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⏮ [ Looking back at ] the rise of China

⏮ [ Looking back at ] the rise of China
Photo by Christian Lue / Unsplash

The last episode of this week's Looking Back series will be about China. How can I avoid this hot topic when seemingly everyone is suddenly starting to read the writing that was on the proverbial wall for the last ten years?

In 2019, I threw on the website 42 bullet points about the next steps in the global digital economy. At the time, I was foreseeing how the U.S., Euro, and Chinese internets were disconnecting from each other, creating different insulated bubbles of economic reality in a new global cold war.

My perspectives on the future of digital economy in 42 bullet-points – Innovation Copilots
I have been doing a lot of work on the future of the digital economy for various multinationals these last months. Part of the work is to map the key driving forces shaping the future of the markets. It’s not about checking the latest technologies hype because it’s

Interestingly enough, I never used the terms 'disconnect' or 'cold war' at the time in the article.

But the conclusions were pretty much on point, and notably about China:

(B) China’s long game was to pretend (still) to be the factory of the US and EU while building its supremacy, which will now unfold sooner than expected (thanks to Trump). They could be ready to cut most ties in tech and digital rapidly. Maybe too soon, and this could be an opportunity for the EU (thanks, Trump!). In any case, the EU has a card to play if not too caught up in internal bickering.

Years later, Europe has still its head so far in its digital butthole that it's not even remotely funny – but that's a story for another time.

If you're in doubt about how China is now positioned, the wake-up calls are now relentless:

China innovation now leads the planet, not California – Innovation Copilots
Among other things, China’s innovation now leads the on-demand mobility revolution with more and more electric vehicles and… bikes. While I was already forewarning my customers in luxury, automotive, energy, and retail for years, this is hopefully obvious for everyone. The country’s size, the prob…

Even branding, which was one of the remaining sore points of Chinese business culture, is leveling up across the board:

👟 China is getting good at branding – Innovation Copilots
In China Nike, Adidas, Mercedes, DolceGabana, and Dior are losing ground in favor of national brands. These brands are the canary in the coal mine of two things I’ve been explaining since Trump’s election in the U.S.: 1️⃣ The Chinese consumer is becoming increasingly proud of its national brands.

And still, most western companies installed in China are dealing with ongoing culture shock in this market:

How Samsung Lost China – Innovation Copilots
While being the uncontested leader in 2014, by 2020, Samsung had lost China entirely. From an 18% market share of the Chinese mobile phone market in 2014 to a measly 2% in 2018, by 2020, Samsung had virtually disappeared from the Chinese mainland market. What went wrong, and why should
💔 Another day, another western brand kicked out of China
Brace yourself for a 2022 year buzzing with western brands getting kicked out of China. If not directly, at least because of an overnight devastating consumer revolt on national social media. I’ve been explaining since Trump and even more fuelled by Covid-19 that the country was closing down on itse…
🔴 The war for coffee
The war for coffee supremacy has been fierce for many years in China, and it’s still heating up. Whether you’re in the food market or not, this is one of the best proxies to understand Chinese consumers and our global economy.

The reasons are numerous, but the pivotal one is, in my mind, how the Chinese deal with crises and change in a fiercely different way than us.

Americans think a stable world is normal. And so, when the world isn’t stable, then it’s a problem. And if there’s a problem, you solve it, and then you go on to something else. Chinese leaders think that resolution of a problem is an admission ticket to another problem. So almost every Chinese leader that I’ve ever met has wanted to think in a conceptual way of policy as a process rather than as a program. – Henry A. KISSINGER, 2016

Among all the world's changes, the digital economy impacted Chinese society probably more deeply and faster than any other one these last ten years. Leapfroging ahead of our norms and tech acumen, they shaped themselves with and around technology:

Alibaba, the Retail Operating System – Innovation Copilots
Even more aggressively than Amazon, Alibaba positions itself from an e-commerce platform to a full-fledged retail operating system. This is not so much about the shiny tech toys embedded in flagship automated stores but absorbing every mom-and-pop store with a fully integrated OS. This paints a fut…
Retail needs a digital wake-up call, but not the one you’re thinking about – Innovation Copilots
The digital wake-up call you need is maybe not the one you think. You are worried that you don’t own the platform where your customer experience and brand are dissected every second. But what is the option anyway? PR your way back to relevance? That’s the thing you
Demystifying China Social Scoring System – Innovation Copilots
I’ve seen and read a lot of nonsense lately on how China is building a global surveillance network of its citizens through social scoring. Truth be told, it is not a simple issue, and I was glad to get myself a better perspective on what it means through Rogier
📚 Blockchain Chicken Farm, by Xiaowei Wang
For many years, from luxury to automotive markets, I’ve been patiently nudging a few large western corporations to consider how Tier III and IV cities in China were the future of their market. FSG Originals | Blockchain Chicken FarmA New York Times Book Review Editors’ ChoiceFSG Originalsmore abou…

And while we are now heading into a future stamped by new crises, it's important to remember that the size of China, its volume of trade, and its gigantic digital network effects will still curve the worldwide economy around its gravity pull:

🤖 There’s a (giant) canary in the self-driving coalmine
With around 26 million inhabitants, Shanghai is the third-largest city in the world after Tokyo and Delhi, and it’s currently under a hard lockdown. Shanghai is also one of the most active digital consumer markets, spearheaded by numerous delivery and supply-chain innovators. One of them is JD.com…

What's next?

In all this, though, nothing is played. As much as the rest of us, China is not in it for a smooth ride for the next years. While still facing massive problems of its own, ranging from a poor response to the pandemic with a poor vaccine to titanic struggles with its own energy grid, a large part of its digital sector is now also struggling to a worrying degree:

Legendary China Bets Unwind as Buffett, SoftBank Sell (source Bloomberg)

Not long ago, I offered a few insights on how to hedge the risks involved with China both decoupling from and yet leading vast sectors of the global economy. I believe they are even more valid from now on:

🔴 Hedging the economic cold war China
In this article, I’d like to connect many dots I’ve been laying out regarding the future of China and what it now strategically implies for us in the West. You might have read a few things I wrote on this already, but I believe that the global picture is now apparent.

And in all this, let's also try to have some positive feelings about Europe. While we often play in the inferiority complex that the U.S. is feeding us, we are actually holding quite a few aces of our own...

🟧 Dutch week: ASML, the most strategic European giant you’ve never heard of
While most of you are probably returning to work this week, I’ve decided to share a few insights about the Netherlands’ tech, design, and innovation. As a country which is only twice as big as London, it makes few headlines, so this might be an interesting exercise. Here goes...