The Forum for Partners in Iran's Marketplace

March 2021, No. 96

Trade & Business

The Chinese now have the first platforms for innovation and science competition.

China is a land of new developments; the pace of change is very high and many inventions are registered in the country every day and this issue has caused Silicon Valley anxiety and concern. According to the World Intellectual Property Organization in 2019, the number of patents in China was 58,990 and in the rival country were 57,840. This is the first time since 1978 that the United States has failed to register the largest number of patents. Interestingly, for the third year in a row, Huawei was able to acquire 4,144 patents against Qualcomm in the United States with 2,121.

China has become very powerful in the last decade. The Chinese have made the advancement and knowledge of science and technology the core of their strategy and development. Some media outlets have claimed that even China is looking to be able to choose English as its first language. Five years ago, out of the worlds 20 most valuable Internet companies, only two were Chinese, but today that number has risen to seven. By the end of 2019, China had 206 private startups worth more than $1 billion. The top voice recognition startup is also located in China with 700 million users. Thats almost twice as many as Siri Apple, which has 375 million users.

The Chinese now have the first platforms for innovation and science competition. At the International Aerospace Robotics Competition, the worlds longest university robotics competition, the top three were Chinese. In the most prestigious computer science competition for high school students, the International Informatics Olympiad, the Chinese won 84 gold medals and the Americans gained 52 medals. Achieving this success in these competitions shows the investment that this country has made in cultivating talents. Other major Chinese investments include the allocation of 2.2% of GDP ($496 billion) for research and development. In contrast, the figure for Americans is $549 billion. The annual compound growth rate in China between 2000 and 2017 was more than 17% and for the United States 4.3%. In 2018, Chinas venture capital reached $100 billion, compared to $130 billion in the United States. 

Return of the Elite

Following the global financial crisis of 2008, a significant number of Chinese engineers and entrepreneurs returned home from Silicon Valley. This group played an important role in the growth of Chinese technology companies. Currently, one in 10 computer science PhDs at US universities is American and two are Chinese. In the past three decades, only one in 20 Chinese students studying abroad would return to their homeland, but now four out of five are returning to China.

In 2016, China had 4.7 million graduates in technology, engineering and mathematics, compared to 568,000 in the United States. The country has a large number of large technology projects and a 15-year plan called China Standards 2035, which aims to set global standards for future technologies, and focuses on the development of G5 technology, artificial intelligence, electric cars, new generation networks (NGN), telecommunications and advanced robots. Other sectors include agricultural technology, aerospace engineering, high-speed rail infrastructure, synthetic materials, and some medical disciplines. 

With a population four times that of the United States; China has the largest domestic market for AI applications.

Artificial Intelligence Battlefield

In the 15-year plan, we should consider China as the world leader in artificial intelligence: A point that Elon Musk has also mentioned. He says Chinas future advances in technology and artificial intelligence could have a huge, not-so-interesting, impact on the US economy.

Artificial intelligence is growing rapidly in China. Until a few years ago, executives at major companies such as Google, Facebook and Amazon saw Chinese companies as inferior, but today everything seems to have changed.

Many believe that the future war will inevitably be based on artificial intelligence. Advances in artificial intelligence can change the shape of wars for future generations, and a country that can use AI well can be regarded the winner for years, former US secretary of defense Mark Esper recently told a National Security Commission conference on artificial intelligence.

With a population four times that of the United States; China has the largest domestic market for AI applications. The Americans recently formed a congress called the National Security Commission on Artificial Intelligence, chaired by Eric Schmidt (former Google CEO) and Robert Orton Work (former deputy secretary of defense) whose mission is to ensure US national security and use tools, especially artificial intelligence, to maintain global power and leadership. 

New Actors

China is moving at full speed. You may have heard stories about the speed of construction companies in this country: For example, building a 57-story skyscraper in 19 working days in 2015. China was once known for imitating and immediately copying everything in Silicon Valley, claiming that they wanted to launch native Facebook and Twitter, but today, according to experts, Facebook is imitating WeChat.

WeChat entered the market in 2011 and has one billion users in its own country, and it is estimated that its overseas users have reached tens of millions. Today, it is no longer recognized as a messenger and acts more like an operating system than an application. WeChat users do all their work in the program. WeChat generates revenue through commissions, and the goal is for users to be able to do whatever they want without leaving the program. Things like buying movie tickets and finding hospitals. But Facebook only generates revenue from ads, and users cannot do everything with Facebook. So we can say that WeChat is a few steps ahead of Facebook.

Huawei is another tech giant that is a tough competitor to major American companies, and Mike Pompeo calls it the arm of the Chinese government. Huawei has been operating in the UK for more than 20 years and wanted to take over part of the G5 network there, but the government refused to participate. In the future, all infrastructure and economies and, in a way, the whole of human life will depend on computers connected via the G5 network, and if someone wants to shut down this network suddenly, what should be done?

In 2012, the company was able to surpass its closest competitor, the Swedish telephone company Ericsson, and become the largest supplier of telecommunications equipment in the world, and in 2019, the second largest manufacturer of telephones after Samsung.

Huaweis headquarters is so large that employees have to use train to get to another building, and each of the buildings built for the company is based on the plans of a European city. About 180,000 people work at Huawei, and its gross revenue for 2019 was $100 billion. The company invests between $15,000 and $20,000 billion annually on R&D. The biggest problem for Huawei is that the United States intends to deal with them harshly, calling them its enemies and accuses them of cyber espionage because they believe the Chinese government is using Huawei for political and sabotage purposes.

Social apps in China have entered a new phase, perhaps it is an area where they have not yet overtaken their Western competitors, but they are moving in new directions, such as the TikTok app, which has become very popular in Europe and the Americas. The US government considers this program a serious threat to American users.

In April 2020, the number of TikTok downloads exceeded 2 billion, of which 165 million were from Americans. Many in Silicon Valley are concerned about the number of TikTok users and believe that the Western world should also be concerned about the country in which the company is registered. Despite the US governments opposition and challenges to the Chinese app, even some American politicians have used it for propaganda. Examples include Sabrina Haake, a former US Congress candidate, and TikToks prominent role in the 2020 presidential election. Now the political power of TikTok has attracted attention.

 What makes TikTok successful is a combination of short and compelling videos that have attracted so many young users so that about two-thirds of its users are less than 30 years old. This led users to use TikTok as a political tool. Although TikTok banned political propaganda last year, its content is increasingly politicized. Some users have claimed that disrupting Donald Trumps campaign in Tulsa was their work and through ticketing. They knew they did not want to go to his program, but they had reserved a large number of seats. To compete with TikTok, the Americans launched Byte and Instagram Reels, which were somewhat successful but still did not gain TikTok popularity.

The fact that these technology companies are involved in a geopolitical issue between the two superpowers cannot be ignored. It is clear that technology in the future will certainly be less dependent on Silicon Valley. The debate between Beijing and Washington for supremacy in this area is not just a matter of technology and innovation, but a matter of determining the rules of the technology world in the future.


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  March 2021
No. 96