 It will be my pleasure to introduce the first speaker of today. She's a journalist, she's a speaker, she's an author, she's a China specialist. She's done TV, she's done radio on this topic. I've seen her talk many times, so you have something to look forward to. Please welcome Christina Boto. Thank you. Thank you very much. It's my pleasure to be here. You heard a lot about pandas in Denmark recently, right? So I'm wearing this t-shirt today. So if you wonder what it's about, you can see here, they are programmed. They have a mission. These pandas, no, it's just a joke. Anyway, I'm happy to be here to share with you some of the insights that I found from the Chinese digital economy. I think here in Denmark and in Europe in general, when we want to prepare for the future, if we are a company or a government, municipality, whatever, we tend to look towards Silicon Valley. We look at Amazon, Facebook, Netflix, when we try to avoid disruption and prepare for the future. So my point here today is we have to look at China, because it's the largest digital economy in the world with 800 million internet users. That's more than US and Europe combined. That means if you win the eyeballs, the attention of Chinese internet users, you are extremely sophisticated and extremely advanced and extremely clever. Otherwise, they won't use your platform because competition is fierce. So I would like to give you some examples of that. And I would like to show you that China is also leading, actually, a world leader in the implementation of AI solutions. And I think it might surprise some of you that it's a fact. But it's a fact. And I would like to show you some examples of that as well. Of course, China has many challenges still, and there are actually many scary things going on. I think most sci-fi on Netflix are already outpaced by what's happening in the real life in China right now. So another reason to look towards China is actually to look at places we don't want to go, a kind of society we might not wish to have. So there are many reasons. And if we only look at Silicon Valley, I think we are standing with our back towards real development. So that's my point here today. I have been following development in China for 15 years now, since I was a very young business journalist. And I worked in China as a correspondent for three years. I came back to Denmark, and I wrote several books. And I've done radio and TV programs, et cetera. In 2006, I interviewed this guy. Do you all know him? Or maybe you know his company, Alibaba. So he is a Diagma, the founder of Alibaba. Do you all know Alibaba? Yeah. It's the largest e-commerce company in the world, not just because China has a lot of people, but because it's really sophisticated. They are actually leading in the use of AI and big data. They are extremely advanced in the customer segmentation. They even have a universe for elder people on Taobao, on their platform, where elder people can find special products that are suitable for elder people. And they actually designed a chat function inside this universe for elder people, where the elder person can contact his daughter, for example, living in another city, asking for advice about the products, and the daughter can even pay for the product. So this is what we call social shopping. That's a trend coming from China right now to the world. When I came to visit Diagma in 2006, it was very hard, because I was told that Denmark is a very, very small market, and it's not really interesting for Alibaba. So you need to bring some other journalists. So I actually invited a guy from Elmundo and Süddeutsch Zeitung, and we were three people going to Diagma's office. And he was very famous in China at that time. Now he's famous everywhere, since Alibaba was the largest IPO in the world in 2014. So he was quite eccentric, and he had a golf course, and he was like, what did you want to know? We were like, hmm. And I just remember it was such a weird experience, because he was talking about his visions for internet in China, and how China had 110 million internet users at that time. Now they have 800 million. And I remember that he was talking about how he would beat eBay in China first, and then he would beat eBay in US on their home turf. And I just thought he was crazy. But today, Alibaba is the largest player in the world. And Alibaba, of course, is leading a lot of the tech revolution, but there are a lot of other companies that are interesting to pay attention to. I also brought this photo just to remind all of us what kind of system China is, because when I was writing this book for the last two years, my first question was, what is driving innovation in China? Because I'm a journalist. I met the censorship, the surveillance, the human rights violations. I saw a lot of things during my many years traveling all over China, and to my surprise, it's actually the state, the communist state, that is the most important driver of innovation. Is that surprising? I think we are many people who would have thought that the kind of top one-party system, top management, top-down management, wouldn't really foster innovation. And the education system itself can only produce small robots that do exactly what they're told, right? This is the impression we have, but we must say now that China is leading in many of the new technologies that are currently shaping our world, and to my surprise, even social media. I mean, social media, how can a country with human rights violations and no freedom of speech, how can they produce more advanced social media platforms? But they can. We always hear that Facebook and Google and Twitter, everything is blocked in China. You need to use a VPN to climb the great firewall of China. So you have the kind of impression that since they don't have Facebook, of course they have other platforms that are like copycats, right? And they must be like lower quality, not as interesting. So if Facebook just got access to the Chinese market, I mean, if they censor the content, they are welcome to operate in China, right? The government just wants to have control over the data and control over the content. And even if they let Facebook operate in China, I don't think people would use it because they have more advanced, more sophisticated platforms. I also brought this photo because it marks a very, I mean, not the photo itself, but what's happening in this big room in Beijing. This was when China's President Xi Jinping changed the constitution in 2017 in October so that he could be president for life. Normally you could have two times five years, but he actually managed to make China less democratic. So just keep this in mind while you're thinking about what's going on in this country right now, which is about to overtake the US within few years in terms of the size of the economy. A lot of political influence because Donald Trump is very focused about US. So China is actually gaining a lot of influence, political influence all over the world also because money paves the road, for the investments paves the road, for political influence, but the remarkable thing that is happening right now is the tectonic shift where China probably last year overtook US as the country in the world that will invest most in R&D. And we didn't get the numbers yet, but it's predicted that it happened last year. So of course you will have a clash between US and China. This is the big power struggle and it's a big milestone in modern history actually happening right now. Of course, through the many years that I have followed Danish companies and European companies in China, I think what we have seen is that they are learning really fast. 15 years ago when I asked the leaders from Danfors, Grundfors, Vestas, other companies in China, how about your Chinese competitors and they were like, they are just copycats, we don't really pay much attention to them. When I asked them five years later, they were like, wow, they are fast learners. They are almost just behind us right now and they are extremely cheap. We really have to keep a good eye on them. And the next thing that happens is actually that we see another trend that Danish companies try to learn from their Chinese competitors in order to be competitive in China, which is a must win battle because it's the biggest market in the world for a lot of products. And so far what the Chinese have been extremely good at is what we call frugal innovation or low cost innovation, which means you have a product like this and you take features out of it to make it cheaper, different material, different features, and then it will be much cheaper, right? But they can do that in any product, any service. And I think most of us have the idea that this is not real innovation. They only take it in the market, especially after the financial crisis because of all those good enough products from China, which were maybe 40% cheaper than a lot of other products in the world market. They actually started gaining market shares all over the world. And that's a problem because a lot of front leaders in technology realize that people actually think these products are good enough, but can Chinese companies be more than just displaces? Are they also real disruptors? And I'd say before no, but yes, now they are. And now they are leading in all these fields and I think it's quite surprising, especially social media and e-commerce, new digital business models. To me it's really surprising this is happening in China. When you look at the areas where China is leading, of course you think they are copycats. They stole the technology, they hacked to get there, they violated IPR, yes they did for sure, a lot of bad things, but it doesn't change the fact now they are front leaders. And many of the products from China, high tech products are probably 20, 30% cheaper than Danish products or German products. And if they are just as good, you have a problem explaining why your product is more expensive. So yeah, there are different ways to deal with that but it's definitely a hard competition. I'll get back to AI. I would just like to say a few words about the Made in China 2025 plan. How many of you have heard about this plan? No, it's good, yeah, a few people heard of it. And actually it's extremely important this plan. China has a plan to become a world leader in all these areas in 2025. And if you look at a small country like Denmark, we are quite exposed because we are leading in co-bots, collaborative robots. We are leading in shipping. We are leading in green technologies, biotech, agricultural machinery. These are some of the areas that are like strength, strong position in the Danish economy. And now China says we want to become world leaders in 2025. So why should we pay attention to this plan? Because we know it will happen. Everything in history shows us they will succeed. So what do you do if you're in one of these areas? If you're an over-Nordisk or you're a MERSC, what do you do? Because you already face a lot of competition from Chinese companies all over the world, not just in China. So right now the environment in biotech for example is extremely open and welcoming in China because they need technology. They need to climb the value chain. They need more knowledge, they need more people, more talents. So they open the door and they make it much easier to operate and establish innovation centers. You can get tax breaks, a lot of things. So they really attract brains and money into these areas. And that's why it works so well. Of course this is also the reason, I believe the very reason behind the trade war between the US and China, it's difficult to accept because they have a lot of unfair and illegal subsidized for their companies, they have state banks that can help them expand all over the world. And yeah, this is something Donald Trump has right when he criticizes China, he's right. I mean, it's true, it's not a fair playing field. And now the EU agrees and says that and they actually succeeded two days ago when the EU met with China's premier, they actually succeeded to get China to admit that they have to change the regulations for investments in China, so it becomes easier for European companies, so that's quite good. It helps with Donald Trump's criticism. And here is a small sheet that shows how exposed different countries are to the Made in China 2025 plan. And as you can see, Donald Trump is complaining a lot about the plan. He even wants China to say goodbye to the plan because it's such a great threat. But you see, Denmark is more exposed and countries like, where's Germany? Here, Germany is very exposed, for example, right? So this is quite ambitious and it will happen. Now I would like to give you a few examples of the digital innovation happening in China. This is WeChat, how many of you know WeChat? Do you use it? How many use it? A few people, maybe you have contacts in China or relations you need to contact people. You have to use WeChat. So it's the largest social media platform in China and it has more than one billion users in and outside China. And it's one and all app where you can order a taxi, you can pay your bills, you can transfer money, you can invest your money, you can even book a doctor, you can book different tickets. And Chinese people spend more than three hours in this app every day. And it's developed by Tencent, the largest gaming company in the world. So they use that gamification abilities to make it extremely entertaining and very, very nice user experience and that's why it's so sticky. They launched WeChat Pay in 2013. They have now more than 600 million users. Alipay has probably close to 700 million users. So it has, you have two big mobile payment solutions in China now. Then they did something which I would call quite disruptive. They launched mini programs in January 2017 and mini programs is actually like an app store. So you don't need to leave the app if you want to have the new Tesla app. Tesla actually built a mini program inside WeChat. It loads quicker, it's easier for the user because you just need one app, right? Of course they have other apps as well but a lot of companies choose to make mini programs. And this actually kind of disrupted Apple's business in the largest smartphone market in China, right? Which is the world's largest market because what do you need an iPhone for if you don't need app store anymore? And also they don't take a percentage of the, I mean they just let you upload your mini program. You just need a third party to build it for you. So this is quite disruptive. And I would like to give you a short example of a mini program. This is a coffee concept. In China, Starbucks is quite popular and Starbucks is like everywhere in the world. You go into a small or big outlet, you get your coffee, you go to the counter with your receipt and then you get your coffee, right? And they are like, I mean this concept works all over the world, of course it works in China. But Chinese urban citizens, maybe they work on the 40th floor and they have to cross eight lane streets to go to Starbucks, right? So they are willing to order it online and pay to get it delivered. But Starbucks never offered this service. So this company called Lianhua Coffee, they actually made a platform for like coffee drinkers who likes the premium brands from the west like Custer Coffee and Starbucks. So it costs you five Kroner or Remenbi, it's almost the same to get your coffee delivered and it doesn't matter if you pay 36 Kroner for a coffee. Anyway, right? So what they did, when they have millions of users on this platform, they realize now we know who likes to drink expensive and good coffee. So of course they launched their own brand called Coffee Box and Coffee Box is like a box where you can get a muffin and a bottle of water and your coffee and of course it's delivered and the day they launched this products they told all their users you can try this new coffee and it will cost you five to get it delivered if you want Starbucks it costs you 10 and then they got a lot of users. But they are really smart because it's a mini program so it's viral, it's a new thing and everybody talks about it. So they launched a virtual coffee shop in the mini program. So me as a user, I can build my own coffee bar or coffee shop in the mini program with my own design and my own front end. So I have my own shop now and I can choose the products I like to sell to my friends on WeChat. This is so smart because it makes everybody talk about this new coffee and why would people sell coffee to their friends in order to earn maybe like 10% of a cup of coffee. So you have to sell several cups before you get a free coffee. But it's not about that, it's a game. It's because it's really funny and it's also because they like coffee of course. But another thing is if you're really popular like me, I love coffee, I'm sure I could be a really good coffee seller. And I would talk about what kind of products I had and why I like them, why people should try them. And then if I sell a lot, actually I get access to the secret products that the other people don't have in their shop. So this is like a video game, you get the secret weapons, right? So again, gamification and one million people chose to build their own coffee bar in one day. So this is really smart and it's also what we can call social shopping again. So now I would like to talk about China's plan. There are many examples of this but I don't have time for more. But I would like to spend the last minute about AI because China wants to become a leader in AI in 2030. And how many of you believe it will be doable? You are convinced? Yeah, because they have a very clear plan and they have billions, billions, billions of dollars and they have power and they have the will to do it. So they will do it. What they don't have, I mean, their research and development is at a lower level for sure. Even though Chinese scientists are now, researchers are now being quoted in international magazines. This is new science magazines but they still lack in that area. They have less talents, they have less companies in the field but what they do have are the things that I listed there. They have lots of money, talent programs and then they have big data. I mean, if data is the new gold, China is the huge, I mean, the biggest gold mine in the world with a population of 1.4 billion people and no data privacy, no GDPR, can you imagine? And also not a lot of ethical barriers. Of course, there are intellectual people in China talking about these things but for most people, they just look at what's convenient in their life and if it's convenient to pay with your face, like Jack Ma, actually I forgot to say in the first slide with his phone when he was scanning his face, that was in order to log into Alipay, the mobile payment system and pay with your smile or pay with your face and people choose to do that. They already have a lot of experience with drone delivery. JD.com is Alibaba's largest competitor. It's number two in China. They have a two and a half year experience with drone deliveries in three provinces. So that's quite a big pilot. And I think we have to look into what's going on there instead of just waiting for Amazon to launch or to get their license in the US, right? Of course, they are willing to take a risk in China. They are simply not as afraid that someone will get this drone in their head and we cannot compete with that because of course, we should be very careful with those things but what we could do, we could learn from the ideas about doing more pilots instead of making everything illegal before it actually started or before the technology developed, right? So yeah, but they always had this strategy that first they let the technologies lose and then they regulate. If there are too many problems in the airspace which there were, they make a regulation about how you can fly and when you can fly, et cetera. China built the first AI hospital in the world. iFlyTake is one of the leading companies in the world in object recognition and voice recognition. They have a hospital now where they diagnose cancer with AI and they get, I mean, it's huge. So they collect so much data every day and train the system. They have a face recognition in class care systems. Can you imagine your students here? Can you imagine if you have to sit in your seat and think about how I look because if I don't do like this several times every day, I get a bad score. So it's all about six different gestures in your face and if you're sleeping. I mean, this is really scary and it's happening. It's quite new, but it's happening. And this is from the subway in Shanghai where Alibaba Cloud actually launched a solution where you can use Alipay to pay for your ticket, of course. And like in Copenhagen Airport, you can have a barcode, you scan and you go through but now you can log in with your face and identify yourself with your face in the subway and also with your voice. And if you ask Chinese people, why would you use your face, the government will know exactly where you are all the time like in which compartment you are, right? And they're like, can you imagine how many people there are? It's the largest subway system in the world and it's just so crowded. I'll do everything just to make it more smooth and more quick. So you have to think about Chinese people are probably more willing to give their data, not for everybody, but in general, they're used to being surveilled since the Communist Party took power in 49. They have been surveilled, all of them. It's just very sophisticated, digital solutions. Now, before it was just a book, right? A last example, in public toilets in Beijing, they now use face scanners. So if you want a piece of toilet paper, you need to scan your face and then you get 60 centimeters of toilet paper. And if you want another piece, you have to wait 10 minutes and you can use the same face again. And it is funny, but it's actually quite thought-provoking. Think about the scale of technologies like this. Can you imagine how many they use all over China when they found out how much money they save on toilet paper? Which they do. So this is about big scale. It's exploding right now. There are so many use cases and they don't have to ask anybody. They just do it, right? That's why China is moving so fast in AI solutions. And I brought this photo because I want to remind you how many people there are in China, how many AI companies there are. It's just unbelievable. That's what I write in my book as well. It's like a tsunami, you know? So, and only the most, the fittest will survive, right? So the players that you will meet abroad, they will be very, very advanced. Mostly. But how can companies in Denmark, for example, or in the West, how can they compete with China when we don't have this environment? One area which I think is very dangerous is just to try to become cheaper, just reduce your cost. Another good road could be keep innovating, but that's also difficult, right? Or you could build strategic alliances with Chinese competitors or companies in order to win in new markets. Eiffel Schmidt, a leader in cement factory equipment, they did that because they can't compete with their Chinese competitors anymore, so they actually won a project in Qatar together with a Chinese competitor. So this is another model. Or you could tap into the ecosystem of China and take advantage of this special data environment, collect a lot of data, accelerate your technology, use it and the regulation as well. And then I think focus even more on putting human in the center of technology. We can discuss that in the panel discussion, what I mean by that, but I think this is one of our strength in this part of the world. Yeah, I think I'm done now. Yes. Thank you very much for listening. Thank you.