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James Chou Discusses Microsoft’s Unique Position Straddling East and West

One of the most prominent figures at Microsoft in Asia is James Chou who leads the startup activities of the company in China, Japan and South Korea. Centrally linked to the acceleration of fledgling companies, this former HP and NEC manager is known as a successful serial entrepreneur and venture capitalist. Here, he gives TFT his a unique perspective on tech innovation from the fault line between East and West… 

Why does China need two Microsoft Accelerators?

Microsoft has a very strong presence in China. The mass entrepreneurship and innovation policy in China has created a really good startup ecosystem for tech startups.   Microsoft ScaleUp Shanghai was made possible through a joint effort by the Shanghai Xuhui government, Microsoft and INESA Group, integrating vast resources to support better growth for startups in Shanghai. Constant efforts with all the parties are to being made to deepen and widen cooperation in supporting the development of Shanghai in digital transformation to become the world centre of economy, finance, trade and shipping, as well as a tech centre in China.  There are so many innovations happening in China. In addition to two Microsoft Accelerators in China, we’re also cooperating with Chinese local government to establish 20+ Microsoft Mobile and Cloud Incubation programs for Chinese startups.

Microsoft for Startups Shanghai is an exclusive club. What are the key entry requirements?

Microsoft for Startups Shanghai has very high selection criteria.  We are mainly focussed on tech innovation startups who are already at least Series A funded by leading VCs.  We are interested in tech startups who are applying AI, Blockchain, Cloud, Big Data, AR/VR/MR, and Robotics technology to solve B2B problems.  We connect those startups with Fortune 500 companies’ customers of Microsoft as those customers are going through their digital transformation and open innovation journey.  

Constant efforts with all the parties are to being made to deepen and widen cooperation in supporting the development of Shanghai in digital transformation

You’ve been quoted as having said that, “Shanghai is uniquely positioned to drive innovation and encourage entrepreneurship.” Why do you think that’s the case?

China has become the most innovative and dynamic market in the world today. First Shanghai is the regional headquarters of many MNCs and a financial center of China.  Those companies all go through digital transformations and are willing to work with startups for open innovation. This trend creates many good use cases for startup innovation.  Second, the Shanghai government is very supportive. They have created many programs to support innovation and entrepreneurship such as providing special policies to startups and building good tech ecosystems to encourage innovation.  Last but not least, Chinese consumers are very willing to try new technology and digital products. The startups can use their AI and data analytics technology to build innovative solutions to create unique consumer experiences.   

What advantages do fintech hubs in China, Japan and South Korea have over those in Europe or the United States?

It has been observed that Chinese cities have topped leading fintech hub rankings. As we all know, mobile payments and transfers are probably the most frequently used fintech service in China. For example, Alipay, a mobile and online payment platform, has 870 million active users, with 600 million in China and 270 million in the rest of the world. And mobile payments is also trending in countries like Japan and South Korea. The key to success for fintech in Asia has a lot to do with its young population. Millennials are widespread amongst Hong- Kong, Singapore, Tokyo and other regions. This group of the population is tech-savvy, digitally advanced and very accepting of digital norms.  Overall, US and Europe may have some advantages in terms of basic research of the technology. In Asia, entrepreneurs are moving at a much faster pace to create applications using those technologies.

It has been observed that Chinese cities have topped leading fintech hub rankings. As we all know, mobile payments and transfers are probably the most frequently used fintech service in China.

What are the main challenges of working with companies in jurisdictions as diffuse as China, Japan and South Korea?

The main challenges of working with companies in jurisdictions are that their cultures very different as are their regulations.  In the past, western companies have localised their products to serve those markets. This has created many opportunities for the local entrepreneurs to leverage their understanding of differences to build products and services to compete with the global players.  On the other hand, this also creates a double edged sword for those companies as they want to go global.

To what extent do geopolitical circumstances, be it tense trade relations or intrigue surrounding Huawei, need to be taken into consideration when representing a huge US brand in China?

We’re closely monitoring the situation and hope the trade negotiation between the two countries can have a breakthrough.    

What are the greatest challenges facing global TMT brands today?

The greatest challenges facing any brand today is to how to constantly innovate and stay competitive in the market. There are so many new innovations and disruptive technologies that have been created by the startups.  We have to keep innovating and move fast.

Are there any projects within Microsoft for Startups Shanghai that you’re especially proud of?

There are so many.  Just to name a few: NextVPU, an AI company who designed the world’s first smart glasses for blind and vision impaired people to “view” the world, called “AngelEye”.  This is a good example of AI and Tech for good. http://www.nextvpu.com/index_en.aspx

Another company is called Citybox, a company who created an interesting smart fridge vending machine that allows the consumer to use their mobile phone or face to unlock the vending machine, then take whatever goods in the fridge you want.  After you close the door, the system will automatically deduct the payment from your bank account.

Since Microsoft is a tech company, a lot of our startups are actually “techfin”. Technology companies for the financial industry.

Which Microsoft for Startups fintech projects should we look out for in 2020?

Since Microsoft is a tech company, a lot of our startups are actually “techfin”. Technology companies for the financial industry.  I would name 2 techfin startups in my portfolio. One is called Datavisor (www.datavisor.com), they use AI for intelligent fraud detection and anti-money laundering.  The other one is called icekredit (www.icekredit.ai).  The company uses AI technology to managing credit risks for banks to do SMEs lending.  It was ranked in KMPG’s top 50 fintech companies in China 2 years in a row since 2017.

Our most recent print edition focused on AI in finance. Which sectors do you think will be most disrupted by the application of artificial intelligence?

From the finance world, some work may be disrupted by AI.   Some of the things we have seen are:

  • Robotic Process Automation (RPA) to automate the repetitive nature of the tasks of human beings to minimise errors and to save costs
  • Chatbot digital agencies to optimise customer service experiences
  • KYC and fraud prevention, identity protection
  • Risk and compliance
  • Robo-Advisory for wealth management
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