Outlook Special Edition - Exclusive Interview - Xia Jiantong: Leveraging the Smart New Economy

2016-10-17 Posted by:admin Categor:Project cooperation
The smart new economy is to effectively and fully obtain consumers’ information, and make good use of resources to achieve the perfect combination of brick-and-mortar industries with virtual economy and form a smart and upgraded new system.
 
Chinese cities are shifting from management-oriented smart cities and technology-based smart cities to people-oriented smart cities. At present, management-oriented smart cities are drawing much attention, technology-based smart cities are the mainstream, but the research, planning, and construction of people-oriented smart cities are still at an initial stage. However, more and more people have realized that technology and management are not the goal of smart cities, and the ultimate goal of smart cities is to make the urban life better.
 
As one of the first domestic entrepreneurs to advocate and practice the concept of second economy, RECON’s Chairman of the Board Xia Jiantong proposed the concepts of “smart+” and “smart new economy.” He believes that we should rely on the smart information system platform with the big data analysis and Internet of Things at the core, the financial sector and the transport logistics sector as two wings, to integrate food, clothing, housing, transport, culture, sports and other related industries. By effectively obtaining consumer information and efficiently utilizing resources, we can fully integrate brick-and-mortar industries with virtual economy to form an upgraded smart system, thus enhancing the production and service efficiency and creating value.
 
In recent years, RECON acquired some agricultural resources, health resources, tourism resources and other industrial resources, and it is trying to acquire and integrate more resources on key links of the industry chain.
 
Xia Jiantong accepted an exclusive interview with Outlook on the ideas, practices and future trend of the smart economy.
 
Smart Life and Production
 
Outlook: The adoption of latest technological means is essential for the development of the smart new economy (second economy). Some domestic economists think that the concepts of both first economy and second economy include information technology, and the boundary is not clear and difficult to define. What do you think about this?
 
Xia Jiantong: I think that the first economy is about traditional industries, including agriculture, industry, information industry and so on, while the second economy is a new system built by relying on information and communication technologies (ICTs) such as big data, IoT and other smart technological means to systematically integrate and upgrade the traditional primary, secondary and tertiary industries.
 
The information industry alone does not make the second economy, and the second economy is not just about Internet-based companies. In practice, we can feel that the second economy has drastically changed our understanding of production, life and consumption. The second economy can achieve effective and rational allocation of production and consumption resources, and ICTs are the driver of changes. Needless to say, the smart upgrading is a gradual process.
 
Internet-based companies can solve the issue of information asymmetry to a certain extent, rationalize allocation of resources and reduce intermediate links. However, many Internet-based e-commerce businesses just provide a platform. They transfer offline transactions to online transactions and change people’s spending habits, but they do not change production very much, fail to fundamentally align supply with demand and cannot actually achieve effective allocation of resources. Therefore, many people recently began to question the value of e-commerce platforms. Worse still, some negative cases were reported. For example, some people sold counterfeits through e-commerce platforms. E-commerce platforms offer lower prices, so some people buy a lot of things at a time, only to find they are of no use and cause a new waste.
 
Outlook: What are the similarities and differences between the smart new economy and the Internet economy as we call it? What are the main features of the smart new economy?
 
Xia Jiantong: The second economy seeks to directly combine traditional industries with ICTs, so that supply and demand are more directly aligned, and the supply side directly addresses the demand side. For example, now some domestic clothing enterprises use ICTs to directly communicate with consumers and have truly achieved C2B customized production. RECON is building a large health service platform, which will be used to collect consumer information through RECON’s smart information platform, so as to provide targeted services according to consumers’ health conditions. In the process, production, service and consumption become more transparent.
 
In the era of second economy, not only does consumer information come more quickly, but we can quickly find the right resources on the planet, so that these resources can be used to produce right products or provide targeted services for consumers around the world.
 
The second economy, through integrated use of resources from production to consumption, will lead to two major changes, namely distributed production and shared consumption. The so-called distributed production means that a product is produced by a number of organizations according to the division of labor and at different places, and every detail is done really well; the so-called shared consumption means that in the era of smart new economy, consumers will share consumption resources. The era of smart new economy has the above two main features.
 
Outlook: As an approach of economic philosophy and a tool of economic innovation, is the smart new economy applicable to all industries? In other words, it can be used to integrate the industry chains of all traditional industries, can’t it?
 
Xia Jiantong: Yes, all traditional industries can integrated with the concept of the smart new economy. In the era of smart new economy, all people’s basic necessities of life will change. RECON will first enter food, clothing and transportation industries. We are penetrating into these industries little by little. For example, in the transportation sector, the current technology can only tell you where there is a traffic jam and remind you to avoid it. The smart transportation first will collect travel information and analyze the travel purposes. With ICTs, group behaviors are increasingly predictable. The smart transportation system will allow more reasonable allocation of transportation resources in dynamic adjustments. On the one hand, travel is unnecessary for some needs because these needs can be satisfied through rational allocation of resources. On the other hand, we should achieve reasonable provision of transportation resources and guide people to use more reasonable means of transportation for travel.
 
Smartness is to make people’s life better, improve quality of life and make more efficient use of time. The smart new economy adopts a whole set of philosophical thinking, technical methods and auxiliary tools to drive the transformation and upgrading of the whole industry and promote economic development.
 
Outlook: What kind of help can the concept of the smart new economy provide for China’s ongoing supply-side reform?
 
Xia Jiantong: The current supply-side reform is to make the production more smart and better adapt to market demand. I believe that the real supply-side reform should improve supplies on the basis of accurate analysis of needs using information and communication technologies. We should not repeat the past, when manufacturers rushed into mass action or quitted en masse, resulting in periodical overcapacity or undersupply. The smart new economy seeks to better align supply with demand and achieve joint production and shared consumption in the future, i.e., to jointly contribute to production and share the production results. Everybody is a producer as well as a consumer, serving the process together and getting returns together.
 
Acquisition and Reorganization Ongoing
 
Outlook: Currently, RECON has set up six industrial platforms, covering smart cities, smart agriculture and health, smart new energy and transportation, smart tourism, smart logistics and smart finance. What kind of development path is this?
 
Xia Jiantong: I ever went abroad to study urban planning and informatics as a major. The essence of urban planning is resource planning. It studies how to efficiently and rationally allocate resources, so that people can live a more comfortable, more awesome and better life in cities. What I am doing now is actually integrating global resources to meet people’s needs more efficiently. We must not only plan resources but also integrate resources and implement the integration results in actual life and production.
 
We can briefly summarize RECON’s industrial model as “1+2+N”. “1” refers to the big platform of smart information system. Over years, we have accumulated many approaches and systems to obtain information and data. For example, through mobile terminals, smart city platforms, smart tourism platforms, vehicle entries and so on, we can obtain consumer information as well as data from production to consumption. “2” is the big circulation platform and the big financial service system. In the era of smart new economy, circulation and terminals are still key links on the industry chain, and they are getting increasingly prominent and important, so RECON attaches great importance to the acquisition and integration of circulation, terminals and other links. For example, RECON is currently building the cold chain logistics system and large fast-food chain enterprises around the world. RECON has made all these efforts to build a sound circulation service system. And our smart financial system, as the lubricant and booster of industrial development, actually helps organizations and individuals in possession of funds to find the investment direction to create profits and helps them achieve wealth accumulation.
 
We are still building the platforms and system of “1+2”, and at the same time we are trying to better apply the resources of “1+2” to “N”, i.e., other brick-and-mortar industries, so that these brick-and-mortar industries can achieve smarter and more efficient development. Currently, we are focusing on catering, transportation, culture and entertainment industries. In the future, we will also enter the fields of education and healthcare. By acquiring or cooperating with enterprises sharing the same concept as RECON, we can jointly build the smart industry chain.
 
Outlook: How is RECON using the concept of smart new economy to carry out industrial integration? What practical difficulties did RECON encounter in the industrial integration? And how did RECON overcome these difficulties?
 
Xia Jiantong: Frankly, we think that none of our industry chains have been integrated to perfection, and they are still in the process of integration. For example, we are restructuring Lotus Health (formerly “Lotus MSG”). It was originally a local leading state-owned agricultural enterprise mainly engaged in the production of MSG and other condiments. We value Lotus’s national leading amino acid bio-extraction technology and food processing technology.
 
In fact, the acquisition and restructuring of Lotus is part of our integration of the smart agriculture and health industry chain. Strategically, we have identified a new development direction and clear development goals for the enterprise. We are changing the enterprise’s original management system. And we are adopting a responsible attitude to solve the enterprise’s legacy problems. For example, we are providing every employee with on-the-job training so that those with positive attitude and capability can fit into new posts and their creativity can be stimulated.
 
At the production end, we will continuously integrate and procure high-quality resources all over the world and use them to produce Lotus’s products. We are also connecting sales and circulation links. By gathering online and offline demand information, we will help Lotus develop and produce products to meet the market demand.
 
RECON Investment is also acquiring other resources in the agriculture and health industry at home and abroad. In the future, we are going to connect the domestic and foreign sectors. We hope to eventually build “one platform” and assemble “global resources” so that we can quickly and safely deliver the global products that meet our standards to our customized users.
 
Of course, in the integration of the state-owned enterprises, we also encountered difficulties in personnel placement and other aspects. Henan provincial government is very concerned about our difficulties and has given us a lot of support and help. I believe that these problems will eventually be well solved. We are currently extending the experience of transforming similar state-owned enterprises to two other listed companies undergoing restructuring and transformation. We have accumulated a wealth of experience and methods on how to re-activate the vitality of old enterprises, including state-owned enterprises. (Text / Reporter Liu Liang)