Twenty years ago China was already an export juggernaut but it was difficult to see it becoming a consumer powerhouse. It did not have credit cards, banks were backward in their technology, there was no credit rating system, and above all there was no delivery system for internet shopping – no UPS or FedEx.
Well fast forward twenty years and wow, things have changed. China is leading the world in many consumer internet applications. Tencent’s WeChat has wrapped Facebook, Twitter, gaming applications and Skype all into one. I wouldn’t be surprised if Facebook copies WeChat in the future. In internet shopping, Alibaba handles more purchases on Singles Day on November 11 (get it – 11/11?) than anyone else does on any day anywhere. Singles Day dwarfs Black Friday. And in logistics, JD and Alibaba have cobbled together an incredibly efficient motorcycle and small van delivery service that rivals UPS and FedEx.
China is not perfect; its economy could stumble big time if housing collapses or its high debt overwhelms the system or the government is not able to continue stimulating as effectively as it has, but right now China is leading the pack in so many areas. Take a look at the chart below. Chinese universities have quietly but rapidly come on strong in STEM research and are rivaling the best in the world in the number and quality of scientific research papers. Critics say that a lot of Chinese research is fake and in some cases this is true. Another criticism is that Chinese research is incremental, advancing in small steps just so the authors can get published (and rewarded). Where are the big thinking, Nobel Prize winning Chinese, the critics argue? Incremental is incremental but I wouldn’t be surprised if small steps translate into big leaps in the not too distant future.
China is also innovating at lightning speed in the consumer sector. Take a look at the graphic below. The Chinese have far less fear of privacy issues than we do in the West and accordingly they are leading the way in things like facial recognition. Another crazy technology leap is a car shopping experiment in Guangzhou where cars are stacked in an elevator automat system. You put in $50 and the elevator lowers a specific model for you to try for three days. No humans on site. So keep an eye on China. It might just be our future.