When it comes to deploying artificial intelligence, China is building a formidable early lead. That’s what the startling data from PriceWaterhouseCoopers’ (“PwC”) 2019 survey of 1,378 global CEOs points to.
Let’s start with what the survey says about the countries’ expectations for AI. Expectations matter, because expectations about impact drive investment. Chinese and American CEOs diverge significantly in their expectations for the impact of AI. 84% of Chinese CEOs felt that AI would have a larger impact on the world than the internet. Just 38% of American CEOs felt the same.
The survey also showed that, while North America boasts some of the world’s most elite AI research talent (Geoffrey Hinton, Yoshua Benigio, and Yann LeCun), China’s companies are ahead when it comes to AI implementation. 25% of Chinese business leaders said they had implemented AI broadly across their organizations, whereas just 5% of American CEOs said the same. PwC estimates that AI rollouts will add $15.7 trillion to global GDP by 2030. China will capture $7 trillion of that total, to North America’s $3.7 trillion.
In his book, Lee identifies four keys to China’s AI dominance: scrappy entrepreneurs, abundant data, AI scientists, and an AI-friendly policy environment. We’ll cover the first two in this blog, and dive into the latter two next week.
Let’s take that first one – scrappy entrepreneurs. China’s entrepreneurs grew up in the most cutthroat competitive environment, one where money is revered over the Silicon Valley obsession with “mission,” copying is commonplace, and the only way to survive is to constantly innovate on yesterday’s version of your product.
As an example, Lee describes Wang Xing, a Chinese entrepreneur who shamelessly copied Groupon’s business model, turning it into Chinese group-buying site Meituan. When the group-buying craze faded, Groupon did as well, to a $2.6 billion market cap in late 2017. Meituan, meanwhile, had developed an automated payments system that got cash into the hands of sellers faster, and expanded into dozens of new lines of business, from noodles to movie tickets to hotel bookings. Meituan Dianping was valued at $30 billion in 2018, making it the fourth most valuable start-up in the world. Chinese entrepreneurs are not content to rest on “one big idea,” secure in the knowledge that an army of patent lawyers can protect that idea, at least for a time. They are continually tweaking the product, or the model, to better meet customer needs.
Let’s move now to the second factor, an abundance of data. Once compute power and engineering prowess reach a certain level, quantity and quality of available data becomes the determining factor in the capability and accuracy of an algorithm. China has 5 times the US’ mobile internet subscribers and 5X the US’ active social media users. By some estimates, Chinese mobile payment spending outnumbers that of the United States by a ratio of 50 to 1.
In addition to the sheer volume of data, China also benefits from the ubiquity of WeChat, which, unlike Twitter or Facebook or SnapChat, has very broad applications to modern life. WeChat users is the “universal social app” in China, and is used for sending messages, paying for groceries, booking appointments, unlocking shared bikes for transport, and even paying taxes. It’s not an app, it’s an “operating system” for daily life in China. All of those transactions create data, the “new oil” which fuels AI algorithms and models, used to predict consumer behaviour among other things.
We are moving from an era of AI experimentation to AI implementation, and from the power of algorithms to the power of data. China is out to a commanding early lead. To catch up, North America needs to build mammoth, usable data sets that cross organizations while protecting user privacy, relentlessly improve the user experience, take more risks than corporations are used to, and establish government policies that protect user privacy AND encourage corporate investment in AI.