Lessons from Visits to JD, iQIYI and Huawei (Tech Strategy – Podcast 208)


This week’s podcast is about our Beijing Tech Tour. And my 3 main lessons.

You can listen to this podcast here, which has the slides and graphics mentioned. Also available at iTunes and Google Podcasts.

Here is the link to the TechMoat Consulting.

My lessons are:

  • JD is flooding money into logistics tech. Increasingly globally.
  • Huawei is showing the future for turnkey digital infrastructure.
  • iQIYI likely the future business model for movies and tv.

Here is the mentioned iQIYI slide.

Cheers, Jeff


Related articles:

From the Concept Library, concepts for this article are:

  • n/a

From the Company Library, companies for this article are:

  • iQIYI
  • JD Logistics
  • Huawei

———–Transcription below

Welcome, welcome everybody. My name is Jeff Towson and this is the Tech Strategy Podcast from TechMoat Consulting. And the topic for today is lessons from our visits to JD, IGE and Huawei. We had the Tech Tour a couple weeks ago, which was a lot of fun. I’ll talk a little bit about that. And then I promptly picked up some sort of superbug or something and got completely taken out. For really the last 12 days this is my first day out of bed since the end of the tour, which is, sorry about that. I know I owe some people, I know that the subscribers, I owe you some articles, I’m on that now. And I got some pings from people saying what’s up, which I appreciate. And no, it’s just super boring. I watched all the Godzilla movies, I watched like, it’s being stuck in bed when you can’t work. It’s just super boring. So anyways, today is kind of the first day back so I thought I should at least talk a little bit about this because it was great. You know, great group of people, a lot of folks from Thailand, a couple of people from around the world and you know, it’s really just, I get used to how interesting these companies are. And when you actually go on site and you get a sense of, oh my God, this is a lot of people. I didn’t know JD was this big, like, oh my God, that’s just building number one of four. And when you see people sort of get a sense of that and not just that but for this group we had a bunch of people that were sort of new to China even though from Southeast Asia. And they get a sense for just being on the ground and just seeing everybody with their smartphones out all the time and everyone buying KFC and and the just pure volume of activity it’s then it becomes very obvious like why the digital ecosystem particularly the B2C side is so vibrant because there’s so many people staring at their phones buying stuff all day long. Anyway so I I choned it and been joy seeing that and thank you for everyone who came out. Oh, I’m sorry I disappeared on that last night. I was that was when I really got hit I literally was gonna try and come out meet everyone and I fell down on the way from the bed to the bathroom in my hotel room And I was like, nope. Okay. I’m going back to bed Fortunately temperance my partner who you met she’s super enthusiastic and she’s actually much more social than I am. So that actually works out alright. But yeah, I felt bad about that. I’m sorry. We’ll have a call in a week or two and talk about it. But yeah, it was a bit of a strain experience. Anyways, let’s get into the Taunton here. I visited four companies, bike dance, IGE, Huawei, and JD, both the logistics and the e-commerce headquarters. ByteDance was a bit skittish about talking about things because obviously they’re under the political radar. So I can’t really talk about them. But there were sort of three lessons that stuck for me, three things that I think I wasn’t appreciating as much that I sort of circled in red in my notes as we were going around. And I think the first one is just, look, JD is just flooding money into logistics technology. You know, Alibaba’s all over the place. They got business after business after business, but JD is much more focused. It’s one of the reasons I like them. I think when the companies get so big and powerful, you lose sense of where the engine and the major bets are being placed. JD, it’s very clear where the major bets are being placed. JD, it’s very clear where the major bets are being placed. Corey Commerce logistics. And they’re looking for another one, but that’s where the money’s going. And, you know, the robotics, the drones, well, the drones are more of a show, I suppose. The warehouses, you know, that they’ve basically show I suppose. The warehouses, you know, that they’ve basically carpeted all of mainland China at this point. And now they’re expanding internationally in Amsterdam, France, California, Germany, you know, with just the logistics business, not the e-commerce business. So they’re all in on this idea of the future of smart logistics at scale, which is going to be highly automated and highly intelligent. And we don’t know what that looks like yet. No one’s ever seen that in the world. And there’s only a couple companies that have the pure financial firepower to build something like that. Because I mean you’re talking about billions and billions of dollars of investment every year for decades. And JD’s one of them, Alibaba’s one of them, Amazon’s one of them, maybe FedEx, DHL, I don’t know. But yeah, I thought that was really interesting and they’ve paired back their strategy in the last year because of the increased competition they’re facing at home. So they’re much more focused than before. Like their core e-commerce business back in China is much more focused. It reminds me more of like 2013 and their logistics business, which is domestic and international, is going abroad pretty aggressively. And the benefits of that is their domestic e-commerce business gives them economies of scale advantage in logistics spending that very few can match. If they can build an international logistics business as well, that will give them further scale advantages. And we’ve seen Amazon toy with the same idea they’ve talked about it. Tynia was definitely doing it, although there’s hints over the last month that they’re sort of pulling their logistics business back from being a standalone profit center to more of being an enabling capability for things like AliExpress. So we’ll see where that goes. So that’s number one, which is in 10 years, five to 10 years, we’re going to see smart global logistics that is completely new, a totally new animal we haven’t seen before. JD is going to be one of the companies that’s there. And the money shows that JD logistics is public, so you can pull their financials and see the money. So that was takeaway number one. All right, takeaway number two, we took the group a little bit outside of Beijing to the Huawei main exhibition center. Now one of the things Huawei does that most of these other companies don’t do that I talk about is they are in the business of selling large enterprise contracts, large supply contracts, right? So they are always bringing out the major telco companies of the world, bringing out a lot of government people as well because typically, you know, the telco of a country is usually tied with the government ministries in various ways. So they have a very well established process for showing visitors and doing the whole B2B sales thing. So they have these major exhibition centers that are kind of lavish, like they’re almost like palaces. So we took the group out there which is well it’s kind of lavish like they’re almost like palaces So we took the group out there which is Well, it’s kind of fun to see because it’s it’s just this crazy palace with like 50 60 foot ceilings and massive marble staircases and these exhibition halls and and Basically the group cut a little bit of a tutorial And basically the group cut a little bit of a tutorial, probably far more detail than anyone wanted, on digital infrastructure. And specifically what’s coming next, because you know, Huawei’s out front with 5.5G. They’re the leader now. They’re not following anybody anymore. They’re the leader in smart transportation. They’re a leader in a lot of smart logistics, but infrastructure building, cloud center, connectivity, edge devices. They’re not really a telco equipment manufacturer anymore, but they’re the only one offering a complete end-to-end solution, which is we make everything from the device in your hand, the device in the street, the device in your car, the device in your home, to the connectivity piece, the 5G, now 5.5G, which now they’re calling 5A, to the cloud and the data servers and all the intelligence they’re baking in that they offer the whole thing that works as one seamless end to end solution. And you know people thought they were going to take a big hit because they got hit with the entity list band and everyone’s like, “Oh, your smartphone business is crushed.” Which it was internationally for about two years. And now their smartphone business is roaring back. I don’t know how they’re doing it. Their new Huawei phones are absolutely beautiful. They make the iPhone look like a brick. It’s almost embarrassing. These foldable screens with these crazy, the handsets are beautiful. But they’re also putting in decars, IoT devices, smart home. I mean, they’re doing the whole thing. Now, why is that interesting? Now, that’s not gonna be the solution for most companies. Like, if you want a cloud server, you might choose Google or you might choose AWS. Why would you choose Huawei? If you want a phone, maybe you get the iPhone. If you’re going to do connectivity, you’ve only got a couple of choices, Eric, Zenokia, and Huawei. There the choice is pretty obvious unless there’s a political restriction. Okay, but why would you want all three? And that’s when you start to look at, you know, digital infrastructure that’s coming. Intelligent transportation, not intelligent cars, which navigate on their own and maybe communicate with each other a little bit. Intelligent transportation where all the cars communicate with each other, they communicate with the street, they communicate with the street lights, they communicate with the city grid, and it all works seamlessly as one system. If the traffic is too much in one part of town All the cars get rerouted to other directions If one street is congested you can reverse the lanes and the traffic flows in the other direction now when you build an integrated Intelligent transportation system for a city It can start to do all sorts of crazy things it can tell you where the empty parking spaces are I mean it has all these crazy capabilities as you put this all together But to do that you need the whole solution You need all the IOT devices you need all this the cars connected you need the phones in people’s pockets You need all the cameras around the streets. That all has to be connected in very fast time. It has to be 5.5 G. That all has to be connected in absolute real time, no latency to a central cloud that is highly intelligent at managing the whole city. Now to do something like that Tesla can’t do anything like that you need an integrated end-to-end solution that’s a Huawei solution. The other one you could think about is port maintenance you know these cargo ships coming in and out of ports unlocking all the cargo tanners, you know, all that again, that’s a more isolated Example of an integrated solution. So you start to see transportation ports specific factories and groups of factories can operate as sort of one digital entity that is increasingly smart and increasingly automated. And that’s the trend line that matters. That once you put this thing in place, it’s not the version 1.0 that’s interesting. It’s 5.0. It’s now that we’ve digitized our port and we’ve got it tied into the intelligence of the cloud and their sensors on everything. What’s that gonna look like in version 5.0 when all the robots move themselves and the trucks drive themselves and all of these things, right? That’s construction sites, mining facilities and those are the basically the case studies they talk about. That’s very, very cool. And the only place that’s coming out of is China. And it’s really Huawei. I mean, who are we kidding? Okay, once that solution is done, you can sell that as a turnkey solution you can sell that as a turnkey solution all over the world. You can go to any mine in Latin America and you show up and say look you have all your mining equipment, you got people everywhere, you got trucks coming and going, it’s crazy. We have a turnkey solution we can put in place, all the sensors will go in, all the machines will come automatic. It will all be connected and blazing fast real-time and the cloud intelligence is already perfected and it works. We can slap it all in one contract, one price, just say yes and sign on the line. Right, so you should expect these companies to start going out of from China to the rest of the world with these unbelievable like turnkey solutions. You want us to manage your whole city? You want us to take over the traffic management of Oaxaca Mexico? Put in our cameras, put in our special street lights, put in our special lane changers, put these devices and we will give you a central data repository. You can sit in there and run the whole system. But by the way, our AI is brilliant at managing traffic already. So I think we’re gonna start to see these turnkey solutions coming out of China, mostly Huawei probably, that are gonna show up and of course the US will scream in moan. But you know, people in Ecuador don’t care. You know, people in Jamaica, they’ll be like, yeah, you can fix the crime in our city. You can make our port work 40% faster than it’s ever worked. Yeah, people are going to sign up left and right. So that was kind of lesson number two was. I think we’re really starting to see what the future of digital infrastructure is going to look like. And at least in a couple, in a lot of cases, it’s going to be these end to end turnkey solutions that you just plug and play. And if you’re a mayor of a mediocre medium sized city with chronic problems that you’ve never been able to fix Do just pick up the phone and call and they can probably solve it Anyways, that’s number two number three Ice now I really like Ice and Usually when we take people to Ice a lot of them aren’t familiar with it. Now this was a little different because IGE’s got a presence in Southeast Asia now. It’s a really cool company and there’s a lot of, I think for me if I had to put my finger on what the future of movies and television is going to look like with all this digital disruption, I’d probably point to Ichee. I think they’ve most clearly got their finger on the button of where things are going. And that’s a little bit random. It just so happens that like the generative and AI leader of China Baidu owns Ichee. Now they’re not integrated operationally or anything like that. They’re separate but then there’s a lot of back and forth. They’re basically right across town from each other. You know that’s like if Google somehow was the parent company of Netflix. You’d be like you know this company is really gonna figure out this AI. If anyone’s gonna figure it out this is the company is gonna figure it out. And, it’s fun because when you go to movie production stuff and you get to see all the actors and the sets and that stuff is always kind of sexy and fun. And I don’t really understand it to tell you the truth. I don’t know why they can make a movie that’s awesome. And IT really is the leader of China. I mean, they win all the awards, their viewership numbers are crazy. Their business model has always struggled a little bit because there was not a real marketing or subscription model or theater model for China when they were getting going. You know, there were not really any steady revenue streams in sort of Chinese filmmaking for a long time. So a lot of these companies got out of struggle their way along. It’s better now. But one of the things that the one slide that I really liked from this, which I’ll have to describe to you because I can’t really show it. But they basically had this little slide up on the wall. And I walked by, I literally pointed to everybody. I’m like, look at that slide. Like that to me looks like the future of all of this. And it’s basically two combined engines. Like an engine on the left which is a content management platform. Or basically, you know, you’ve got all the things you need to manage the production, the design, the marketing, the distribution for any sort of long form entertainment, not the short video stuff, but like real movies and TV dramas with 20 episodes, things like that. And that is more and more infused with intelligence, obviously, but that pairs with another engine which is basically a virtual production engine, which reminds me a lot of the gaming engines we see in video games where you have these sort of proprietary virtual production engines and you feed all of your stuff into that you anything you shot with the camera you feed it in any digital assets you’ve purchased you feed it in and that’s where basically you can create you know the highest quality long form entertainment. And those two engines sort of feed off each other and the inputs into that are you know they could be actors that you hire. So there might be a database or a marketplace of actors that you want to hire. There’s digital asset libraries where maybe you want this type of sound effect or you want this type of music or you know and what I Chi is doing now is they’re digitizing everything they’re doing to make their movies and televisions. So if you want to basically license the set they used for a tank battle in some movie, you can license the set. So it’s you know if you want it you can go on the ICHI website right now and you can see vehicles they’ve used in various productions and you can license the vehicle. Now they’re not going to be identifiable as some significant vehicle in a show, but if you want one of 50 different types of tanks, you can do it. And they digitize the assets and you can license them and then feed them right into the engine. So that’s kind of the mix. It looks like these production houses that have a long history are building these massive suites of digital assets that they’re going to license out. They’re creating these gaming-like engines, but in this case, it’ll be a virtual production engine that anyone can license and use, just like any game developer can license to use the Epic game engines. And then surrounding all of that will be a whole suite of services. Marketing, distribution, maybe you want to hire some actors so there’ll be talent management. Maybe you need some production crew, like an upwork type thing where you just need one cameraman for the day. You can see the whole suite of services that’s gonna be built around the central proprietary virtual production engine. If I had to bet what the future of long form high quality entertainment is, I think that’s it. Which is pretty similar to what we see in gaming right now anyways. So by the end there was literally one slide on the end of the wall and I just like, like everyone just look at that slide, I think that might be it. Anyways, I’ll see if I can get permission to show that one because it’s pretty helpful. Anyway, so that was kind of the three lessons. How we doing? 22 minutes good, not too long today. Yeah, I hope that was helpful. I’m sorry for not being online here. And to the subscribers, I do owe you some articles. I feel bad about that, so I’m on top of that as of today. Fortunately, I’ve always got like 25 articles on my list. There’s a never-ending list that I’m on top of that as of today. Fortunately I’ve always got like 25 articles on my list. There’s a never-ending list that I’m always working on so it’s actually kind of easy. Anyways that is it for me. I only had to stop this podcast four times for a coughing fit so not too bad. Anyways I hope everyone is doing well. I’m actually sitting in yogykarta, Indonesia. I’m going to probably be in Indonesia for a couple weeks, which is… Yeah, that’ll be a lot of fun. So, well, hopefully, funnier than the last week. Anyways, that’s it for me. I hope everyone is doing well, and I will talk to you soon. Bye bye.


I write, speak and consult about how to win (and not lose) in digital strategy and transformation.

I am the founder of TechMoat Consulting, a boutique consulting firm that helps retailers, brands, and technology companies exploit digital change to grow faster, innovate better and build digital moats. Get in touch here.

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