WeChat is not just a messaging app. With nearly a billion active users, it is used to make voice calls, play games, read news, hail cars and more. With WeChat Pay, people use the app to send money and pay bills by scanning a QR code, and friends and families use WeChat to send lucky money during festivals. For many, WeChat is already indispensable. How did the company grow? What were the key decisions and strategies? In the fierce competition between WeChat pay and Alibaba’s Alipay, who will win? There are many questions about WeChat, but the app’s success is certain—for now.
Online social networks are changing Chinese professional culture—simply sending out resumes to get a job is inadequate. Compared to Americans, young Chinese spend more time networking and leverage social sites to find jobs. Recruiters are active participants in this trend. As a Shanghai-based employer says: “I don’t even call people anymore.” Instead of waiting for resumes that may contain dull business mug-shots, employers look at applicants’ social profiles, chatting to ones they find interesting and learn about their business and leisure time and maybe, if lucky, get a rough idea of their personality.
Education in China has undergone sweeping changes since 1980. A major change is the emerging popularity of elite private schools. Different from public schools under China’s 9-year free compulsory education, many elite private schools, with expat teachers and small classes, have western-style curriculum and focus on developing students’ creative abilities. Newly-affluent families favoring private schools are willing to pay tuitions ranging from $36,000 to $72,000 per year and they believe children in these private schools are also from well-off families. The trend has also attracted investors from other industries, with big firms like Vanke and Alibaba investing billions in private schools.
With a growing economy and the world’s largest population, China has for decades been a key destination for foreign companies expanding abroad, but the difficulties of doing business here have never been small. In the past few years, however, China has in some respects become an increasingly risky place to do business, in part because of the Chinese government’s efforts to modernize regulations and crack down on bad actors. In this interview, senior partner Kent Kedl at Control Risks explains how the challenge is not only for foreign companies to understand and comply with new rules, but to make compliance into a competitive advantage.
NetEase is the Chinese internet pioneer you have probably never heard of. Founded in 1997, before its bigger and better-known Chinese internet peers Baidu, Alibaba and Tencent (collectively known as BAT), it is largely unknown outside of China. NetEase is currently making big pushes into many new businesses: e-commerce, online learning, music streaming and a host of other businesses, but it still has a long way to go to climb back to the top of the China tech tree. Analysts note that NetEase lacks the breadth of its rivals’ businesses, and that will likely stymie its growth, unless it can continue to diversify successfully.
After meeting with Chinese President Xi Jinping this year, Donald Trump backtracked and dropped his accusation of China being a currency manipulator. But the issue of currency manipulation is still debatable. The RMB is certainly not a free-floating currency and the controls are complex. China’s central bank sets the daily rate with movements only allowed in a narrow 2% band. This did not change for years, until August 2015 when the central bank reformed a bit by beginning to set the daily RMB rates based on the closing value of the previous day’s interbank forex market. But it’s not considered a major change and the way to achieve a more open currency remains difficult.
The Summer 2017 issue of CKGSB Knowledge is out! It has articles and interviews like: COVER STORY: India: The New Battlefield: The next big market is right next door to China, and the entire world is looking for a piece of it COMMENTARY: The Fourth Industrial Revolution: A new era is upon us, and this time it will be different, not least […]
Back in 2014, Stephen Hawking warned that people should be careful about artificial intelligence (AI)—the full development of it could spell the end of the human race, he said. Brad Nelson, professor of robotics and intelligent systems at ETH Zürich, is optimistic about the technology’s development. To him, machines and robotics are augmenting instead of replacing the human workforce. In this interview with CKGSB Knowledge, Nelson talks about the state of AI so far, China’s advantages in this industry and, as an engineer, his insights into the relation between humans and machines.
Over the past couple decades, we have been told over and over again that the most important sources for job information are weak ties—in other words, acquaintances. But now we have an embarrassment of riches in terms of the tools and platforms available to us. It’s more information than we can ever take in, and we have a vast number of connections with people—connections that are often very vague and shallow. So knowing how to make the most of online networks has become increasingly difficult, even as it has become more important.
China’s property market was virtually non-existent 25 years ago, but it is now one of the most critical pillars in this country and the source of incredible wealth for many of China’s citizens. Last year property prices in China’s tier one cities made another gravity-defying leap last year. By September, new home prices had jumped 27.8% in Beijing, 32.7% in Shanghai and a meteoric 34.1% in Shenzhen year-on-year. The health of this pillar remains a top concern of the government and citizens alike. But is there a looming crisis? In the near term, the answer seems to be no.
China’s business world is littered with rags-to-riches entrepreneurs—Jack Ma, chairman of Alibaba Group, was an English teacher before starting Alibaba. Not all such magnates are equal, however, and joining Ma in the upper echelons of China’s rich list was Wang Wei, chairman of delivery and logistics company SF Express, who initially started out by lugging packages between Hong Kong and mainland China, operating in a legal gray zone as he did so. But now SF Express has grown to become the most successful logistics company in China. Listed in Shenzhen Stock Exchange in early 2017, the company has many competitive advantages over its counterparts.
Drone maker DJI made drones, once a high-end toy for rich niche hobbyists, into a mainstream consumer product. Begun 10 years ago in a college dorm room, the company now controls 70% of the consumer drone market. Xu Huabin, Vice President of the Shenzhen-based tech firm, explains how the company’s product-driven philosophy helped the firm grow from a maker of model planes to become the world’s largest commercial unmanned aircraft manufacturer. He also discusses DJI’s future plans for diversification and industrialization—to go beyond only making drones with cameras to developing drones with industry-tailored features for diverse customers including engineers and farmers.
Today, we pack more computing power in our pocket than it took to get to the moon, and we can send a message to anyone in the world in less than a second. We’re overloaded with information, and as a consequence, many of us feel more anxious, more distracted and less productive. Why? “Unlike computers, we do not have limitless storage nor do we have unlimited time”, writes Julia Hobsbawm in her book Fully Connected. As a social network analyst, she says that people today are struggling with over-connectedness and are searching for meaning. People need to look more closely at what she calls “social health”.
Silicon Valley may hog the artificial intelligence (AI) limelight, but Chinese companies are catching up by implementing AI technologies in real life. According to a McKinsey Global Institute research report, China is one of the leading global hubs of AI development and its advantages include the vast population and a diverse industry mix that has the potential to generate huge volumes of the data needed to feed AI systems. That population not only provides an enormous market for AI-related products, but also, with the large number of internet users, about 731 million, China generates more data than most other countries—a key to AI innovation.
The fourth industrial revolution (4IR) is “a fusion of technologies” that blurs the lines “between the physical, digital, and biological spheres,” according to Klaus Schwab, the founder of the Davos Forum. This fusion of so many fields will ultimately see 4IR change the world far more fundamentally than the first three industrial revolutions. Any analysis of the many technological breakthroughs that now define this new 4IR business world is incomplete at best if it misses the China factor. At the dawn of the 4IR era, China is much better positioned than in the past to seize the opportunities offered by an industrial transformation.
Many people in India still have the impression that Chinese products are cheap and of low quality. Yet India’s smartphone market is 51% Chinese, which may surprise many Indians. And it’s not just smartphones: More Chinese companies, from new tech firms to traditional manufacturers, are heading to China’s southern neighbor, along with many of the largest multinational enterprises. Companies like Ebay, Apple and Uber, have all targeted India as their next growth market. For Chinese companies, though, India market entry might not be easy. They have to face both their old competitors as well as rising local Indian firms.
A look at the China data you should care about–from China’s investment in an electric car factory in Germany to the 25,000 tons of avocado imports from Latin America. Plus, a look at China’s first homemade passenger jet, the C919, which took its maiden flight in May and seeks to compete with Boeing and Airbus; and technology giant Tencent’s USD 316 billion market cap, which makes it the ninth-largest listed company globally. More international trades are set to grow in the future: One Belt and Road Forum China signed more than 270 agreements with 68 countries and international organizations as China pushes its Silk Road revival.
Although official data for first-quarter GDP and industrial growth exceeded expectations, the industrial economy has not yet bottomed out, according to the latest CKGSB survey. The survey, led by CKGSB Professor Gan Jie, shows that overcapacity remains at a historical high, both in terms of its prevalence and severity in Q1 2017. As in 2016 Q4, rising costs have been the driving force behind rising prices. Among firms with product costs inflation above 5%, cost rises were the most prominent. Meanwhile, the advantage of state-owned firms over private firms has increased in recent quarters.
HNA Group is the most acquisitive Chinese conglomerate in China. Through acquisitions, the group quadrupled its size and made its debut on the Fortune 500 list as the world’s 464th biggest firm in terms of revenue. And it aims higher: becoming one of the top 10 by 2025 with holdings of $5–6 trillion in assets—more than double the assets held today by JPMorgan, the biggest bank in the United States. What is its business model like? How did the Group, which started as a small regional airline company in China’s southernmost island, with only two jets, make it? What are the risks behind the buying spree?
Some introverts dread small talk and trying to get to know strangers. But like it or not, networking is necessary. Research has found that regions with higher numbers of contacts per capita were more resilient to economic shocks during the Great Recession. Today, as we embrace all the advances in communication–with more online discussion and less face time–questions over the efficiency of online networking are being raised. Yet the trend is irreversible, and what we need to do is find out a useful role for this new way of networking .