In 2016, China became the first-ever middle income economy, that entered the top 25 of the global innovation index. As of 2017 they have moved up 3 spots and are currently ranked 22th of the world.
China used to be known as a country where copy right meant “right to copy”, this is however, no longer the case. China is now ranked 22th on the global innovation index published by the world intellectual property organization this all while being a middle income economy. Tech giants such as Alibaba and Tencent are not only leading the market within China but also abroad with most of their applications. If these companies do not sound familiar, it is definitely time to look into them.
Alibaba famous for its own commerce platforms and payments system has not only been bringing innovation. It has also connected companies and consumers in adopting these innovations. Alipay is a mobile payment solution that took China by storm, nowadays everyone with a smartphone in China has in some way or another been exposed to this payment application. Tencent was quick to follow with its own payment solution integrated with their Wechat application.
People are scanning QR-codes left and right to make payments, transfer money to their colleagues and friends with ease through Wechat and Alipay. If you go for lunch with your colleagues for example, you can easily split the bill. The stores can now focus on their core business instead of wasting time on payments, people simply pay by their apps.
What is more interesting is how quick these innovations have accepted by the Chinese. Not only by consumers but also by big companies as well as mom and pop stores. This is often the struggle with any technological innovation. In China it seems that innovation sees quick adaption, this is often not the case in other countries. The risks however, is that as quick as these innovations come they can also go just as quick. This is also because of how much power the government has in China.
What are the risks?
There are some dangers to this, one of these dangers is excluding parts of society. A concrete example to this are tourists and foreigners. In 2016, the Chinese taxi application Didi bought Uber’s China unit. Uber was available in China in English as well as Chinese, the Didi app however was only available in Chinese. Because of Didi buying Uber’s China unit, did it not only terminate a large part of the competition in China, it also started unintentionally to exclude non-Chinese speaking commuters. As we know, China quickly adapts to innovation, and so did the taxi drivers in the big cities of China. Which led to the problem that everyone needs to use an App in order to get a taxi, which now is a struggle for non-Chinese speaking visitors.
So yes, there are potential risks to quick adaption of tech and a mix of no competition and government power can be a dangerous situation. It does however, lay the perfect foundation for the rest of the world. Where first China used to follow, it is now shifting towards China leading and the rest of the world following.
During the 19th National Party Congress in China, which is currently ongoing, Xi Jinping has said that “Innovation is the primary force driving development, and it is the strategic underpinning for building a modernized economy”. So what can we expect in the coming 5 years, we have already seen self-driving cars from Tesla but no government is willing to give it the green-light, China might be the first to do so. Another one is block-chain technology and cryptocurrency, as we have seen, not only the people but also businesses are quick to adapt in China. This is what is needed for block-chain technology and cryptocurrency to truly find its flourish.