'B side' innovations－next investment hot spots

Technology-driven innovations on the "B side" will emerge as one of the key drivers of China's economic growth in the coming decade, said Kai-Fu Lee, founder and CEO of tech venture capital firm Sinovation Ventures.

The B side refers to businesses that sell products and services directly to corporate clients and enterprises instead of individual customers. Industrial supply chains, enterprise services and logistics are considered part of the B side.

B side innovations will make sectors like industrial automation hot investment spots, he said.

"China is ushering in a golden wave of industrial upgrading, which is driven by technology. Thus, technology-enabled automation, intelligence and cloud computing will become the nation's core economic drivers in the coming 10 years," said Lee.

He said that compared with companies such as Meituan, Pinduoduo and Douyin that serve customers directly, the country's businesses on the B side are lagging behind and most of them remain labor-intensive.

"In the logistics industry, for instance, massive packages during the Double Eleven and Double Twelve online shopping galas still relied on mom and pop delivery stations to be hand-packed," he said.

"But the COVID-19 pandemic and rising global economic uncertainties have prompted more local companies to embrace artificial intelligence and automation, instead of simple and repetitive labor, so as to reduce costs and increase efficiency," Lee said.

He also said that with rising demand, automated robotics technology is expected to push China's manufacturing capabilities to a new high with absolute advantages in global competitiveness.