Point from Dr. Xiao Feng: Opportunities of the New Digital Economic Revolution in Globalization 2.0
This article is the speech on Opportunities of the New Digital Economic Revolution delivered by Dr. Xiao Feng, President and CEO of Wanxiang Blockchain at the 7th Global Investment and M & A Summit held by Morning Whistle Group.
2020 has become the watershed of globalization. We should not have witnessed this watershed until several years later but the coronavirus has accelerated its formation by 3 to 5 years.
Globalization Before and After 2020
Before 2020, globalization was about globalizing industry chains. Specifically speaking, taking advantages of the comparative strengths of different regions, companies reconstructed their manufacturing chains around the world in exchange for the least costs and the best profits. Take Apple for example, its phone manufacturing business happens around the world. Given the cost advantages of different countries, certain parts are even produced in one country, processed in another country and assembled into iphones in a third country in order to make the largest profit.
However, the globalization after 2020, what we call Digital Migration, is no longer about physical rearrangement. It is a journey of traveling from the physical world to the digital world where we will see no national, spacial and time boundaries.
The globalization before 2020 benefited us in many ways, especially for the transnational companies on the Wall Street and developing countries like China. But it also brought many victims like the middle class and industrial workers in the U.S. and other developed countries, as they are non-tradable goods in economics. For example, when certain industries moved from the U.S. to China, few American workers came to China with the companies and the American workers ended up losing their jobs and having to look for new ways to support themselves.
However, in the digital world, traditionally non-tradable goods like human resources are becoming tradable. Now we see Chinese children learning English with teachers who are living in the U.S. and the U.K. online, demonstrating that digital tools and technologies like the Internet are solving the problems brought by the globalization before 2020.
Therefore, it is safe to say that the globalization after 2020 or Globalization 2.0, accelerated by the coronavirus, will bring a better future.
The famous slogan of Globalization 1.0，“The World is Flat”, talks about the physical world, while the slogan of Globalization 2.0, “Traveling Through Parallel Universes”, refers to moving from the physical world, the Earth, to the digital world.
Human beings have been migrating to the digital world since the birth of the Internet. If we take Being Digital by MIT Professor Negroponte published in 1996 as the herald of the digital migration of mankind, nowadays we can see that being digital has become the mainstream.
The Digitization of Organizations
Coronavirus has sped up the digitization of organizations. For one thing, companies actually do not care about where the employees are if they can work from home efficiently and this can save the companies the trouble of getting working visas for foreign employees, which will profoundly change the relationship between companies and employees and create a favorable environment for flexible employment.
As mentioned before, workers in developed countries bore the brunt of Globalization 1.0 as they were non-tradable and could hardly move with industries. But in this digital world, workers will become tradable. For example, American workers may work for Chinese companies online without moving to China, which makes Globalization 2.0 fairer than the previous one.
For another, digitization brings great revolutions to companies’ organization, management and control system. The hierarchical organization for control and manipulation is gradually giving way to the horizontal organization for collaboration. That is why many companies are shifting from KPI, the performance evaluation model for hierarchical organizations, to OKR, the horizontal model that requires everyone to align their goals, keep the goals transparent and work for the goals even when they are in different time and space. New companies are all working with OKR. Google is the best example. In China, ByteDance employed OKR at a very early time and it has been developing rapidly, indicating that OKR can inject great vitality to companies.
Digitization of Business
After the industrial revolution that has lasted for over 200 years, every industry has entered the phase of Diminishing Marginal Effect. Basic industries like physics, chemistry and traditional industries like automobile are all facing challenges and calling for changes.
Digital technologies are making human resources tradable. For example, in the education industry, teaching online enables American and British teachers to teach students around the world. In the sports industry, VR glasses will increase the value of a $1 billion team to $10 billion, as it enables audience to watch games from home while getting exactly the same experience as they watch the games at stadiums. By the way, stadiums can contain at most 80,000 audience and the number of seats that provide good view is very limited. In this sense, watching games from home while sitting comfortably on your own sofa with the assistance of VR, 5G or even 6G in the future will improve the experience of audience and contribute to selling more tickets. In these cases, we can see that digitization is breaking all boundaries and bringing exciting possibilities.
The Tools for Digital Migration
Digital migration requires various tools, like the Internet that connects people together and the IoT that connects devices together. The number of devices connected by the IoT might amount to trillions, many times the number of people connected by the Internet.
By connecting devices together, the IoT enables the human society to collect numerous data at a very low cost for the first time. We cannot imagine collecting data at such a business favorable cost without the Internet and the IoT.
Blockchain, as a digitized trust machine with the features of irrevocable and unalterable data, can make the data collected by the IoT more reliable and safe once they are uploaded to the blockchain.
Other technical tools like cloud computing, AI and 5G also play irreplaceable roles in the digital migration of human beings. But except for the behavior data used by the Internet companies, a great number of data remain untouched, leaving exciting opportunities to explore the potentials of these data.
In conclusion, in Globalization 2.0 fueled by digitization, mankind will migrate from the physical world to the digital world, requiring all industries to renovate so as to get out of the dilemma caused by the diminishing marginal effect. In this digital world, a digital economy without any diminishing marginal effect is in the making, which is unimaginable in the industrial time and will give birth to more and more companies worth over trillion dollars.