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China Industry Update

China is seeing some exciting business developments

16Aug

China’s Push For Solar Power Dominance

As countries around the world were shocked by the news that Donald Trump was pulling the US out of the Paris Agreement, a few also saw the huge opportunities that this created, chief amongst them being the potential for Chinese companies.

At around the same time, China became one of the world’s most important solar power providers, switching on the world’s largest floating solar power plant in early June as the country quietly became the global leader in electricity generated through solar power. Given that 60% of all the world’s solar panels are built in the country, it is no surprise that China has cemented itself as a world leader in the field.

The rate of expansion is also impressive, with solar production currently making up just 1% of China’s total energy demand, but a recent government report claims that this number could grow to 86% by 2050. Many western companies are even looking to China for new business opportunities within solar power generation, given the country’s concentration on cleaning up its environmental image.

Apple Data Centre Opening In Guizhou

After seeing the sales of iPhones in China rocket in the past 5 years (although there has been a decline in the past few quarters) it is surprising that the California-based tech giant has never had a data center in the country. However, this will soon change as the Cupertino-based company is creating its first Chinese mainland data center in Guizhou in the south west of the country.

However, this move appears to have less to do with practicality and more to do with new cybersecurity laws passed in 2016, which dictated that all data created by Chinese users must be stored in China. With a market of around 1.3 billion people, it is no surprise that Apple saw this $1 billion investment as necessary in order to continue operating in the country. Although sales of the iPhone have dropped 20% in the last 5 quarters, it still represents 25% of the company’s total income.

Another interesting element of this move is that in addition to building the data center, Apple is also working with a working committee of Chinese government officials to oversee the data center’s construction and implementation. Given that they refused to unlock the iPhone of the San Bernardino terrorist Syed Rizwan because of data safety in the US, this intervention by Chinese government officials in the most sensitive data held by the company, shows how vital China is to Apple’s success.

AI Domination

China has definitely moved from a manufacturing economy to one more focussed on services and technology in the past decade, and it is quickly looking to become the dominant force for artificial intelligence in the future. Its concentration on this is perfectly demonstrated by a recent funding round by SenseTime which raised $410 million in July, which they claimed was the largest single round of funding for an AI company in history.

This has been helped by the huge numbers of software engineers in the country combined with over 750 million internet users and some of the best mathematical education in the world. These three elements combined is a real boon for Chinese artificial intelligence companies as they have so many people to test on and a large pool of employees to choose from in order to further develop the technology.

As has been shown with the claimed record funding, there is also a huge amount of money available to help develop the technology in the country, in addition to some clear government support for the endeavor. For instance, SenseTime has been developing its AI offering with the help of the Chinese police, who have provided millions of facial recognition scans to help the company improve its software.

State Owned Companies Aim To Improve With Private Money

In an interesting move, the Chinese government has continued with its attempts to reinvigorate stale state-owned companies through investments from private organizations.

The most recent example of this is China Unicom, previously China United Network Communications Group, which has raised $11.7 billion from a round of investments with some of the primary investors including private tech behemoths Baidu, Tencent, and Alibaba. This continuing flow of private money into state-owned companies has the potential to create some interesting dynamics in the country, with this move, at the very least, showing that the government is now willing to have a certain level of transparency for what have previously been relatively opaque state-owned entities. 

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