China has caught up. At incredible speed. In what ways have they already forged ahead of the Western world?
Companies from the Far East are catching up in many industries. However, in no other industry have Chinese companies advanced as far as in the technology sector. The three online giants Baidu, Alibaba and Tencent are setting the pace. In China, they have developed with remarkable speed, not least because the Chinese government blocks competitors such as Facebook, Google and Twitter or makes it difficult for them to do business. However, Chinese corporations have now become so good that even companies in Silicon Valley are drawing inspiration from Chinese products. Some of the most interesting applications are found in the fields of mobile payment, online shopping and artificial intelligence.
What do the Chinese do better than us in terms of innovation?
Chinese companies have an immense location-specific advantage. China is the world’s biggest online nation. More than 800 million people in China are now online. And almost all online users speak the same language. This is a unique opportunity for companies to accelerate the process of making their products available to a mass public. In the early days, Chinese companies copied ideas from other countries. However, they subsequently improved upon them step by step. WeChat, for example, was originally a copy of WhatsApp. Nowadays, the Chinese program can do much more than the US model. Many Chinese use the app for every aspect of their online lives: from shopping through making phone calls to paying medical bills.
Have the Americans and Europeans lost touch?
No, not yet. When it comes to artificial intelligence, the USA is way ahead. In Europe, there are only a few really large online corporations. However, we have a number of strong midmarket companies. These are the ‘hidden champions’ that from their provincial locations have often developed the world’s best products in a specific niche. If they can rise to the challenges of digitalization, they will be able to move Europe a long way forward in the long term.
What does this mean for Europe in geopolitical terms? How should we organize ourselves?
We have to do all we can to make sure our companies remain globally competitive. There are numerous widely varying approaches to this. For one thing, I don’t believe that data protection is an obstacle. On the contrary, I expect that high standards in Europe could become a major selling point in the long term. This is one way in which European businesses could acquire global clients in the future.
Should we close ourselves off to investments and takeovers from China?
No, that would be wrong. Isolating ourselves wouldn’t achieve anything. In the long term, we can only hold our own if our companies remain innovative. It is wrong to assume that we can secure our future by blocking investors from China, for example. However, Europe should push for equal opportunities in China. It isn’t fair that Chinese companies can buy into almost all industries in Europe but many areas in the People’s Republic are taboo for investors from Europe.
Stephan Scheuer is now the technology editor for ‘Handelsblatt’, having previously spent five years as its China correspondent.
From the publication‘s central office in Düsseldorf, he writes about the global telecommunications sector, the IT industry and Chinese companies in Europe. He studied International Relations in Berlin, London, Beijing and Marburg.
Stephan Scheuer’s book ‘The Master Plan: China’s Road to Global High-Tech Dominance’ (currently only available in German) deals with the rise of China’s digital corporations.