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China’s “Human Capital Gains”

The piece originally appears on LinkedIn, we reproduced it here under Kaifu Lee’s authorization. Kaifu is the founder of Chinese incubator Innovation Works , he also served as Google and Microsoft VP. 1.3 billion people. 20% of the world’s population.

The size of China’s population is a historical advantage that China has leveraged throughout its 5,000 years of history. This advantage enabled the construction of The Great Wall of China, a structural and engineering marvel that is one of the Wonders of the World. It enabled a quarter century of blistering economic development that pulled hundreds of millions of citizens out of poverty. China is projected to overtake the United States in GDP in 2016, but with a nation that has 4 times as many citizens, the per capita growth is still at its infant stages. Many may believe that China may lack in pure innovations. The truth is that China often harnesses the scale of human capital towards uniquely innovative solutions.

Many individuals in the United States enjoy the expedited services of Amazon Prime, offering 2nd day shipping in the United States. Amazon is frequently seen as the paragon of excellence for logistics – having strategically situated fulfillment centers and streamlining inventory to quickly deliver product to loyal customers. The United States benefits from a mature delivery infrastructure network, since the nascent days of the Pony Express. China’s rise to economic prominence has occurred only within the previous quarter century, with a relatively poor delivery infrastructure.
Nonetheless, many Chinese enterprising companies have come up with creative solutions to harness China’s inherent advantages of scale to achieve similar effects. One of China’s largest e-commerce giants, 360buy, has spoiled Chinese consumers with the concept of guaranteed same-day delivery. Place an order in the morning, and have it delivered to you in person a few hours later. 360buy accomplishes this monumental task by having a huge on-the-ground mobile delivery fleet concentrated in the most densely populated cities. With the correspondingly large number of daily orders received, 360buy has been able to leverage a massively scalable work force to efficiently and quickly deliver product to its customers, leading to a superior e-commerce experience. Additionally, this scale of human capital has similarly enabled the construction of many modern architectural feats. Consider Broad Group, a corporation previously known for manufacturing central air conditioning units. Through the continual process of simplifying and further streamlining the manufacturing process, Broad Group realized that similar techniques could be feasibly applied to the construction of entire buildings. Witness this recent YouTube video (http://www.youtube.com/watch?v=Hdpf-MQM9vY) that went viral depicting the incredible time lapse construction of a 30 story hotel in only two weeks! Broad Group was able to achieve this remarkable feat through manufacturing a pre-fabricated set of building pieces, then having an army of construction workers expertly and quickly assembling the pieces for an end result that is incredibly sturdy (able to withstand a 9.0 earthquake), cost and time efficient, and environmentally sustainable. This concept of bringing to the traditionally laborious construction process a simple and effective solution for the masses is not unlike IKEA and the impact that it had on the home furnishing industry. The incredible scale of human capital in China has enabled numerous advances. The truly exciting chapter for which to watch will be the ongoing transformation of China from its previous position as a low-cost labor producer to one moving forward off the heels of a highly-skilled workforce. We are still in the infant innings, and there are many exciting developments to come in the years ahead.

(Thanks to @mickey_du for his contribution)