Bertrand Barthélemy's Blog

China is a modern country

In May, I went to Beijing and Shanghai.
It was modern. Large avenues, superb subways, a forest of skyscrapers in Pudong.
The fastest train in the world: it attained 437km/hour when I reached the airport on board of the magnet train.
But I thought it was only the big cities.

In August I went deep in the country: 250 kilometers inside.
I was driven on  4-lane highways. I saw factories and modern housing along the 250 kms.
I visited Nanjing which is still a Tier 2 city, and Kunshan, a small town.
It was not as modern as in Shanghai or Beijing, but it is much more modern than Bangalore. And in some offices, it is state of the art in terms of technology. For example, I saw the equivalent of the Cisco “Telepresence” equipment in Kunshan….

Even Chinese local authorities are investing for tomorrow

...And that’s not the end of the story.
At county level, some mayors decided to prepare for the future.
I spent one day in Kunshan, 30 minutes from Shanghai domestic airport.
This small (1,3 million inhabitants) town is the heart of the laptops manufacturing: 40% of the world laptops production  is made in Kunshan).
But they forecast that the vicinity of Shanghai in the long run is going to hurt their cost competitiveness in manufacturing. They made the decision to move all the laptop factories further West, and they set up “Services parks” close to Shanghai. Land is owned by the city in China. Most of the income of cities comes from the sale of land. But in Kunshan, they resisted the temptation to maximize the short term income. They keep the land and rent it at a discount price to attract companies and workers.
They chose to specialize their town in services activities where they could get a comparative advantage on other cities, ie where the proximity of Shanghai would be an asset: one park for high end logistics, one for Headquarters and one for BPO. The goal is to attract white collars from Shanghai, in businesses for which the cost of remaining downtown Shanghai is becoming too high.
The facilities are top technology.

And they built housing for the workers and condos for the managers. I visited one apartment: it has the standards of a western apartment, with one bedroom per person, enough space, Wifi, broadband Internet and IP TV in each room…

China is preparing the move to a « Services » economy

I had several business meetings in Southern China: Hong Kong, Shenzen, Nanjing and Shanghai.

I was struck by the quality of the strategy of the country and the smart way the Chinese implement it.
China decided to prepare for the next step: after Manufacturing, they want to step into the Services economy. They are the “factory of the world”, but they know their cost advantage could fade. Hence China doesn’t want to let India be the “Office of the world” alone.

At central level, they decided to boost the IT and BPO business in the country.

The plan is called: 10-100-1000.
10 stands for 10 cities to compete with Bangalore
100 stands for attracting 100 multinational companies (MNC) to transfer their IT/BPO in China
1000 stands for developing 1000 domestic IT/BPO providers.

The list of the 10 big cities was decided by the central government.
Now the 10 cities are competing to attract the 100 MNCs.

And that’s the smart way of implementing a central strategy: each city is free to choose its own specialization, its own incentives, its own negotiations with MNCs.
That freedom enable China to test numbers of  ideas, numbers of solutions. When one proves to be efficient it is multiplied; when one fails, it’s just dropped.

A stunning balance between central strategic decision and local freedom of competition.

Retail 2.0

I visited the Technology show room of Galeries Lafayette, the high end French retailer and consumer loans bank.

They are displaying prototypes of new technologies, applied to a department store.

I got a glimpse at what could be a retail store in 3 or 4 years from now;

Innovation can be split into 3 categories:

- ways of getting a much better recognition of the brand, of the ads

- ways of improving the buying experience by displaying instant information about the product the customer is looking at or by providing the customers in real time with profiled information or rebate

- ways of simplifying the action of paying your purchases.

1. Better recognition of a brand

The key idea is to use videos or moving pictures. The best example can be seen in the video of the pool and the red fishes.

It has been used in stores to advertise soft drinks:the customers was walking on ice and made the name of the drink appear below their feet. The recognition results were ten times higher than a traditional ad.

On the Internet we find the same level of efficiency: the transformation into an actual purchase of a product after an Internet ad is 8 times higher when you use rich media (video, animation) than with a traditional static web site.

2. Improving the buyer experience

You can display on a flat screen information about the product the consumer is handling or simply looking at. It’s a simple use of RFID tags or video recognition. You can even recognise which type is the customer(eg: male, between 25 and 45, or female above 50) and display information profiled for this type of category.

A supermarket manager can monitor the sales by product and send SMS to the clients present in the store in order to offer focused rebates on the products which are selling slow. The biggest hurdle for this type of service is not the technology, but the internal rules of retail companies!

3. Speed up the payment of your purchases

In Japan 98% of the mobile handsets enable the customer to read electronic tags put on goods or ads, or to pay their subway card, to buy drinks from machines, to pay their purchases at their local department stores, and a multitude of new applications….

The USA are catching up very rapidly with pilots at Safeway for example where you pay with your mobile: you pay in 3 seconds instead of 19 seconds!

Visa and Mastercard are now allowing to use your mobile phone instead of your credit card.You just enter your pin code and send it by SMS.

Google is about to launch new services and Apple is partnering with Starbucks…

Europe is coming too with experiences in Austria, in Amsterdam.

In japan, the two biggest Telecom operators have just bought two banks..

Who is going to drive the Mobile marketing?

The banks, the retailers or the telecom companies?or Google?

The winner will make big money.

15 big trends in the Bay Area according to Orange Labs

1. Video & bandwidth explosion
2. Social networking (with a direct link with real networks)
3. Data portability (I can control and transfer my personal data from a social network to another one)
4. From portals to platforms (ie:ability for anyone to develop applications on a given platform (eg:for Facebook, I-google, Yahoo!,…) it allows these platforms to offer for free a lot of applications.
5. Datacenters: cloud computing & virtualization (the data are not hidden inside the enterprise anymore; GenY doesn’t care for confidentiality as returns are high from openess.Geny is ok to give free access to their personal data: 26% of facebook users give the real phone number, on Mint.com people give the real bank account number!).
6. Mobile Plus (Android by Goole, I Phone, …):access to the web everywhere, with rich media applications available on your smart phone;
7. “Consumerisation” of the enterprise. The best tools are not the ones provided by your company but the ones you use in your personal life (her’s a real example: a clerk used his own PC with Googlesearch next to his company CRM system. It allows him to give quicker information to his clients)
8. On line advertising is still THE business model for start ups on the Internet
9. Search function is commoditized. Google has won the battle. The next battle will be about “discovery and “recommendation?” (advices, reputation)
10. Location based services & the Geoweb
11. Reality mining. Indexing reality and intention management (reality is what I do everyday with my phone, my PC. It allows forecasting my intentions in order to provide me with higher confort. Yahoo! made a demo around these possibilities.
12. Neuro-marketing and mind-augmentation: be more than human. Internet can correlate more data than I can
13. Knowlegede amplifier: understanding what we know; there’s a lot of data but a lack of “meaning”
14. Green tech, clean tech
15. GenY is joining the workforce. It has an impact but nothing is ready for them within the traditional companies. This young generation need IT but no confidentiality. Managers must listen to them, go and understand their needs

Search engines: what’s next?

The basic search engine function is becoming a commodity.
Google won the battle.
But the battlefield could move and go where you don’t expect it.

Today’s investments in search engines go to digital profiling advertising tools and to human natural language recognition.

The web 1.0 was the discovery phase of the Internet.
It came with any search engines (altavista, yahoo! google) which was looking for a word. The results were given without any order or meaning.

The web 2.0 is the social web;
It comes with a powerful search engine which ranks the findings by their “popularity” on the web: it’s Google.
The more a page is read or talked about, the higher it’s ranked by Google as being relevant.
This logic is the logic of social networks.

The web3.0 or the semantic web is the web which gives sense to a series of words, to a sentence.
The search engines optimized for that are based on the same logic: recognizing thz natural way of speaking of human beings.
A lot of investments are made in that field.
But they could prove to be short lived.

Because this feature is not a key one for GenY.

GenY doesn’t want you to optimize a correlation. They don’t need to speak perfectly as the SMS language shows.
But they look for an entry to a network. When they look for a site or something to buy, they look for an unique advice, coming from a trusted person.

Some think that search engines should understand GenY as it talks. Perhaps.
But is that what GenY is expecting? Is Geny expecting you to talk as it talks or does it expect you to give a sense, to answer to the question “Why”?

The web 4.0 is the intelligent web, the one which give meaning to what you live.
which search engine will prevail?

If Web 4.0 overcomes rapidly Web 3.0, the winner should be the”reasoning search”. Already Google makes you some proposals while you are still typing your search!

Reuters aired an ad which goes like that: “the end of think; the beginning of know”; “information waits for you. Intelligent information finds you”