Living in China in the early 2000s changed my perspective. I saw firsthand that the outside world’s view–China was good at copying but bad at innovating–was simply wrong. While many were focused on the low prices of Chinese imports and those eerily similar Chinese knockoffs of beloved Western gadgets and appliances, it was clear to me, from meeting companies like Baidu and Huawei, that something tectonic was happening. China, it turns out, was building a global artificial intelligence empire, and seeding the tech ecosystem of the future.
A.I. isn’t just another tech trend. Within a decade, all technologies–from everyday business to genomic editing–will in some way touch A.I. Today, China is poised to become its undisputed global leader, and that will affect every business.
Under President Xi Jinping, China has made tremendous strides in many fields, but especially in A.I. Businesses and government have collaborated on a sweeping plan to make China the world’s primary A.I. innovation center by 2030, and it’s already making serious progress toward that goal. That plan is unlikely to be repealed by a new government; this March, China abolished Xi’s term limits and will effectively allow him to remain in power for life.
That gives China an incredible advantage over the West. It also gives three of China’s biggest companies–Baidu, Alibaba, and Tencent–superpowers. Collectively, they’re known as the BAT, and they’re all part of that well-capitalized, highly organized A.I. plan. The BAT are important to you even if you’ve never used them and don’t do any business in China.
That’s because the BAT are now well established in Seattle and around San Francisco, and are investing significantly in U.S. startups. That’s attractive to those startups because a BAT deal typically means entrée into the lucrative Chinese market, which can otherwise be impossible to penetrate. Take Zoloz, the Kansas City, Missouri-based face-recognition startup bought by China’s Ant Financial for an estimated $100 million in 2016. It became a core component of the Alipay payment service, and thus immediately gained access to hundreds of millions of users–without having to contend with strict European privacy laws or the threat of privacy lawsuits in the U.S.
Getting a foothold in the Chinese market is a dream for any business. But keep in mind that, in the age of A.I., businesses that can use machine and deep learning techniques to mine, refine, and make products from data culled from all areas of operation–from customer service to employee productivity–will gain a big edge. And access to the Chinese market for U.S. startups comes at a steep price: their business data. With that, and the data from China’s almost 1.4 billion citizens, the BAT could soon command what’s perhaps our most valuable resource–human data–without the privacy and security restrictions common in much of the rest of the world. In other words: If data is the new oil, China is the new OPEC. It will soon wield tremendous influence in global digital commerce, autonomous vehicles, and a renewed race to outer space.
It’s true that China has failed at times to deliver on similarly bold investments. (The development of China’s high-speed-train network had a history of death and catastrophe.) That may be why we haven’t taken Chinese A.I. startups, researchers, and government initiatives as seriously as we should. While we shouldn’t expect–or want–the U.S. government to model China’s example and dictate A.I.’s future, public and private sectors should coordinate on educating leaders about A.I. and writing policy that helps A.I. businesses thrive.
There’s a Chinese proverb that roughly translates to “Forewarned is forearmed.” Now that you know what’s coming, reframe your thinking of China as the world’s factory. Be wiser about entering partnerships. Above all, get up to speed on what A.I. is and isn’t, and the impacts it will have on your company.
From the September 2018 issue of Inc. Magazine