Chinese virtual reality is going to fuel trade wars

The Chinese government has made no secret of their interest in integrating technology throughout China’s culture. From AI law enforcement to their (somewhat misunderstood) social credit score, China wants tech to take a leading role in their culture and economy.

This includes virtual reality. While most would agree that the sector has somewhat cooled over the past couple of years, China remains eager to find opportunities in the new world of VR. In fact, it may even be the new battlefront of the trade war.

VR Subsidies

Nanchang is the capital of Jiangxi province, which The Associated Press describes as “a relatively impoverished region nestled in the mountains of south-central China, where the regional industries are copper mining and rice.” It’s also home to VR Star park, a VR theme park featuring dozens of exhibitions and games.

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The VR playground didn’t simply spring up organically. Rather, it’s part of a government subsidized push into the emerging tech. Xiong Zongming, CEO of IN-UP Technology, was lured back to his hometown of Nanchang thanks to government paid rent and 150,000 RMB ($22,340) in startup funds.  

“Frankly, VR isn’t 100 percent necessary in the Chinese market at the moment,” he told the AP. “But with the government’s push, many other companies, departments and agencies are more willing to try it out.”

These government subsidies are part of what frustrates the American economists pushing for Trump’s trade war. Where westerners risk their own capital on investments, Chinese firms have the comparatively stable backing of the government itself.

Virtual Health Care

The government’s VR subsidies include software focused on education, training, and health care. The latter shows great promise, as medical students can utilize VR for training.

That’s what’s happening at Fuwai Hospital, China’s leading hospital for cardiovascular diseases. Last year, doctors underwent a 10-month VR training program at the hospital. According to Xinhua, “users equipped with a headset and a motion controller will not only get a 360-degree view of the anatomic structure of a patient’s heart but can also interact with some virtual features.”

All of the trainees said the VR training had a positive impact on their comprehension.

“The VR images look more vivid than pictures on paper or on computers,” trainee Zhong Zhaoji told Xinhua. “The system enabled me to observe all parts, experience virtual cutting, and even move around in the virtual heart.” Experts believe the VR training could help doctors learn surgical techniques much faster. And some day, it might also be used to help senior surgeons in their general operations.

TVR

Despite the potential medical applications, right now, the most popular use for VR is entertainment. Here too, China is keen to get into the game.

The South China Morning Post recently ran a profile on “Grease” director Randal Kleiser’s foray into virtual reality. His VR drama “Defrost” premiered last month on Veer, a Beijing-based VR content provider. Consisting of 11 five-minute episodes, the show is among the early experiments in VR-storytelling.

“I got the actors to rehearse how to move within the five minutes,” Kleiser said. “It’s like a small play for each episode.” The five-minute structure is no accident either.

“Each episode of Defrost is only five minutes long because people who use VR only like to be in it for five minutes at a time,” says Kleiser.

Softer Hardware

The short increment has a lot to do with the VR headgear, which is often clunky and uncomfortable. The Chinese video streaming company iQiyi is looking to change that with their new Qiyu 2S headset.

After testing the device, CNBC said “the immediate takeaway was how light the Qiyu 2S felt.” Weighing just 280 grams, or 9.9 ounces, the headset is lighter than many competitor’s devices, while still providing 4k resolution. And it’s starting price of 1,999 yeun ($294) should make it “a competitive, mid-market headset,” according to CNBC.

The tech is just part of what’s interesting about this device. iQiyi is primarily a streaming service, like Netflix, and boasts over 80 million monthly subscribers. CNBC notes that getting into the hardware business “is a first for a major company focused on producing and distributing entertainment.”

VR For 5G

The custom content iQiyi is distributing for the Qiyu 2S includes seats in a virtual movie theater, which uses a high-resolution projection screen. There are also front-row seats for concerts and sporting events, a sector with intriguing opportunities for promoters of live entertainment.

The transition to 5G will be an important step in the evolution of VR, in China, and abroad. Earlier this year, the country’s first 5G VR live broadcast took place during the popular Spring Festival Gala. With U.S. networks lagging behind in the race for 5G, Chinese companies like Huawei can take the lead, in part thanks to the promise of wondrous new services like VR without WiFi.

Master Plans

The interest in VR is merely one branch of China’s overall plan of “Made in China 2025.” According to the Council on Foreign Relations, the policy “aims to use government subsidies, mobilize state-owned enterprises, and pursue intellectual property acquisition to catch up with—and then surpass—Western technological prowess in advanced industries.”

This is clearly a threat to America’s dominance in the tech industry and is a big part of the reason why the Trump administration is imposing new tariffs on Chinese goods. The escalating trade war, which sent stocks tumbling on the day of this writing, may affect farmers most acutely but it’s really about protecting America’s technological interests.  

So even though virtual reality is only a small part of the current tech landscape—just 5.8 million VR headsets were sold globally in 2018, compared to more than 1.5 billion smartphones—it’s turf that both Chinese and American companies are eager to claim. And ultimately, the winner of these smaller skirmishes may determine the outcome of the larger trade war.

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