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At a time when the panic about COVID-19 is gripping practically the whole world, here is something much more optimistic from China.

We have here Chadwick Xu, one of the topmost technocrats from the country, talking about automation in the manufacturing industry and other latest technical developments in China.

Xu is a serial entrepreneur, known mainly as the founder of the hugely successful Zowee. He has recently established a start-up called SVV – Shenzhen Valley Ventures.

That’s all for the intro. Let’s dive straight into the interview to learn more.

Q. Let’s begin with something about yourself. Our readers love to learn more about top technocrats and their vision. How did you become an entrepreneur? What’s the backdrop?

A. There were tremendous business opportunities in every aspect in China during the late 1990s and early 2000s as the economy soared after China’s opening up and joining the WTO. Those 2-3 decades are China’s golden time and most current tech giants were established by then, and most private businesses started during that period.
Shenzhen was set up as Special Economic Zone in 1980, and after 12 years of testing, Deng Xiao Ping made his famous speech in Shenzhen in 1992 that China will be devoted to more in-depth reform. This speech is deemed as the real starting point of China’s opening up and soon it created a nationwide entrepreneurial enthusiasm. Shenzhen has now become the most active city of China.

I have been working in the manufacturing industry after graduation (Lanzhou University) in 1992. It was a common path for ambitious young graduates who want to work for corporations for a few years and build their experiences and connections, then start their own businesses. There are hundreds of thousands of people in the same boat; I am just one of them. It seemed very natural, nothing special.

Q. You founded Zowee in 2004 and got it listed in the stock market in just six years. Such success in a short span is perhaps more common in the software and IT-enabled industry, but not so in core manufacturing sectors. What is the secret behind the success?

A. It’s more about luck that we got all the necessary elements together at a good time. We had the right founding partners, right products, right revenue/profit, and the expansion of China’s exchange market, there’s no secret sauce.

Q. Could you share more details about core products of Zowee and its present locations of operation?

A. Our major products are cellphones, network products and IoT devices. Our R&D facility is located in Shenzhen and Xi’an, while manufacturing units are based in Shenzhen and TianJin.

Q. Your companies are based in China, which has been in the news for various reasons – whether for medical reasons such as COVID-19 virus outbreak at Wuhan or for political reasons like student unrest in Hong Kong. Have these factors affected your operations and manufacturing output? What are the steps, if any, that you have taken to counter these?

A. Student unrest literally has no effect to our business. There is a tiny river, Shenzhen River, which separates Hong Kong and Shenzhen. If you are physically here, you will notice that even at the peak of the unrest, people on both sides of the river lives totally different lives (business wise). The inter-dependency of the two cities is quite minimal. The major link with Shenzhen is banking, financing, and shipping, which received the least impact from the students.

Covid-19 has a big impact on China, now it’s difficult to estimate the level of affect.

  • If it’s controlled within China, since the Chinese government did a good job in the past two months and most of the businesses got back to normal by the end of Feb, except for entertainment and tourism, the effect will be only a loss of 1-2 months.
  • If the virus becomes global, it will create a bigger problem worldwide, the recent plunge of US exchange already showed this potential

Q. Now, let us focus on SVV – Shenzhen Valley Ventures, your newest company. What are its primary objectives?

A. Research and engineering are two sides of the coin for innovation, and both sides are equally important. Since Shenzhen has become the world’s hardware hub, it has fully equipped engineering resources and supply chain to help research be converted into a commercially sellable product. SVV’s goal is to build an engineering platform dedicated to support innovative research, and eventually use our engineering platform to better serve venture capital investment.

Q. Recently, you talked about the AI-fuelled Robotic revolution in the manufacturing industry at a web summit. Let’s talk about that in more detail. Which of the manufacturing sectors are currently employing robots to a large extent? Do we presently have a 100% robot-controlled manufacturing sector? If not, how long does it take to achieve that in all manufacturing areas?

A. Automation has been popularly adopted in many industries to produce high volume and standardized products, e.g., beverages, medicines, cars, PCs and cell phones. But it has only just started to attract the attention of the masses, because of the concept of ‘replacing’ humans with fully automated AI-fueled robotics. In fact, it has actually been happening for decades, the only difference now is that, with the help of AI, the definition of “standardized” is greatly expanded so that more and more work could be handled by machines.

It’s hard to tell how long it will take to have a 100% robot controlled manufacturing process, but the process will be accelerating, and it may happen faster than most people think.

Q. What are the major long-term advantages of employing robots in manufacturing? There will be perceived social disadvantages as well, such as loss of jobs and resulting economic problems. Do you think the benefits from the advantages will outweigh the cultural despair from the disadvantages?

A. Somehow, the current attention is more drawn to the bad side, on taking jobs away from people. But the good side highlights that the history of industry has been the history of continuous improvement of work efficiency. The better efficiency we have, the more goods we can have, regardless whether it’s produced by human beings or by machines.

The increased efficiency brings more material wealth, at a lower cost, so that people can enjoy a better living standard.
If you compare today with the first industrial revolution in 1760s, we have many more machines to replace human beings, but we are generally having better living standards today with less working hours and intensity. If in the future, AI can help robots improve the work efficiency at such a level that unlimited material wealth can be produced without any human labor getting involved, people could have a better living without even working! It may create a better world to live in, as long as people can find ways to properly spend their time.

Q. Finally, how do you think the use of new technologies – robotics, AI, et al. – impact the end customer? Will it lead to a situation where the customer truly becomes the king by being able to choose high quality products that do not harm the environment at affordable prices?

A. Improvement of work efficiency will always bring the cost down, and AI will greatly help improve not only the efficiency, but quality as well.

Recycling has been one of the biggest problems for environmental protection in the past several hundred years after the industrial revolution started. One of the major breakthroughs of technology will happen in recycling. It will be the fundamental solution for a better environment-friendly era, work efficiency helps to minimize consumption of materials, and recycling helps to build a sustainable supply of goods.