China’s Singles’ Day – on November 11, every year – is a favourite for shoppers and journalists alike. Consumers search for bargains amid the commercial chaos, while journalists like to ponder the bigger picture, searching for insights from the sales data.
This year Alibaba, the operator of Taobao and Tmall, the two main sales platforms, announced that people in Guangdong were the biggest spenders, for instance, racking up Rmb20.3 billion of sales (measured by gross merchandise value) over the 24-hour bonanza. Consumer electronics gadgets were also in hot demand from shoppers in the province, who snapped up items ranging from drones to electronic breast massagers, according to the Beijing Morning Post.
In fact, Alibaba’s data shows that consumer electronics first displaced apparel and shoes as the most popular product category on Singles’ Day in 2013. Rival platform JD.com, which piggybacks on the Alibaba event, has also noticed that more rural Chinese took advantage of discounts to upgrade their own home electronics. This year, the average size of the flatscreen TVs sold to customers outside the main cities was five inches greater. Sales of water purifiers also soared, rising tenfold on a year ago.
“It speaks to the upgrading of consumption in China,” says Daniel Zhang, chief executive of Alibaba Group.
With the average order value going up, it was no surprise that this year’s Singles’ Day set another new record. Alibaba shifted Rmb168.2 billion ($25.4 billion) worth of merchandise on the day in question, shipping more than 812 million parcels in what has become the biggest day by far on the global retail calendar.
Behind the record-breaking statistics were improved, more streamlined systems: this year, all the major e-commerce platforms have started to rely more on artificial intelligence (AI) to make their operations more targeted and more efficient. And analysts expect Beijing will encourage the e-commerce giants to innovate further in this field in the years ahead – given it wants China to become the world’s leading AI power by 2030.
So how did AI transform this year’s sales extravaganza?
Back in April, Alibaba launched a new chatbot called Dian Xiaomi (which means ‘little honey’) powered by artificial intelligence. The customer service application, which is free of charge for merchants on its e-commerce platforms, is said to be capable of comprehending more than 90% of customer enquiries and serves almost 3.5 million users a day.
Retailers can customise the chatbot to suit the specific needs of their own business by adding information on their own stores, products and promotions to the application.
A more advanced version of Dian Xiaomi purports to interpret emotions through text analysis and alert ‘human’ customer service staff for priority handling of irate shoppers.
“When it comes to big promotions like 11.11, merchants need to hire a large temporary customer-service crew, yet they are still swamped by the overwhelming volume. [Or] merchants don’t have enough staff to handle enquiries during rush hours in the daytime, nor any staff on duty in the evening,” says Liu Jianrong, product manager at Alibaba. “So Dian Xiaomi solves those problems.”
Semir, an apparel merchant on Tmall, told China Youth Daily that Dian Xiaomi helped it reduce the number of temporary workers on its own payroll by 40% compared with a year ago. The chatbot has also replaced human agents in fielding questions from late-night shoppers.
Alibaba also relied on AI to prepare for Singles’ Day sales, following previous years in which consumers have complained about the logistical nightmare of getting hold of their goods (see WiC261). Ahead of this year’s shopping bonanza, the e-commerce giant analysed its historical data to determine which products would prove most popular and where, moving the best-selling inventories to warehouses closest to the demand. “We have also used the artificial intelligence system to determine which courier can deliver the package the quickest and which one has a bottleneck,” says Xu Yinghui, who is in charge of the AI department at Cainiao, the logistics company 51%-owned by Alibaba.
JD.com also uses AI to power its product recommendation system. In an interview with Nanfang Daily, He Xiaofeng from JD.com said the retailer analysed enormous amounts of data ranging from brand reviews to buyers’ behaviour. Using proprietary algorithms, it was able to tailor product offers down to individual shopper level. It also reminded merchants to increase their inventories appropriately in preparation.
Suning also grabbed headlines when it opened four unmanned sales outlets to drum up interest for its own Singles’ Day effort. Called Suning Biu, the stores used facial recognition technology to identify the visiting shoppers. To pay consumers only needed to look directly at cameras and the goods were charged directly to credit card numbers tied to their profiles. Suning also used algorithms to predict customer flows through the stores, using the information to optimise product placement.
What about AI’s development outside of e-commerce?
It is impossible to talk about AI in China without bringing up Baidu. The search giant, which has struggled to compete with rivals like Alibaba and Tencent as shopping and social media migrated to smartphones, is doubling down with its investment in artificial intelligence.
At the forefront of its AI effort is the driverless car. Lu Qi, a renowned engineer who joined the Chinese search giant from Microsoft earlier this year, announced in April that Baidu will open up its self-driving car know-how via a platform called Apollo. The goal, says Lu, is to create a platform that becomes the “Android of the autonomous driving industry, but more open and powerful”. By the end of 2020, the tech giant expects to be selling fully driverless cars.
And then there is DuerOS, Baidu’s equivalent of Apple’s Siri and Amazon’s Alexa. Like the other conversation-based AI platforms, DuerOS helps users to interact with gadgets through voice recognition. The main difference is that DuerOS is aimed at the Chinese-language market, although Baidu also bought the Seattle-based AI start-up KITT.AI to beef up the operating system’s voice processing power.
DuerOS already features in over 100 types of home appliances, such as refrigerators, air conditioners, TVs and audio speakers.
“We have entered a new age, the age of AI, and technology is important again,” Baidu chairman and chief executive Robin Li, told the audience at the Wall Street Journal’s D.Live conference. “You need the best language processing tech, the best image recognition tech, the best data analysis… We are good at that.”
What about AI’s wider future?
Applications relying on artificial intelligence are spreading far beyond the retail sector. Tencent, another of the tech giants, has developed advanced face-scanning technology that will be used at an unmanned police station in Wuhan, says Caijing Weekly. Local citizens will be able to report stolen wallets or renew their driving licences just by having their faces matched to the database. Because it is unstaffed, the police station will be open 24 hours a day.
The Chinese are also using AI to improve efficiency in their vast healthcare system, for instance by interpreting scans in hospitals.
In education, schools are experimenting with facial recognition to gauge student feedback and use AI to even grade homework.
Chinese companies are the second-largest investors in AI after firms in the United States – although two-thirds of the total investment in the sector last year flowed into US-based companies. Needless to say, Beijing wants to narrow that (large) gap and policymakers are preparing new investment programmes that support AI efforts. Patent submissions in China for the area have surged (tripling between 2010 and 2014) and the government announced a new development strategy designed to convert all of the new IP into a Rmb1 trillion ($151 billion) industry by 2030.
With that kind of backing, AI is the talk of the tech industry. “If you don’t know artificial intelligence you will be eliminated,” an industry insider told 21CN Business Herald. “It is a well-known fact that anything that is AI-related is so much easier to receive funding.”
Others agreed: “In the past if you said you majored in artificial intelligence, you wouldn’t be given a job. But if you mention ‘deep learning’ today, you will have an offer instantly that promises a salary of a few hundred thousand yuan a month,” Yang Fangchun, vice president of the China Artificial Intelligence Society, told China News Service. New start-ups are taking advantage of the flood of capital and the country boasts several AI ‘unicorns’, or start-ups that are valued at more than $1 billion.
Toutiao, a news aggregator, uses machine learning to recommend articles based on a readers’ interests and location.
Megvii Technology identifies people almost instantaneously with its facial recognition software, Face++.
iFlytek, which specialises in intelligent speech and natural language processing, is said to be worth $12 billion. Its speech recognition technology can also differentiate between Chinese dialects.
Still, even if China were able to outspend the United States in the AI race, detractors say it will struggle to match the talent in Silicon Valley. A recent LinkedIn survey showed that China had 50,000 people working in tech-related roles in AI – ranking it well below the 850,000 in the US and just one third of the level in the UK and India, says the Financial Times. As of now, the groundbreaking research that focuses on the actual science and infrastructure underpinning AI technology is mostly happening in the West.
China’s trump card is its market, however, with nearly 1.4 billion people generating more data than most other countries combined. Its number of mobile phone users – at 731 million – is nearly twice the size of the US population. That scale is a major lure for AI firms to experiment with applications designed for the Chinese market. The more data available, the more the algorithms can be refined and the smarter the AI offerings will become as they ‘learn’.
As Baidu’s Lu said about his decision to return home from employment overseas, China is simply the market with the most potential. “We have an opportunity to lead in the future of AI,” he says.
Why is he so confident of this? Perhaps because of another unspoken competitive edge: China is a country where privacy restrictions and ethical concerns may be less of an obstacle to the new technologies. These seem set to become thornier topics in Western countries as AI starts to encroach into daily lives, and there are louder calls to regulate or even ban some AI technologies – not least from tycoon Elon Musk who has already warned that AI could prove an existential threat to the human race…
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