China’s digital economy: A leading global force

China is now a leading force in digital technology, including virtual reality, autonomous vehicles, 3-D printing, robotics, drones, and artificial intelligence. China accounts for more than 40% of the value of worldwide e-commerce transactions, up from less than 1% about a decade ago. China has also become a major global force in mobile payments with 11 times the transaction value of the United States.

Three factors are propelling the expansion of digital China and suggest that there is far larger upside potential for digital in China than many observers appreciate.

In 2016, China had 731 million Internet users, more than the European Union and the United States combined. Beyond scale, it is the enthusiasm for digital tools among China’s younger consumers that will support growth, facilitate rapid adoption of innovation and make Chinese digital players and their business models competitive. Nearly one in five Internet users in China rely on mobile only, compared with 5% in the United States. The share of the Internet users in China making mobile digital payments is 68%, compared with only around 15% in the United States.

The three Internet giants in China are Baidu, Alibaba and Tencent. They have been building dominant positions in the digital world by taking out inefficient, fragmented, and low-quality offline markers while driving technical performance such as computing efficiency to set new world-class standards. These companies have been developing a multifaceted and multi-industry digital ecosystem that touches almost every aspect of consumers’ lives. In 2016, Baidu, Alibaba and Tencent provided 42 percent of all venture-capital investment in China, a far more prominent role than Amazon, Facebook, Google and Netflix who contributed only 5 percent of US venture-capital investment in that year. Beyond China’s big three, other digital innovators such as Xiaomi and NetEase and traditional players such as Ping An are building their own ecosystems. China’s digital players enjoy the notable advantage of close links to hardware manufacturers. The Pearl River Delta industrial hub is likely to continue to be a major producer of connected devices because of its strength in manufacturing hardware.

China moved slowly to regulate the digital sector which gave innovators plenty of space to experiment. As the market has matured, both the government and the private sector have gradually become more proactive about shaping healthier digital development through regulation and enforcement. Today, the government is playing an active role in building world-class infrastructure to support digitization as an investor, developer, and consumer.

China has increased its visible presence on the global stage and is making an increasing impact on the global economy. China runs a trade deficit in services but a trade surplus in digital services. Over the past two years, China’s top 3 Internet companies made 35 overseas deals, compared with 20 by the top three US Internet companies. Chinese digital companies are also expanding business models outside the country’s borders, and sharing their technology with foreign partners. China is already more digitized than many observers appreciate and has the potential to set the world’s digital frontier in coming decades.

 

TALENT & TECHNOLOGY

Technology is changing the ways we live and work – the emergence of a ubiquitous internet, connected objects (e.g. self-driven cars), digital technology, robotics and virtual teams working from remote locations. They are affecting the world of work so deeply. Talent readiness and talent competitiveness will largely determine which economies will be leading in the race to turn technological advances into job creation.

The effects of technological change are increasingly impacting talent competitiveness. Jobs at all levels are being replaced by machines, technology is also creating new opportunities. However, people and organisations will need to adapt to a working environment in which technology know-how, people skills, flexibility and collaboration are key to success. Horizontal networks are replacing hierarchies as the new leadership norm.

Governments and business will need to work together to build educational systems, change ways of working and re-engineer talent attraction policies. But our school system, dating from the factory age, prepares our children for routine work rather than for creativity and projects, also neglecting to foster the learning-how-to-learn mentality that is needed in a world where people will have multiple careers during their lives.

The Insead Business School has recently released their fourth edition of Global Talent Competitiveness Index. Switzerland and Singapore occupy the top spots in 2017, with four Nordic countries in the top 10 (Sweden, Denmark, Finland and Norway). The United Kingdom and the United States rank third and fourth respectively.

These countries share key traits, including educational systems that meet the needs of the economy, employment policies that favour flexibility, mobility and entrepreneurship, and high connectedness of stakeholders in business and government.

The fast advance of automation and artificial intelligence is the source of the most disruptive changes of our time in the way we live and work. The transition will be rocky, so governments and business must act.

Education system reforms are urgently needed to provide the right technical and people skills, and the ability to adapt to change. As a multi-career reality becomes the norm, workers must boost employability by committing to life-long learning. At the same time, employment policies must combine employers’ need for flexibility with social protection.

Technology is having a profound impact on the nature and structure of work. In this digital era where work is constantly evolving, a premium is placed not on employees who possess the highest level of technical competencies, but on those who have the ability to learn and re-learn on the job. Many employees will find themselves facing technological and structural unemployment if they do not re-invent themselves.

Successful transformational change is most likely to occur where there are strong ecosystems. Cities and regions are showing the way in talent competitiveness because they enjoy a higher level of higher financial independence and economic growth rates than the countries in which they are located and have more agile decision making and innovative branding abilities. The top ten cities combine high quality of life, high connectivity, and high levels of opportunities for international exposure and careers.

The Insead Report offers an interesting picture of a world in which talent moves not only from country to country but also from city to city, often across national borders. Cities are hence emerging as global players on the talent competition scene. The rankings show that although megacities such as San Francisco, Madrid or Paris are among the leaders, smaller cities such as Copenhagen, Zurich, Gothenburg, or Dublin are competitors to be reckoned with. They are cities where talent can find excellent career opportunities, good connectivity (broadband and transport) and a high quality of life for themselves and their families.

Many small cities amongst the top performers have less than 400,000 inhabitants. Top performers combine the best of both worlds (high quality of life combined with opportunities for international exposure and careers). Interestingly 3 Scandinavian cities feature in the top 5, having benefited from concerted strategies for attracting and retaining talent.

Technology and hyper-connectivity are already changing the nature of work: along with demographic, economic and social factors, they are driving the rise of a more independent and dispersed workforce. Flexibility is the watchword of our age, as we are shifting from an environment in which work was based on traditional (salaried) employment to one where 30% of the USA and European working population are free agents. Foxconn the mega supplier of Apple has already replaced 60,000 of the 110,000 workers at its giant plant near Shanghai by deploying thousands of industrial robots.

Technical skills plus social/project competence are crucial for the new talent profile since innovation increasingly comes from collaboration. As the world we live in is so unpredictable, young people must be empowered by ‘learning how to learn’, along with creativity, problem solving and communication skills. Curricula must consist of experiential and project based approaches, including work-based training opportunities, such as apprenticeship systems. In a multi-career age, moreover, life-long learning is a must.

We are experiencing a profound transformation of society, organisations, careers, education and employment. Organizations are becoming flatter and interconnected; results and collaboration win over authority and hierarchy and a ‘multi-career’ has become the norm.

 

Why all the noise about Coding?

Programming languages are shaping business in this century and well into the future. Today’s pre-collegiate students are the super tech-savvy Generation Z, the pioneers of the future’s digital workforce. In a world where business innovation will be formatted in code, the languages influencing business in coming years will include Objective-C, JavaScript and Python.

Jeff Immelt, Chairman & CEO of GE, explains why. He is transforming GE into the world’s largest digital industrial company to one that is focused on decentralized decision-making, speed and startup-like mentality.

“The Industrial Internet and the economic potential of connecting a locomotive or a jet engine to the cloud has much more potential than the consumer internet! We can now use software and analytics to unlock the incredible value of machines and increase productivity, something that wasn’t available before.

How will GE will get there? “Our culture. We may be a century-old company, but we need to move quickly, take risks, fail fast and behave like a startup to keep winning. I joined GE 34 years ago, and until recently our management could make every decision in the headquarters. Those days are over. We have to embrace decentralization and use technology to help our people to stay connected and allow more automated decision-making so you can look at an app and see what’s going on inside the company.“

“But culture is not just apps. It’s a combination of people and technology. If you are joining the company in your 20s, unlike when I joined, you’re going to learn to code. It doesn’t matter whether you are in sales, finance or operations. You may not end up being a programmer, but you will know how to code. We are also changing the plumbing inside the company to connect everyone and make the culture change possible. This is existential and we’re committed to this.“

“GE is giving up employee ratings, abandoning annual reviews and rethinking the role of HQ“

“Culture and attracting the right talent are also why we are moving from suburban Connecticut to downtown Boston. It’s an ecosystem made by and for innovation. In Boston, we can be challenged by a doctor from Massachusetts General or by a student from MIT. We need to be in this environment.“

“We are also changing the way we evaluate our people. We’re trying to end anything that was annual or quarterly and make everything more real-time. We wanted to make the feedback process more like how we give each other advice in the real world. Instead of an annual review, we have an app PD @ GE where our people are getting continuous insights from their colleagues that they can use to get better every day.“

President Obama in his final State of the Union Address highlighted the need to invest in computer science education and outlined plans to help students learn to write computer code in hands-on classroom lessons “to make them job-ready on day one.“

Many of the US’s largest public school systems have announced their intentions to expose students to computer science. Currently in the U.S., only one-tenth of high schools offer a computer science course and this does not factor in middle and elementary schools.

President Obama has asked the U.S. Congress to fund a $4bn program for states plus $100m for districts to train teachers and get the necessary tools for elementary, middle and high schools to provide computer science classes

Schools globally need to teach modern students how to handle data, integrate that data into applications and understand strategies to solve problems related specifically to software. There are already areas in which computer science education is noticeably hamstringed, such as a serious skills gaps and a slim talent pool for IT departments.

The recent Oxford Economics global survey of senior business and technology executives found that 78 percent of enterprises believe the shift to becoming a software-driven business will be a critical driver of competitive advantage.

The C–suite faces a situation where their kids will know more about code than they do!

In this era of digital transformation, businesses will have to engage customers through new channels using apps and multimedia content. This is driven by trends in mobile, multichannel and transforming social digital landscapes. Being able to read, understand and use code will be fundamental to creating and integrating those content formats, and today’s students will be responsible for doing so.

Generation Z will need be equipped with the knowledge and abilities to compete in the job market, especially as more companies are digitally transforming their businesses. Students need to be consistently exposed to computer science programs at a young age, instilling coding proficiency that grows as they do. A student who knows how to write code will become an employee who is fluent in business and be a very valuable company asset. English may be the world’s spoken business language, but code will be where business innovation is born