one else..

    June 27, 2019
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  17. Martin Ljubic said:

    Chinese patents- rest on stolen Intellectual Property!!

    'Chinese innovation' … that is a euphemism for the
    'creative' ways China STEALS Western Technology.
    China's Communists, with its people under its boot,
    has stopped people thinking long ago. Innovation
    requires thinking. When your rulers tell you what to
    think, there is no room left for any other thoughts.

    Russia tried Communism for seven decades, with

    140 million under its boot, and gave up, almost, in
    recent times. China has 1.4Billion under its boot.
    Its demise in the modern world, where information
    travels at the speed of light, will see its collapse in
    the next four decades.

    *The thing China will innovate is its speedy demise!!*
    *And I am talking about the Communist State!!*
    (The one party rule of dictatorship).
    99.99% of the comments below are Chinese Trumpets!!

    *

    June 27, 2019
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  18. Bill You said:

    Never and ever trust China communist government. They are real copy cat.

    June 27, 2019
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  19. William P said:

    Wrong! China steals technology, invention from the West.

    June 27, 2019
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  20. Gordon Xu said:

    Any civilization wants to survive, competition is a must. When you are poor in technology, you learn, copy, imitate, then innovate, invent. America did it, so did japan? So did South Korean? Certainly China.

    June 27, 2019
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  21. DynoMike008 said:

    The 3 reason that the technology in China advances so fast, she said others are claiming were false are 1) protectionism from Chinese Government. 2) out right theft 3) cheap labor. Haha, look how fast she was shining away from these true claims with out any explanation by just saying that these are false claims! The truth of the first claim is, all big business in China are all invest by high government officials if they are not out right run by the Government! These high tech companies start with the aid of foreign technology companies with signed technology transfer agreements for joint venture. These companies being own by government officials, they could either get low interest rate , or even 0 interest rate loans if the companies go under or setting up products below their cost to drive out their initial competitors. So basically these companies are using the whole China government resources to compete with their foreign private companies! We can talk more and more about these unfair practices including item 2 and 3! Well, it’s beyond what I want to spend the time here ! This cute girl presents only the surface perhaps she doesn’t really understand the true nature of the matter!

    June 27, 2019
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  22. KB GIREL said:

    She is so young yet so intellectual

    June 27, 2019
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  23. Michael Voung said:

    No matter how high you fly or how good your tech is, your government is holding a rope to everything you guys have.

    June 27, 2019
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  24. Dominic Fong said:

    I don't mind China, don't mind Chinese, it is the China Communist Party I have a serious problem with. The video is certainly a paid advertisement by the CCP.

    June 27, 2019
    Reply
  25. 6969tomahawk said:

    Chinese innovate is moving ahead of the western

    June 27, 2019
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  26. augiedogie88 said:

    Got sick of her BS half way thru did she ever mention the Orwellian state or is that censored ? Any contradicting speakers? No you say just her BS. That's what I thought. When she wakes up from her CCP comma she will be applying for residence in a 1st world country.

    June 27, 2019
    Reply
  27. long wong said:

    Jwe neocon oligarch community are paranoid the rise of China. China have defeat and destroy the Jwe FANG monopoly.

    June 27, 2019
    Reply
  28. ulyquime99 said:

    You mean stolen technology ? This digital payment dystopian system that the government can shut you down from just because you type about the massacre in China. PLEASE ! China is totalitarian/fascist state THE WORLD CANNOT LEARN NOTHING FROM CHINA. You have no moral basics to be nothing but a huge factory.

    June 27, 2019
    Reply
  29. Qingxian Wang said:

    US is using unfaire way of caculation to exagerate trade deficit with targeted countries to make its execus to threten other countries. US used cheap labour to enjoy cheaper products, sacrificed environment of other countries, explorated other countries to leave them with little profit margin. And, yet, US points its fingure to other countries to accuse them of "stealing" jobs from US when it wants to make control or rob off other countries. This very UNFAIRE.!!!!

    June 27, 2019
    Reply

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