With manufacturing in US hollowed out in last couple of decades and China being the new global manufacturing powerhouse, it is not surprising that China is seeking smart (software/cloud/AI/robotics powered) solutions to industrialization, warehousing, transportation, supply chain, payments and other areas. Why hasn't US achieved the level of digital payment smoothness that China has been able to?

While the points you made about lax laws and blatant data privacy invasion are an contributing factors, I think you would have seen China making great strides in the above mentioned areas even if laws were enforced strictly. It's important to recognize China's technological prowess. They have similarly taken a lead in bioengineering.

Because it already achieved that "level of digital payment smoothness" with credit cards?

> I think we need to be careful about attributing all of the China's success and splurge of VC funding to IP theft, hostile domestic market for foreign players, etc. China is succeeding because it really wants to.

> It's important to recognize China's technological prowess. They have similarly taken a lead in bioengineering.

I attribute it to having an authoritarian government that's not afraid to direct the economy. The US, on the other hand, has more-or-less adopted an ideology that specifically rejects that kind of government economic direction.

I studied abroad in New Zealand in 2004. Even back then, everything was chip-and-pin, with computerized machines at every merchant to take orders. I never had to hand my NZ bank card to a merchant, just insert it into an EFTPOS reader and enter my PIN. My American credit card needed a swipe, signature, and handover to the cashier, because unlike in the U.S, they actually checked signatures in NZ.

Meanwhile, in the U.S, we just moved to chip cards 2 years ago, and just yesterday I had a POS reader reject it for "chip malfunction - swipe instead". The major merchants just stopped collecting signatures last month, though cashiers have been ignoring the signature for decades now.

I blame the innovator's dilemma and first-mover disadvantage, like sanxiyn's comment mentions. The U.S. has a "good enough" system that everyone's adopted; it's not worth it to force everyone to adapt to a system that's a little better. Same goes for many other broken systems in the U.S. - electricity, measurement, public education, public transportation, health insurance, etc.

Whether the two are equivalent depends on the transaction costs of the two models.

According to the Economist: "Visa and MasterCard extract over 0.10 cents of net income for every dollar of payments. Ant takes a smaller cut, of less than 0.03 cents." https://www.economist.com/news/business/21726713-ant-financi...

Perhaps more importantly I've seen estimates that Chinese banks lose $20 billion yearly in credit card fees due to the mobile payments.

I don't think we're not talking about exact, feature-for-feature, cost-for-cost equivalence.

Both these systems have the same or similar "level of digital payment smoothness" from the customer perspective. At least with credit cards, those fees are on the merchant side not part of the customer experience equation.

This isn't unusual. Because of legacy issues, latecomers often enjoy superior infrastructure. For example, US is still on 110V despite all the disadvantages.

Could go into that? IIRC, 110V is less efficient but it's also less dangerous, so maybe it's more of a trade-off.

But your point stands. I've read that the reason Estonia's government infrastructure is so much more advanced than the US's is because they had visionary leaders and started from scratch in the 90s. The US has the weight of decades of good-enough paper processes weighing it down.

All of it? Clearly not. But it would be pretty disingenuous to claim that it's not related.

"With manufacturing in US hollowed out in last couple of decades"

The US is still the #2 manufacturer in the world.

"Why hasn't US achieved the level of digital payment smoothness that China has been able to?"

We've had credit cards for quite a long time.

It is a clear #3 by population, so I don't know how significant that statement is.

The Fed's measurement of real manufacturing output is 70% higher than it was 30 years ago (the population is merely 1/3 larger).

Further, manufacturing is booming in the US. [1] In China it has been barely expanding for years, and that's despite China supporting their manufacturing base with vast state subsidies that have generated extreme over-production in things like steel.

The US has a perpetual cheap energy advantage over most of the rest of the world that is helping to spur that manufacturing boom. Natural gas prices are typically half that of the rest of the developed world or lower, as are electricity prices (US electricity costs are something like 35% that of Germany). Then throw on top the substantial corporate income tax cuts that will bolster manufacturing income margins.

The US outlook for manufacturing is brighter than it is for all other major economies. [2]

[1] https://www.marketwatch.com/story/ism-manufacturing-gauge-hi...

[2] http://fortune.com/2016/03/31/united-states-manufacturing-ch...

What, and not be racist? Where's the fun in that?

It's clear that Chinese scientists and engineers are inferior (except when they happen to immigrate and work in the US, then they're suddenly OK) /s

For a VC looking to immigrate, maybe...

Edit: Or do you mean getting US VCs into said US government-sanctioned projects, so that the US can take EB-5 money and use it on VC funding? That's quite brilliant.

Combine this with major new technologies on the horizon (especially around autonomy, AI - potentially, and others) which give opportunities for new players, and an incredible amount of recently created wealth looking for new growth opportunities in China and India and you have the recipe for a massive shift in balance.

The legal framework in China simply isn’t very developed, that doesn’t mean you can get away with whatever you want, quite the contrary, it means you never know when the government will come down on you for violating some unwritten rule.

Isn't bribing your way out of "violations" common in China?

My point is, unless you are Chinese working for a Chinese company, don’t try to be edgy in China, follow both written and unwritten rules. Foreigners are great chickens to kill to scare the monkeys, as the Chinese idiom goes.

Isn't this also official Chinese government policy?

Those Chinese tech VCs may be literally funded by the state and/or operating under its direction.

The article mentions that the govt funding may not be as large as it seems and that the government LPs don't have that much control over investment strategy, but the intent is there

https://www.chinamoneynetwork.com/2017/10/31/chinas-798b-gov...

I've worked as a software engineer for over 12 years at over half a dozen companies, with codebases numbering in the millions of lines of code and I have yet to see any software or code I could imagine anyone would want to steal. And if you really needed some code, I'm sure it's available somewhere as open source. And wouldn't the open source code be much more preferable? rather than ripping out some piece of "stolen" code that was never meant to serve other purposes.

For example, if you buy a competitor's product to take it apart, replicate its components and assemble lots of knock-offs, you have some validation that the product is going to work, without having to do any costly planning and design yourself. All of that works without literally breaking into the competitor's factory to steal their equipment or their code.

For a lot of really valuable IP you won't find an open source implementation, or if you do, you won't be able to legally use it, at least as long as software patents are a thing.

https://www.bloomberg.com/news/articles/2018-01-24/chinese-f...

A Chinese wind turbine manufacturer paid a programmer working at American Superconductor to send them the source code used to run the turbines. The company shortly afterwards cancelled their contract w/ AMSC.

All of this is just anecdotal second hand evidence but wanted to answer the question :)

That general premise has been widely forecast at least three or four different prominent times across the last 40 years in Silicon Valley. There was a time in the 1980s that it was supposedly dying. In the early 1990s it was supposedly dead. In 2001 it was supposedly dead.

The sun isn't setting this time either. There is no competition for Silicon Valley anywhere on earth on the horizon.

China does not directly compete with Silicon Valley. The notion that they do, is entirely a myth. China's tech companies are trapped inside of China (that's why Baidu never actually proceeded to challenge Google globally, which used to be widely expected). US tech companies get the rest of the world to play in.

Talent that is drawn to Silicon Valley, isn't going to China instead (plenty of it that is local to China may be staying home in China rather than moving to the US). China is dramatically less welcoming to foreigners than the US is. The US hands out a million green cards per year. It's almost impossible to become a citizen in China as a foreigner.

Not to mention that little problem of China having few human rights, near total state censorship and an aggressive dictatorship that has been rapidly revoking the few rights they acquired. It's so bad, they're banning joke apps in China now, because apparently, according to the Communist Party, jokes are contrary to Socialism. [1]

[1] https://advox.globalvoices.org/2018/04/11/no-laughing-matter...

I think it's more that the Chinese government will essentially gift you a monopoly if you are deemed strategic (which almost everything is at this point).

https://www.lexology.com/library/detail.aspx?g=2d04aa03-d8dc...