I spent the past week in Beijing and Shanghai, visiting our teams and seeing clients. This was a particularly enlightening trip because I met with several Chinese state-owned enterprises (SOE), the leading investor in artificial intelligence, the leading medical venture capital firm and five rising Chinese privately-owned companies. Here are a few of my observations:
- The SOE Sector Is On the Move Leading the Belt and Road Initiative in Asia and Africa — There is a new commitment to sustainability, well beyond the historic building of roads, schools and hospitals in the rural areas of host countries. The next phase envisages putting sustainability into product innovation, such as CNMC's work on Ethiopia to take biomaterials into the energy supply chain — even creating a new agricultural combine to get byproducts more simply.
- The Scale of Overseas Involvement of SOEs Is Staggering — The State Grid energy company has invested $21 billion USD overseas, managing $65 billion in energy assets in 80 countries. China Poly, the housing construction firm, has projects in 100 nations. The China Three Gorges Corporation, a power company, is building hydropower projects in a number of countries. These projects use 85 percent local talent and pay significant taxes to local governments. One example is in Brazil with the Energy Transmission line project that created 16,000 local jobs and generated $2 billion in taxes.
- The AI Ambition Is Genuine and Powerful — Kai-Fu Lee, ex-Microsoft and -Google, runs an AI accelerator that has investments in 300 startups and his own team of engineers working on projects such as improved customer call centers. I was shown applications from restaurants to trip booking with labor savings and speed to completion.
- The Retailing Revolution Continues Apace — It was extraordinary to see how deeply engrained in daily life are mobile payment apps including WeChat Pay and Alipay. Store-to-home delivery is regularly done in under an hour with motor scooters. Alibaba is rolling out new retail offline stores, Hema Xiansheng; each product will have a code that allows you to know its exact origin from farmer to fishermen. In some digitally enhanced retail stores, there are now cameras in store refrigerators taking images, constantly alerting store help to potential outages.
- Great Responsibility Is Given to Very Young Employees — Ctrip has a Baby Tiger program in which CEO Jane Sun entrusts rising talent with big budgets and continuous new challenges; this is key to talent retention in a market where turnover is a constant curse. But the results are evident; the Ctrip app features over 60 travel-related products and services versus limited functions.
- The Customer Is King — Didi, the ride-sharing company, is designing a custom car that takes the best of a dozen auto suppliers from doors to chassis in order to ease the process of access and egress for up to six passengers. There is also concern for the driver, with a more comfortable seat and a reduced cost of operation.
- The Media Scene Is Evolving at a Frenetic Pace — Shanghai Media Group now expects its journalists to post news content continuously across its digital, social and video channels. These are lower-cost, fast-turn operations. I got to hold my own branded microphone in an interview on Thursday, with the journalist doubling as camerawoman and producer. Caixin has a website with news and data, mobile apps, an intelligence unit akin to that of The Economist, and a burgeoning conference business with big events in Hong Kong in September and Beijing in November, plus salon events around the G20, G30 and APAC summits.
- The Companies Are Taking Tech Platforms Beyond Their Business Sectors, Applying Experienced Innovation to Government — China Construction Bank is supporting local governments on IT systems, building a one-stop digitalized center for the public to access administrative affairs services, including business registration and tax and document processing via SMART administration. They are also applying big data to the problem of lack of financing for small business, which may not have enough conventional accounting to get loans.
I left China stunned by the ambition, the speed to market and use of technology to disrupt existing players. The U.S.-China trade war has certainly slowed business conditions in market. But the inexorable progress, the willingness to break with convention, makes China an agile and powerful competitor. The Chinese CEOs now seem ready for the first time to break with Confucian wisdom of doing more and speaking less. It is our moment to persuade them to speak out and lead from the front, respectful of the power of government but knowing that business is the true agent of change.
Richard Edelman is president and CEO.
