PERSPECTIVE: China's Digital Technology From Copycatter to the Copycatted (Part 2)

Part two of the two-part perspective on China's digital trends and the shift away from the copy-to-China mindset with super apps like WeChat.

Steve Kanaval
    Jul 12, 2019 4:00 PM  PT
PERSPECTIVE: China's Digital Technology From Copycatter to the Copycatted (Part 2)
author: Steve Kanaval   

Click here for Part One of the story on digital trends in China, published July 11.

With funding from SoftBank and Sequoia Capital and an estimated valuation of $75 billion, ByteDance's flagship app is actually Jinri Toutiao, an AI-generated news aggregator, and even after launching in 2012 it still boasts millions of active daily users. The company has also used this same AI-aggregation style for apps in India like Helo. TikTok uses this same AI technology across the app to improve user experience and keep users coming back.

 "Artificial intelligence powers all of ByteDance's content platforms," a spokesperson from ByteDance told The Verge last year. "We build intelligent machines that are capable of understanding and analyzing text, images and videos using natural language processing and computer vision technology. This enables us to serve users with the content that they find most interesting and empower creators to share moments that matter in everyday life to a global audience."

And, like WeChat, TikTok has been ripped off by Facebook with the Lasso video, a 15-second short-form video platform. 

But what Silicon Valley companies should be more concerned with is the global rollout of super apps rather than just the impressive rise of TikTok. 

Grab, a transportation and financial services super app, and Lazada, an e-commerce giant, are both rapidly expanding across Southeast Asia. Grab recently received a $300 million investment from Invesco, and, based off reports, will use the funding to add movie streaming, cinema booking and hotel booking to its already popular app. The company also was able to invest in Ninja Van, a Singaporean logistics startup, that will create Southeast Asia's largest logistics network and Ninja Van will also adopt GrabPay, the super app payment platform.

Another area where Chinese digital innovation is surpassing the U.S. is education. 

Meeker's report mentions this briefly, but VIPKid is certainly a company to watch. The Chinese unicorn connects Chinese pupils to fluent English speakers in the United States and Canada. Teachers can work anywhere and any hours they choose. Most work 10 to 20 hours per week and earn $14 to $22 per hour. Founded in 2013, the company's growth has skyrocketed with more than 500,000 students and 60,000 teachers on the platform. To compare, in 2015, the Beijing-based startup served just over 3,000 students.

In November 2018, at a CNBC East Tech West Conference in Guangzhou, VIPKid's Cindy Mi said: "The limit is, as a platform, how we can maintain the highest quality possible where we are undergoing this rapid growth (and) how we can stay focused on quality and learning efficacy when we are learning with so many teachers." 

Mi started the company after learning how enthusiastic Chinese parents were about English language acquisition but realized there were only 27,000 English teachers in the country, which is not enough to service Beijing alone.

"About 50 percent of the communication is nonverbal," explained Mi in the same interview. "It takes about three classes to get used to teaching online." A little practice results in great student interaction. Valued at $3 billion, VIPKids is looking to implement new technologies like virtual reality and augmented reality into its platform for more rich instruction. 

Go have a look at WeChat, or TikTok, super apps defined by a seamless, unified experience with major online hubs with different interfaces making China's unified experience a cat copied by the west.  This is a sign of maturation for the global economy as software integrates online goods and services regardless of language, culture, government, or demographic.

(The opinions expressed by contributing analysts do not reflect the position of CapitalWatch or its journalists. The analyst has no positions in any stocks mentioned, no plans to initiate any positions within the next 72 hours, and no business relationship with any company whose stock is mentioned in this article. Information provided is for educational purposes only, may be incomplete or out of date, and does not constitute financial, legal, or investment advice.)