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By Yun-Hee Kim 

The U.S. may be winning the race in artificial intelligence for now. But it won't last for long.

So predicts Kai-Fu Lee, chairman and chief executive of Sinovation Ventures, a Beijing-based venture-capital firm. He believes the U.S.'s current technological edge over China could disappear within five years, thanks to government support, a growing force of entrepreneurs and their speed of execution.

Mr. Lee, who previously was the head of Google Inc. in China, recently spoke with The Wall Street Journal about the AI race, entrepreneurship in China, and prospects for leading U.S. tech companies in the world's most populous country. Edited excerpts follow.

China vs. U.S.

WSJ: How do Chinese and U.S. strategies to develop AI differ?

MR. LEE: China's techno-utilitarian policy encourages technology to be launched first, observed, and allowed to proceed without obstruction if things go smoothly. If there are issues, it could quickly come up with regulations. An example is mobile payments. In the U.S., this might raise all kinds of lobby, security, hacking concerns from the credit-card companies and banks. But in China, Tencent and Alibaba were permitted to try to run payment systems as software companies, and they did a great job. Mobile payment took over in China.

In China, a highway is being built with sensors to improve autonomous driving, new cities are being developed with autonomous vehicles; some with two layers of roads -- one layer for pedestrians, pets, bicycles, and another layer for cars. All of these will help with testing for autonomous-vehicle systems to be launched sooner. With AI applications, you need a lot of data to do testing. China has a lot of data, so its approach allows it to move faster.

WSJ: What do you think the U.S. needs to improve on and where does China need to invest further when it comes to AI?

MR. LEE: It's going to be about who has more data, faster entrepreneurs, lots of AI engineers and government support. China will continue to catch up against the U.S. in terms of building products and monetizing. What could work in the U.S.'s favor is if someone disrupts the whole thing with a brand new fundamental technological change.

WSJ: Which country is ahead?

MR. LEE: In internet AI, which is algorithms making profitable recommendations for people based on their Web browsing history, China and the U.S. are about equal. China will probably get ahead because it has more user data. In business AI, where companies mine their customer data to come up with new product ideas and improve service, or use it to monitor systems to make them more efficient or lucrative, the U.S. is ahead, and will probably stay ahead because its enterprise data is properly archived and more usable for AI. In perception AI, or things like facial recognition and other biometric interfaces, China is ahead because it is building more sensors cheaply and for broader uses, and it will probably get further ahead.

In autonomous vehicles, it's incredibly hard to tell because it depends on policy. The question is, is the road ahead to making autonomous vehicles ubiquitous mostly about technology breakthroughs? Then the U.S. is ahead. If it's a matter of rapidly testing and evolving without policy, lobbying and unions holding it back, it would be China in the lead.

Work and the workplace

WSJ: What jobs will disappear because of AI?

MR. LEE: Customer service, but not every kind. Customer service with very high-end human touch will stay. Telemarketing and telesales will disappear. Dish washing, fruit picking, assembly-line inspection will all disappear. Paralegals and accountants -- but not 100%. Some lawyers who do form filling, those would be replaced.

Creativity-oriented jobs are safe. Working in a construction environment is safe. Cleaning is hard to do for a robot and every house is different, so that's safe.

WSJ: China is known for its intense startup work culture. It's often referred to as 996 -- work 9 a.m. to 9 p.m., six days a week. Is this a critical factor to the success of Chinese startups? Can this work culture foster true innovation?

MR. LEE: The most important things are focus, tenacity, operational excellence, speed of execution and hard work. They all come together. If you are just hard working but working dumb, that's not good. Then you get burned out. I'm personally concerned about my entrepreneurs but I don't have much hope of changing them. This culture cannot be changed in the next two to three decades as China still emerges from its current state.

WSJ: Do you think Chinese tech companies will be more successful because entrepreneurs there do the grunt work?

MR. LEE: The Chinese companies are not nearly as breakthrough-innovative as the many Silicon Valley greats. Whether it's Elon Musk or Steve Jobs. The whole Chinese education system doesn't really easily train these types of brilliant thinkers. But on the other hand, I think if Silicon Valley or the U.S. continues to view China as copycats, then it will miss many opportunities. The stereotype of looking at Chinese companies as lower-quality copycats will cause American entrepreneurs to have blinders on and miss stuff they should learn.

Chinese innovation

WSJ: Is there real innovation coming out of China now?

MR. LEE: Absolutely. WeChat [a payment and messaging platform from Tencent] is an example. If you look at ByteDance [the company that operates the news-aggregation app Toutiao], while traditional media may not like the content that's being put through, it's a very innovative way for displaying content. Think about minivideos -- Vine [a video app that was owned by Twitter] never worked out, but Chinese companies are doing great with minivideos. Bike-sharing apps like Mobike, these are innovative, creative business solutions that add value, but they weren't created the Silicon Valley way.

WSJ: Trade tensions between China and the U.S. are making it more difficult for foreign companies in China and Chinese companies looking to expand in the U.S. What are the prospects for U.S. tech companies in China?

MR. LEE: It's almost irrelevant. The U.S. and China are almost parallel universes. American companies will not succeed in China, with or without significant regulation. Same for Chinese companies in the U.S. We're almost at a point, at least in consumer internet and AI companies, where U.S. companies don't fit the ecosystem. Let's say ByteDance wants to come to the U. S. -- how are they going to get people to trust this brand? How will it answer questions about the newsfeed?

WSJ: So you don't think the Chinese government is making it more difficult for foreign companies to operate there? Or is it more an issue that U.S. companies built products that don't work for consumers in China?

MR. LEE: I actually think Google and Facebook will get some element of their products in China. But I don't think they will be successful, just because of the parallel-universe reason. Clearly, they are talking [about expanding into China] and Waymo [the autonomous-driving unit of Alphabet Inc.] got approval in Shanghai. Where American companies are likely to have a chance would be to work in a simple, nontangled part of this parallel universe such as doing something brand new.

Ms. Kim is a technology editor for The Wall Street Journal in New York. She can be reached at yun-hee.kim@wsj.com.

(END) Dow Jones Newswires

November 12, 2018 11:02 ET (16:02 GMT)

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