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4 Ways China Is Influencing the U.S. Tech Industry

Sep 13, 2017

The technology industry's future depends in large part on the relationship between the U.S. and China.

That’s one of the takeaways from a Mobile World Congress conference on technology and finance in San Francisco on Wednesday. Although companies in both countries compete against each other, globalization and improved wireless technology have linked businesses from the two countries in ways that haven't existed before.

Here’s a few highlights that show China’s explosive growth into a technology powerhouse and its increasing influence in the U.S.

1. A Chinese smartphone company wants to become better known in the U.S.

ZTE may not be a household brand in the U.S., but it’s one of China’s biggest telecommunications and smartphone companies. Lixin Cheng CEO of ZTE's mobile device business, explained how the company is trying to gain a bigger foothold in the U.S. by selling cheaper smartphones than Apple and Samsung. He cited ZTE's recent deal to be an official sponsor for the 2017 NBA championship team Golden State Warriors as one way it’s trying to become better known outside of China.

Despite increased competition, U.S. and Chinese firms are still heavily dependent on each other, Cheng said. For example, China’s mobile boom could not have happened without Google’s (goog) Android operating system, while the U.S.’s smartphone market couldn’t have taken off without Chinese manufacturing.

2. China’s wireless coverage is better than the U.S.

The U.S. may lead the world in tech research, but China has managed to build better wireless infrastructure that gives people Internet access in more places, according to several executives at the event. One reason is because Chinese telecommunications companies have an easier time building cellular towers, said Qi Bi, the president of the China Telecom Technology Innovation Center, a research unit of China Telecom. To build towers in the U.S., companies need approval from multiple government agencies, which he called “a big hassle.” China’s government, in contrast, lets companies build cell towers quickly, providing the country with 10 times as many towers than in the U.S., Bi said.

3. U.S. companies using cutting-edge tech to capitalize on China’s growth

For data crunching specialist Orbital Insight, studying satellite imagery of China’s mainland creates a new way to make money. CEO James Crawford said that his U.S. company has been using satellite images to identify oil barrels stored all over the world. By figuring out how many there are, companies and investors can get a better sense of the world’s refined oil supply. Crawford said his company trained its software, or neural networks, to automatically recognize oil barrels in satellite images. It then applied the software to satellite images of China and found 200 million barrels that were previously undiscovered.

Orbital Insight chart showing oil barrels in China. 

4. To fuel artificial intelligence, Chinese companies are hoarding data

China’s government said this summer that it wants to be the world’s leader in the red-hot field of artificial intelligence that has made it possible for companies like Google and Facebook (fb) to build software that can quickly translate languages and understand text. As Doug Makishima, the chief operating officer of U.S. wireless tech company Meeami Technologies, explained, the Chinese government is investing billions of dollars in companies like the search giant Baidu and China-based research institutes to help it achieve its goal. The next step, Makishima explained, is for these Chinese businesses to buy companies that hold tremendous amounts of data that can improve AI-powered software to be more efficient at tasks like recognizing people's faces.

He cited the China based biotechnology company BGI—formerly the Beijing Genomics Institute—as an example. In 2012, BGI bought a Silicon Valley DNA sequencing company, Complete Genomics, for $118 million. It wasn’t necessarily Complete Genomics’ technology and U.S. workforce that BGI was interested in. It was the company’s vast amounts of DNA data that could be used improve BGI’s AI capabilities, Makishima said.

Expect Chinese companies to make more of these types of data-acquisition deals in the near future.

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