WA China Watch Digest Special!

Interview: Karl Weaver on Consumer Electronics Show in Shanghai, and China leapfrogging U.S. in tech development

Karl Weaver at CES Asia 2017 in Shanghai.By Wen Liu   June 20, 2017

With most headlines nowadays devoted to illusive Russian connections, one could miss those few with more evidence like this one: “China’s copycat tech image is fading and that should worry U.S. tech giants,” or “The rise of the QR code... driving China’s rapid shift towards a cashless society.” Yes, cashless, as this writer found out recently in Beijing when friends paid for a ride or an art gallery ticket with their phone. One person who knows very well this tech transformation in China is Karl Weaver, Mobile Device ecosystem specialist, who just returned from Shanghai attending CES Asia 2017 from June 7-9. What was this CES in Shanghai all about? What new Chinese technology did he find and like? What about the ubiquitous QR code in China? And where is mobile payment in the U.S. in comparison, especially with tech companies in Washington state? Here is Karl.

WCWD: First all, as someone who just attended the CES Asia in Shanghai and also spoke on a panel of wearable technology at the show, could you tell us what this CES was all about?

Karl Weaver: The 2017 CES show in Shanghai, China was packed with consumer electronics device manufacturers from around the World, not just from China. This was the third year for the show and this time it was very close to the other big tech show Mobile World Congress, where I’ll also be presenting this year in late June. Many of the major consumer brand companies were there including Huawei, ZTE, Lenovo, and many IoT related firms as well as some third party Connected Car component supply companies like Continental. There were many European companies but I noted fewer American firms. I sat on a panel session titled “You Are What You Wear” and discussed embedded SIM technology related to Wearable Payment Smart Watches. I had a Huawei Smartwatch to DEMO and discussed it during the event. Huawei has developed their second generation Smartwatch called Huawei SmartWatch 2, and it is the first Smartwatch to market in China to support mobile payments on the wrist with NFC functionality by just tapping the point-of-sale POS terminal that supports NFC payments in Starbucks retail stores in China or also a subway transit ticketing system in all four of China’s major subway systems, Beijing, Shanghai, Guangzhou and Shenzhen.

NFC means Near Field Communications and I played a major role in getting this NFC embedded Smartcard technology designed into OEM Smartphone device manufacturers from 2008-2013 while working in Beijing China for Gemalto and sister company Trustonic (for TEE device security).

WCWD: So I understand that you were in Shanghai as part of a new company. Could you tell the readers a little what you do now or what you are working on?

Karl Weaver: As the business development Director for Asia-Pacific and Greater China at Simulity Labs, I’m focused on development and creation of business opportunities for anything IoT and M2M related. Simulity Labs is a U.K. eSIM software OS company with offices worldwide and some local USA presence. I work remotely from Seattle to jump shoot Asia and China for the promoting of eSIM and the GSMA’s Remote Sim Provisioning Program (RSP). This program allows the owner of the device with the eSIM soldered onto the device to program and reprogram, by themselves (from the device), the wireless operators profile to select more flexible rate plans while doing away with the need to swamp out a SIM card if you travel overseas. That means no more swapping out of SIM cards when entering foreign countries while also eliminating the sticker shock of Global Roaming charges on your monthly bill.

Karl Weaver on CES Asia 2107 panel.WCWD: You worked in China’s wireless market for many years. Could you say something about Alibaba’s AliPay, said to have 450 million users, Tencent payment in-app, integrated with ride-hailing service, and the QR code that seems everywhere in China?

Karl Weaver: Alibaba’s Alipay is very successful inside China even though they use an old, unsafe technology called 3D bar codes. It’s what we refer to as online, remote payments. It requires 4G LTE connectivity on the device because it requires the user to access the internet to perform a mobile payment transaction authentication and certification. The user first opens their web browser on the Smartphone (and mostly people is China use Smartphones to make payments), then they access their AliPay Mobile wallet where the payment application is stored. The Smartphone processes the payment either with a scanning function of the 3D barcode at the point-of-sale or purchasing through the wallet directly through the T-Mall online store on the device. As an example, online payments for goods from an online store will be made and the funds are typically immediately debited from the users debit card account from their bank. Once the goods arrive at the users’ location, they can process the release of funds to be cleared back to the seller of the merchandise.

Tencent’s WeChat pay also uses the same method of remote, online payments through their mobile wallet feature. I prefer to use WeChat because it is so much more than just a “Chat App.” You can actually pay for bike rentals all over China with the mobile payment in-App function of the WeChat’s Social Media Chat App-turned into mobile payment wallet App. Again, 3D QR codes are not safe as in the rental Bike business, as caution has crept in for the 30 plus rental Bike companies because of recent fraud from fake 3D barcodes. However, MoBike and Ofo are migrating to embed 2G WWAN connectivity (and other wireless protocol) cellular modems into their bike rentals to unlock the bikes with 2G connectivity (from China Mobile cellular modules) with safer and better wireless security. I had been using WeChat long before many Chinese people because I was pushing the technology to Tencent starting in 2008. It is by far the best social media chat app on the planet even if most of the Western public is unaware of it.

WCWD: Compared with China, especially in terms of going cashless with mobile payment systems, where is the U.S. now?

Karl Weaver: I doubt China will be cashless society any time soon, even as they have leapfrogged the U.S. for development of mobile NFC “contactless” payment technologies. Gold in China is still the standard means of stabilizing their RMB currency, and rural China simply hasn’t the required technology in place for a complete cashless society. As for Mobile (remote and proximity) Payments, China is ahead of the U.S. and I was interviewed about this at the 2016 CES Show in Las Vegas. Americans have been laggards with mobile NFC payments and mobile device security for a long time. When we look at the existing service provider network set up in China by Shenzhen Snowball Technologies, it is already cutting edge. There aren’t any trials of Mass Rapid Transportations mobile payments network up and running nor a wearables strategy in place that I know of here in North America. I consider that to be a real tragedy. We can see deployment in China and other South and Northeast Asian countries already as well as certain European countries for Smartphone and Smartwatch payments in the Subway systems of China. My Huawei Smartwatch 2 can be purchased in any Huawei retail store in China right now to support mobile payments in all four major subway networks.

WCWD: On the whole, in consumer electronics, do you agree with the CNBC Tech Transformer headline that “China’s copycat tech image is fading and that should worry U.S. tech giants,” or tech companies in Washington state?

Karl Weaver: Yes, for sure Washington state, even though here we are leading in software and cloud development, we are not leaders for mobile payments nor mobile security. We have become too software centric and dependent on Microsoft and Amazon, but software security must be driven from a hardware perspective, and unfortunately the semiconductor chip industry has left the State of Washington in 2015 with Intel’s Dupont manufacturing facility closure. Right now, this has effectively shut out the lights for semiconductor manufacturing in our state. We need visionary thinkers in the State to bring Chinese companies over here to invest in factories. I actually predicted the onslaught of Chinese wireless technology companies entering the state in 2007 when I specifically mentioned a plan to the State’s Commerce Office, which should be developing relationships with Smartphone device vendors in China and have them invest here. All I received was lip service from them at that time. This time I make the same request: please bring in semiconductor and Smart card companies in to Washington state from China and Taiwan to build and back up our embedded devices, semiconductor manufacturing ecosystem.

China has clearly leapfrogged the U.S. for technology development and manufacturing but America still maintains the lead in pure creativity and innovation. Unfortunately, Chinese companies have a tendency to not want to pay for R&D sometimes and prefer to just look at what the latest developments are in the West and do more R&C - "Research how to copy”. Shenzhen to me is an exception because of the Shanzhaiji (山寨机, mountain village phone, or wild copycat phone) spirit that I first discussed in a presentation to the American Chamber of Commerce Beijing in 2009. There is a spirit of risk taking and investing in new development because China is cash-rich for investments in new products and technologies.

Yes, China is transforming from copycat into innovator. The major reason for this is disposable income and inflation deeply impacting the Chinese economy. They have no choice but to innovative to survive. If you investigate at the Bike rental business, the locking system used in China is creative and offers more flexibility than in the U.S. Additionally they are working on wireless charging docks on the Bikes, which is cool. I believe for this Bike Rental business the U.S. can learn from the innovation I have researched inside China.

(For more information on major events in Washington state-China relations, go to WA China Chronicle.)