Jun 13, 2018

Axios Future

By Bryan Walsh
Bryan Walsh

Welcome from Shanghai. I'm writing Future from China this week and packing as much as I can from the trip into today's newsletter. Let me know what you think. We were in Beijing on Monday and Tuesday, and now have moved to China's financial capital.

Meanwhile, thanks for subscribing. Consider inviting your friends and colleagues to sign up. I'd love to hear your ideas: Just hit reply to this email or shoot me a message at steve@axios.com. Let's start with ...

1 big thing: In China, a clue to how jobs may go

Illustration: Rebecca Zisser/Axios

JD.com, a Chinese e-commerce gargantuan, has built a big new Shanghai fulfillment center that can organize, pack and ship 200,000 orders a day. It employs four people — all of whom service the robots.

Welcome to the creeping new age of automation. When the talk turns to Chinese Big Tech — rivals to Google, Amazon and the rest of Silicon Valley — the names usually cited are Alibaba, Baidu and Tencent.

But scrappy JD, with a respectable $58 billion market cap, is investing aggressively to be added to the pantheon.

  • Its secret sauce, executives said this week in Beijing and Shanghai, is logistics — its creation of China's first east-to-west, north-to-south package delivery business, able to deliver a purchase the same day almost anywhere in the nation, as long as it's ordered by 11am.
  • But to get faster and more reliable, just as important is automation: From smart warehouses that process orders, to self-driving trucks and drones to deliver them, JD's R&D team is developing ways to eliminate costly workers.

Why it matters: This is the future. Like JD, its fierce e-commerce competition Alibaba has also built an entirely automated warehouse, showing the way for how retail will probably be done everywhere.

  • There were about 1 million warehouse workers in the U.S. as of May, according to the Bureau of Labor Statistics.
  • JD says its objective is not to eliminate workers, and that it will shift them to other jobs. It currently employs some 160,000 workers, around 65,000 of whom are couriers.
  • To the degree its development of autonomous trucks is successful, many of the couriers could lose their jobs.

JD's new mantra is "retail as a service," in which it will sell the efficient methods it's developed to other companies.

Go deeper: Read the whole post.

2. Tale of the box

JD.com's Shanghai warehouse for luxury goods. Photo: Steve LeVine/Axios

I am inside a 28-meter-tall, 100,000-square-foot Shanghai warehouse stacked almost to the ceiling with boxes stored one atop the other on 60,000 pallets.

Math question: How many workers are needed to process the 50,000 to 100,000 orders that go out of the building every day?

The answer, says Pujiang Pu, manager of the warehouse, owned by JD: It depends on the size of the box — small, medium or large.

  • Within that answer lies the current state of the robotization of warehouses — robots are equipped to handle mostly small boxes.

This particular warehouse handles only medium-size boxes: That means 12-by-24-inches. It’s increasingly automated but still has the most employees of any warehouse in the park — 500 workers split into two shifts.

  • If an item can fit into a small box, current automation can handle them, so they go to the (mostly) humanless warehouse discussed above.

What's next: This setup is just for now, according to Pu. He says:

  • The company is experimenting with more automation, and will bring in dozens of self-driving forklifts and around 20 mechanical arms by the end of the year.
  • JD owns more than 500 such warehouses around China. Adds company spokesperson Lori Chao, “we would like to upgrade all of them to be personless and let these workers do other things” for the company.

For now, working here is a lifestyle. Pu said on a tour today that more than two-thirds of the workers — including himself — live in dormitory rooms on the site. He’s been doing so for eight years. We asked why, and he said with a smile, “I like to keep an eye on the operation.”

3. Getting along with Xi

The new way of politics and business. Illustration: Greg Ruben/Axios

American and Chinese corporate titans share something in common: jittery slavishness to their president, and sometimes even each other's president.

In the U.S., President Trump's tweets — sometimes even the threat of one — send powerful CEOs scrambling to announce hiring sprees, factory openings and profit repatriation.

In China, the driver for seeing things President Xi Jinping's way — quite apart from survival and staying out of prison — is Belt and Road, his planet-spanning infrastructure initiative.

The bottom line: Beth Bao, a strategic planning executive with JD Logistics, says the company is sometimes deliberately aligning company strategy with Belt and Road. Others are doing the same. Among the examples:

  • JD is shipping cargo on dedicated rail cars twice a week from Hamburg to the Chinese provinces of Xi'an and Chengdu, along the Belt and Road route, Bao said this week.
  • Jack Ma, founder of JD's e-commerce rival Alibaba, last year called Belt and Road "a responsibility and an opportunity.”
  • Western companies, too, frequently cite investments along Belt and Road in what appear to be conspicuous toadying to Xi.

Go deeper: Read the whole post.

4. Smartish cities

Shanghai scored high in awareness of smartness. Photo: Artur Widak/NurPhoto/Getty

One of the most over-used slogans of recent years has been "smart cities," the vision of a connected, Jetsons-like future of streamlined metropolises where technology smoothly manages energy use, traffic, policing and more.

The big picture: Even so, a decade after the term first gained currency, we still have no truly smart cities, according to McKinsey Global Institute via its new study of 50 selected cities around the world.

What happened: One of the problems, say the study's authors, has been that cities have focused too much on the technology and too little on humans. The study emphasized that smart phones are the door to the smart city, providing all the information at one's fingertips for health, traffic, safety and news.

  • Co-author Jaana Remes tells Axios that she was surprised by how low European cities rank in much of the study.
  • In terms of establishing a strong technological base, Amsterdam and Stockholm scored high right alongside Seoul, Singapore and New York. All were praised for having "ultra-high-speed communication networks and [being] in the process of launching 5G services."
  • But Europe was well behind the leaders when it came to using smart apps and awareness of the elements of smartness.

Go deeper: Read full story.

5. Worthy of your time
Expand chart
Data: Centers for Disease Control; Cartogram: Chris Canipe/Axios

Knives are out for U.S. pork in trade war (Gregory Meyer – FT)

Suicide is up in almost every U.S. state (Chris Canipe/Haley Britzky - Axios)

Watch the World Cup through VR glasses (Erin Winick - MIT Technology Review)

Drone surveillance state, unplugged (Dave Gershgorn - Quartz)

Why our working memory stops at four (Jordana Cepelewicz - Quanta)

6. 1 pig thing: What's in a face?

Betty? Susie? Photo: Nicolas Asfouri/AFP/Getty

One of the biggest advances in this early stage of working artificial intelligence is facial recognition — as seen via Facebook's ability to pick out individuals across its platform, and China's skill in nabbing suspected criminals out of a city crowd.

But last year, engineers working for JD Finance in Beijing wondered where such capabilities could go next. What about animals? Was AI sufficiently advanced, for instance, to reliably distinguish one piglet from another?

Soon afterwards, a contest unfolded, pitting three teams of JD Finance engineers against one another to adapt facial recognition programs to pigs.

How will the winner be selected?

  • As a first stage, each team must show it can identify individual pigs, says Chris Yao, a vice president of strategy for the JD.com affiliate, speaking over lunch.
  • Then, they must do so over time — after all, as with humans, a piglet's facial appearance evolves as it grows up.

This isn't entirely a lark: The pig inquiry has its roots in a prior JD Finance study of chickens that resulted in a way to systemize feed costs for a full-size bird.

  • If facial recognition can detect a pig's age and approximate weight through time, it might be possible to systematize the cost of feed to raise them, too, and "when it's the right time to sell," Yao said.
  • Yao said he has begun to look around for who might pay for such data.
Bryan Walsh