Tag: china

China goes on the tech offensive

The meeting between US and Chinese leaders later this month could mark the pivot of China’s economy

The most important economic relationship in today’s economy is that between China and the United States, despite bellicose chest thumping by both sides their wealth and well being of their industries is inextricably linked.

Against the backdrop of that chest thumping and a slowing Chinese economy, the Chinese and US Presidents are due to meet in two weeks time where trade and security relations between the two countries are at the top of the agenda.

China’s leaders though plan to emphasise their nation’s tech prowess and its importance to the US’s sector, something the New York Times reports has irritated the Obama administration.

What would almost further irritate the US leadership is that US tech giants including Apple, Facebook, IBM, Google and Uber have been invited to attend a Chinese tech summit hosted by Microsoft and the PRC President will be dining with Bill Gates before flying to Washington to meet Obama.

Redmond gets on board

Microsoft’s role in the China Forum is interesting, the company is extending the hand of friendship not just to nations but also to companies that were fierce rivals in the past, just last week the company announced a partnership with VMWare despite deep rivalry in recent years and CEO Satya Nadella is due to appear at next week’s Salesforce conference.

Coupled with Microsoft’s battle to keep offshore customers’ email records out of the reach of US legal jurisdiction, it’s clear Microsoft are playing a long global game with their business plans so the support of China’s initiatives isn’t surprising.

Given China’s strength as an emerging tech powerhouse and its administration’s ambition to move the economy up the value chain, it’s also not a surprise that other US technology companies are reluctant to join the politicians’ games.

Choosing Seattle

The choice of Seattle is interesting as well, while the city is a major tech centre with companies like Amazon and Microsoft based there, it’s far more integrated with the Pacific Rim economies than San Francisco and Silicon Valley. Again this is a loud message to the US tech community.

For China, the success of showing off their technological strengths is an important in sending a message to its East Asian neighbours and the US that the nation is diversifying and shouldn’t be underestimated, a process that Chinese Premier Li described as “a painful and treacherous process” at a World Economic Forum event in Dalian today.

The meeting between Xi Jinping and Barack Obama in two weeks time, and the associated events in Seattle, could well prove to be the marker of where China moved into the next phase of its economic development and its relationship with the  United States.

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Zooming ahead of the supply chain

China’s control of the supply chain gives its manufacturers a powerful advantage

One of the least understood, but most important factors in modern industry is the logistics of moving supplies to manufacturers and goods to market.

Mastery of the supply chain is one of the key advantages Chinese manufacturers have says PCH Industries’ CEO Liam Casey in an interview with Fortune Magazine.

Fortune describes how Casey has become the ‘go-to’ man for companies wanting to outsource their manufacturing to China, a process that can be steep learning curve for an inexperienced startup team.

Since first travelling to China twenty years ago, Casey has been studying how the country’s manufacturers operate and he believes they are “light-years ahead when it comes to the supply chain.” 

That strength is something that shouldn’t be underestimated by China’s competitors and western countries hoping to rekindle their manufacturing industries as Chinese costs increase, getting goods to market is as much an value add as making the products.

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Chinese companies fall out of love with America

Chinese companies withdrawing from US stock markets is bad for both countries

The emergence of Chinese companies and their listing on US stock exchanges has been one of the features of the country’s rise over the last decade.

Now Reuters reports the tide may be turning as disaffected Chinese companies shift back to local stock market listings to counter what they believe are under valuations from US investors.

Two of the notable things about the Chinese stock markets have been the lack of transparency and their volatility.

It may be the current attractive valuations are part of that volatility with the Shanghai Composite stock index having more than doubled this year as opposed to the S&P 500 being up a comparatively disappointing five percent.

For Chinese companies, the relative transparency and discipline of US market listing rules also promised to raise their internal management standards.

The US markets also gained from the Chinese listings as these cemented the nation’s position as the world’s tech centre, with the attraction of American markets fading an opportunity opens for European and Asian exchanges.

Overall, the withdrawal of Chinese companies from US stock exchanges would be a shame for both countries as it makes each of them stronger.

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Stemming the Innovation drought 

Science, Technology, Engineering and Mathematics studies are essential to the future economy a PwC study shows.

When discussing how industries are changing, the constant question is ‘what will happen to today’s jobs?’

Even in the Future Proofing Your Business webinar earlier this week this question was asked by a number of the small business owning listeners.

That concern forms the basis of the “A smart move: Future-proofing Australia’s workforce by growing skills in science, technology, engineering and maths” report released by accounting firm PwC yesterday in Sydney.

PwC’s report warns 44 per cent of current Australian jobs are at high risk of being affected by computerisation and technology over the next 20 years.

The report highlights that Science, Technology, Engineering and Maths (STEM) subjects are critical in the jobs that are going to benefit, or be created, by that technological change.

Finding the right courses

Sadly for Australia, and most of the western world, STEM courses are deeply out of fashion with students preferring to study in business related courses such as accounting, commerce and law.

As PwC flag, those industries are at risk with accounting at the top of the list for job losses.

Australian-industries-expected-to-be-disrupted-pwc

On the other hand, PwC forecasts professions in health, education, personal care and – worryingly – public relations will be in increased demand. Something that may underestimate the effects of technology on those industries.

Competing with STEM

PwC’s main contention is that economies which want to compete in the new economy are going to need more STEM graduates.

The shift to STEM education is something the OECD highlighted in its recent report, OECD report How is the Global Talent Pool Changing?

In their report the organisation forecast that the number of students studying around the world would increase from 130 million today to 300 million by  2030 with all of that growth being in Chinese and Indian STEM courses.

Already that science and engineering emphasis is clear in today’s numbers.

OECD-graduates-by-field-of-education

To counter the drift away from STEM courses among students, PwC suggests a campaign to engage young people while they are still at junior school.

The Australian conundrum

Sadly, that’s unlikely to work in Australia given the nation’s economy is built upon property speculation driven by the wealth effect of rising real estate prices.

Two nights before the PwC report one of the highest rating shows on Australian television came to its 2015 finale. The Block, which features couples renovating and flipping properties, finished its season the apartments being sold at auction at record prices and the contestants pocketing between 600 and 800,000 dollars for a few month’s work.

For young Australians the message from their parents and society is clear; don’t innovate, don’t create, just buy as much property as you can afford.

In the US on the other hand, the business heroes are the builders of new enterprises; people like Steve Jobs, Elon Musk, Bill Gates, Mark Zuckerberg and the founders of Google.

Other countries like Israel, India and China, are aspiring to be the next generation of tech leaders. That’s what’s necessary to build a dynamic economy.

Creating enduring jobs

As the PwC report claims, “the jobs most likely to endure over the next couple of decades are ones that require high levels of social intelligence, technical ability and creative intelligence”

Harnessing that combination of social, creative and technical intelligence is going to be one of the challenges for all economies in a decade of change.

Getting the supply of STEM skills right will be essential for success for all countries at a time when digital technologies will drive most industries.

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Apple keeps ticking over

Once again Apple beats the market and shows the way to its competitors

Once again Apple keeps surprising the market with Apple second quarter results beating the analysts’ estimates roundly and putting the company on track to becoming the first US corporation to have a trillion dollar market valuation.

Coupled to nearly fourteen billion dollars in profit for the last quarter is that the company is looking to return $200 billion of cash back to shareholders.

A particular high point in Apple’s results are its China sales with the company showing seventy percent year on year growth, showing it’s possible for western companies to sell into the PRC.

Those results are from iPhone sales and, given the Chinese smartphone market is ruthlessly competitive, it puts the managers of all US and European companies on notice that there are no longer any excuses about not performing in the Middle Kingdom.

Another key takeaway from Apple’s results is the tablet market is limited with iPad sales down 23% compared to last year.

The question now is how big are watch sales going to be? It may well turn out that the Apple Watch is similar to the iPad – a market defining product but one that isn’t the company’s mainstay.

Regardless of how well the Apple Watch, the iPad or the iPhone’s Chinese sales perform next quarter, it’s safe to say Apple will probably break more records over the next year.

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Hydrogen trams take to the street

A Chinese hydrogen powered tram shows how cities and energy use are going to change

China doesn’t have many trams but that might change soon as the coastal city of Qingdao rolls out their new streetcar system.

What makes Qingdao’s system particularly notable is the trams will run on hydrogen with water being the only by-product of the vehicle.

The Qingdao city leaders hope the hydrogen trams will reduce the chronic air pollution the city, like most Chinese urban centres, suffers.

Should the trams be successful, hydrogen fuel cells will be another shift from mains electricity and motor vehicles. As we’re seeing, being off the grid might soon be a viable option.

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Prefabricating change in the construction industry

Prefabrication and 3D printing promise to radically change the construction industry.

One of the industries being dramatically reinvented by China is the construction sector as the nation’s demand on labor and materials puts stresses on the economy.

An answer local developers and builders have found to these constraints has been to turn to prefabricated construction.

While prefab building isn’t new, Chinese builders are pushing the techniques of designing, manufacturing and assembling the structures.

In Changsha, the capital of southern China’s Hunan Province, local construction company Broad Group built a 57-story building using 1200 in 19 days.

Coupled with large scale 3D printing and computerised design tools, the Chinese builders are redefining the construction industry with methods that are far more efficient and less labor intensive.

For companies, and countries, that depend upon the construction industry for employment and profit these techniques could be another disruption.

Again we’re seeing there are few industries immune from major disruption as technology changes business.

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