Microsoft feels the pulse of China's digital transformation

By Liu Zheng(chinadaily.com.cn)
Updated: 2016-12-13 15:03:27

A file picture dated 14 March 2015 shows a person demonstrates the look and feel of new operating system Windows 10 for Smartphones and at the Microsoft stall at the CeBIT technology fair in Hanover, Germany. [Photo/IC]

As a global conglomerate that has been expanded for more than two decades in China, Microsoft has partnered with local enterprises across sectors to achieve new goals amid a digital transformation upsurge, according to an executive of Microsoft Corp.

"Chinese government has embraced digital transformation like few other nations in the world, and domestic enterprises across almost every industry recognize the value of digital transformation and are looking for partners to help them move forward," said Alain Crozier, chairman and chief executive officer of Microsoft Greater China Region.

Alain Crozier, chairman and chief executive officer of Microsoft Greater China Region [Photo provided to chinadaily.com.cn]

Crozier said the application of cloud technologies, including, big data, internet of things, machine learning and artificial intelligence, will empower breakthroughs in productivity, customer engagement, operational efficiency and will help every organization in the diverse economic and developmental landscape become digital.

Taking the latest case as an example, last month, Microsoft announced a partnership with China Development Bank Capital to promote technology innovation and smart city development in the country.

The two sides will jointly build innovation incubators and accelerators to support excellent startups, and explore the new development mode of smart city based on Microsoft's intelligent cloud platform and productivity services.

Currently, the Microsoft accelerator program has helped 125 startups in the past five years in the nation. Out of them 116 received investment funding upon graduation, 12 of them have been acquired and three have issued initial public offering.

Recently Crozier spoke to China Daily about his vision and strategy and new opportunities for his operations in China.

The following are edited excerpts of the interview:

1. How do you view China's rapid economic growth and its recent slowdown? Will this affect your business development in the market?

Reforms are under way in China, transforming the economy from investment- and labor-intensive to one that is driven by innovation.

Microsoft has been part of China for more than 20 years and we continue to transform with China.

We view the current reforms and the future that they will deliver as an enormous opportunity for innovation – for great new ideas to emerge around China's unique challenges and scale, and for China to be a source of solutions that will reshape the future for people around the world.

Together with a strong partner ecosystem, Microsoft is committed to empowering China's digital transformation, upgrading of both traditional industries and emerging sectors with advanced technologies and cloud-enabled solutions, and helping to build and fuel China's innovation engine.

2. What are your business strategies as you readjust to the new Chinese economic realities like the New Normal?

Microsoft believes that we are uniquely positioned to help accelerate China's digital transformation in line with the ambitions expressed in the 13th Five-Year Plan, which will largely be driven by cloud-based technologies.

Microsoft CEO Satya Nadella speaks at a Microsoft tech gathering in Dublin, Ireland October 3, 2016. [Photo/Agencies]

3. How do you assess the prospects of your business in China in conjunction with the Chinese market and economy?

I have a great deal of confidence in Microsoft's business prospects across series of industries, such as retail, services, healthcare and the government in the nation.

For example, we worked with PPTV to develop a content platform on the Microsoft Azure Cloud that enables Chinese television producers around the globe to easily upload their programs for Chinese audiences to discover and watch from anywhere with an internet connection.

Bank of China has introduced a financial management platform based on Office 365 and Microsoft's Intelligent Cloud that reduces the operating costs for Bank of China branches.

Taxi-hailing unicorn Didi Chuxing has started using Office 365's extensibility model to enable enterprises to link their corporate Didi accounts to Outlook -- allowing employees to book vehicles directly in Outlook and management and finance teams to control usage and costs within the same experience.

Haier is building the "U+Home" smart home platform using Microsoft Azure for its backend and XiaoIce as the intelligent assistant in their app.

By doing so, Haier is differentiating their products and delivering new value to consumers while creating an entirely new ecosystem of services that will capture new revenue.

4. Do you have any plans for new investments in China in the next few years? Do you plan to add to your R&D efforts in China?

Microsoft has been a part of China for more than 20 years and our largest research and development center in the world outside of our American headquarters is in China.

Over past two decades, many talented alumni from Microsoft Research Asia have gone on to help the China IT Industry thrive.

More and more of the basic innovation work that will shape future Microsoft technology are coming from China.

XiaoIce is a great example.

It is an AI chat-bot built by Microsoft researchers in China that has a unique personality and, thanks to massive feedback from Chinese internet users, a balanced IQ and EQ that allows her to form unique emotional connections with users.

Photo taken on August 13, 2014 shows the mugshot of XiaoIce's Sina Weibo account.[Photo/IC]

XiaoIce has been released in both China and Japan and has 40 million users. In China, XiaoIce acts as a Trainee Anchor for Dragon TV's 'Good Morning' Program -- the first time an AI has achieved this level responsibility and notoriety in the world.

Microsoft is now using what it has learned from XiaoIce's success in China to influence its bots and AI experiences in other parts of the world.

However, our investments in innovation are not solely about research and product breakthroughs for Microsoft.

Microsoft's business model is all about building a strong and broad ecosystem of innovative partners who build upon our technologies and platforms to deliver innovation of their own - and use it to grow substantial businesses with global reach.

In Shenzhen, for example, we work with more than 140 partners who are building Windows devices -- everything from tablets and laptops to drones and internet of things sensors.

They have delivered more than 300 devices that are sold in more than 75 countries and regions around the world since we started working with them, bringing more than 8 billion yuan in revenue back to Shenzhen.

5. What do you think of the opportunities and challenges facing your company amid recent traditional industry reform in China? How does your company fit into the national strategy of "Made in China 2025" and "Internet Plus"?

"Made in China 2025" and "Internet Plus" aim to update systems, connect internet of things devices and harness and leverage data to propel the transformation of the Chinese economy, making more efficient use of the flow of information, people and capital.

Microsoft brings a uniquely aligned combination of global experience, resources including talent and technologies to these ambitions.

We operate in China less and less like an international company with business in China, and more and more like a Chinese company with international ties and global ambitions – because that's exactly what our customers and partners are, and we are here to help people and organizations transform and achieve more.

Our mission, vision and ambitions translate into strategy in China under a single, guiding principle: everything thing that we do in China, we do with China, as part of China.

I believe that any organization in China that spends some time sharing their challenges with the Microsoft team will come away believing that we are the most capable digital transformation partner on the planet – not just for their challenges today but for the challenges they have not even imagined yet.

Microsoft CEO Satya Nadella speaks at a Microsoft tech gathering in Dublin, Ireland October 3, 2016. [Photo/Agencies]

So, whether it's a traditional industrial operation exploring automation, a financial services business exploring Block chain, or a startup exploring holographic gaming or eSports broadcast, we have the platforms, partners, solutions and programs to help.

6. What's the biggest difference between the China market and the other markets? What are the challenges in the China market?

China is such a diverse economic and developmental landscape that it can't really be compared to any single market in the world.

Major urban areas are some of the most advanced anywhere in the terms of the progress of digital transformation.

At the same time, China has rural areas with little or no basic infrastructure for digital transformation.

China has many massive traditional industrial enterprises that must transform to survive and thrive in this new era where efficiency, productivity, the environment and global supply chains play an increasingly critical role in determining success.

The economics and societal implications of that will not be insignificant.

At the same time, China has one of the most creative and energized born-in-the-cloud technology startup environments in the world and China's digital-native innovators have already built several of the world's most powerful internet companies. The implications of that for China and for the world are also significant.

Microsoft's mission is to empower every person and every organization on the planet to achieve more. Microsoft China was in many ways born in and shaped by the incredible diversity and dynamics of this environment and the China that we see today.

So, we can't help but see all of this as the world's greatest opportunity to have a positive impact.

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