How China has become America’s equal, as showcased at a Harvard forum

by Robert Delaney / 25 April, 2017/ SCMP

On the campus of Harvard Business School this past weekend there was little doubt among corporate leaders and investors gathered for an annual conference that China had arrived as an equal to the United States.

Keynote speeches, panel discussions and a business pitch competition at the 20th annual Harvard China Forum convened under the theme “Sharing the Road Ahead” in English

This year’s thematic certitude differs from years past. Consider, for example, “Can China Lead?” in 2014 and “Building Chinese Confidence” in 2008. There were also previous themes suggesting the hopes of a country-in-waiting: “Unfolding the Chinese Dream” in 2015 and “Keeping Up the Momentum” in 2009.

Lei Jun, founder and chief executive of the Chinese smartphone maker Xiaomi, embodied the spirit of this year’s event. As he addressed the crowd of about 1,000 gathered for a standing-room-only opening ceremony, Lei articulated his business strategy based on technological superiority rather than the lowest price.

“Word of mouth can do the work of a marketing department if the customer’s expectations are exceeded,” Lei said, explaining that positive reviews for Xiaomi’s products have allowed the company to nearly eliminate the kind of expensive marketing campaigns that the world’s largest consumer electronics makers run. “It’s no longer just about cheap things.”

That has freed up resources to develop technical solutions that allow its products to compete with global brands and outperform them in some parameters. For example, Xiaomi’s Mi Band – a competitor to Fitbit’s fitness tracking band – is splash proof and can go as many as 70 days without recharging, which Lei claimed no competing products can offer.

Lei has reputable, third-party validation behind him. As tech news publisher CNET reported last year, Fitbit’s slice of the wearables market “took a nosedive” starting in 2015 because of demand for the Apple Watch and the Mi Band.

Now Apple may need to worry. During Lei’s presentation, he gleefully referred to a report on the website The Verge about Xiaomi’s launch of a bezel-free phone last year. The headline: “Did Xiaomi just pre-empt the iPhone 8?”

A strong focus on technology in recent years at the Harvard-China event reflects the importance startups now play in global economic leadership and explains why – at least so far – the two countries have managed to coexist rather than fight.

“Historically, whenever we see a new world power rising, there’s always a fight over geological or territorial resources, but this time it’s different,” said Zhang Shoucheng, chairman of Palo Alto, California-based Danhua Capital. Danhua targets early and growth-stage companies in sectors including augmented and virtual reality plus artificial intelligence.

“For the very first time in the history of the world we see the rise of a new power, which is peaceful because the resources we’re fighting for are intellectual and science and technology’s an endless frontier,” said Zhang. “I see nowhere else besides the US and China where technology is developing so quickly, but also wealth creation through technology.”

Influenced by the success of Silicon Valley giants like Google and Facebook, financing tech innovation in China has ballooned in recent years, making the US and China the world’s two largest venture capital markets.

Venture capital investments in China hit an all-time high last year despite a global slowdown, with over US$31 billion worth of venture capital pouring in through more than 300 rounds of investment, according to KPMG’s fourth-quarter Venture Pulse report.

Such robust investment has helped China take the lead in offline payments through apps such as WeChat and AliPay as well as other forms of online finance technology, allowing the country’s growing ranks of consumers to leapfrog the need to apply for credit cards. Read more…

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