Media  International Exchange  2020.06.16

Catching up with and Overtaking China in Social Infrastructure Development after COVID-19: Early examples in China are particularly useful for new non-contact lifestyles

The article was originally posted on JBpress on May 19, 2020

Social infrastructure development required for new non-contact lifestyles

Based on the assumption that the battle against COVID-19 will be a long-term one, the Japanese government has advocated new lifestyles to ensure that non-contact daily life takes root in society.

The new lifestyles require everyone to make efforts to wear a mask, wash hands, keep a certain distance from people when shopping, doing exercise, and commuting to/from work, adopting staggered working hours, and going to/coming from the office or school on foot or by bicycle.

However, some of these measures are difficult to achieve through the efforts of the individual alone.

 Difficult to promote are initiatives to make it an integral part of society to use mail-order sales and electronic payment when shopping, utilize delivery services for eating and drinking, and adopt workstyles based on telework and online conferencing.

In order to ensure a smooth shift by all people to these new lifestyles, it is necessary to develop social infrastructure that supports them.

The most fundamental requirement to achieve the goal is to make a smartphone and a PC available to every person.

Smartphones are essential for online shopping, food and beverage deliveries, electronic payments, and other such online transactions. PCs or tablet computers are needed for telework and online conferencing.

In addition, it is important to establish communications networks that allow people to use their communications equipment at any place in the country with a sense of security.

Recently, an increasing number of workers have communicated with each other via online conferencing when they worked at home, but images and voices often break up during conversations, causing inconvenience to users.

If such inconveniences continue, people will not be able to use communications networks constantly for business meetings and school education at a satisfactory level.

The starting point of these new lifestyles is to ensure that the use of communications equipment such as smartphones and PCs spreads to all people and that all communications inconveniences are eliminated.

Based on such infrastructure, if economic and social systems that support the smooth provision of diverse services needed for daily life are built and applications and other software programs linked to such systems are developed and upgraded, the real shift to new lifestyles will begin across the country.

In the shift to new lifestyles, online school education as well as online diagnosing, prescription, and drug purchases in the medical services are also important issues that the government cannot afford to put off though they are not specified the government's recent proposals, and it is necessary to develop social infrastructure for these initiatives.

In order to prepare for the prolongation of the battle against COVID-19 and promote a swift shift to new lifestyles, it is the government's important responsibility to give top priority to social infrastructure development as described above.

Strong dissatisfaction with the Shinzo Abe administration and government agencies is building up among the people as it strives to take countermeasures against COVID-19, including establishing PCR test systems, compensating businesses for suspension of their operations, and supporting small and medium enterprises.

Nonetheless, Japan is holding on in some way or other though it is being driven to the very limit.

In order to reward the efforts of the people, the government needs to take appropriate policy measures swiftly when it promotes a shift to new lifestyles so that many people can feel that they are happy that they live in Japan.

All-out efforts to voluntarily refrain from going outside prevented explosive infection

The greatest objective of these new lifestyles is of course to prevent the re-spread of COVID-19. The understanding of the author is that the effects of the new lifestyles introduced have specifically been shown in the countermeasures China took against the pandemic.

In China, in order to prevent the spread of COVID-19, the government implemented strong isolation policies such as the lockdown of Wuhan and imposed a strict, complete curfew throughout the country.

These two principal countermeasures enabled the government to successfully contain the pandemic early. Partly because these countermeasures were effective, the government did not conduct PCR tests for a wide range of people as in Western countries.

In addition to the lockdown of cities and the cutting off of high-speed interprovincial railways, expressways, and other means of transport, China's isolation policies included the monitoring of COVID-19-positive patients kept at home in isolation using monitoring sensors and cameras at the entrances - a countermeasure to which it is difficult to obtain the consent of people in Japan and Western countries.

Another restriction on people going outside was to thoroughly implement three measures: taking people's temperature, registering their contact address, phone number, and ID, and presenting a green code (*) on their smartphone at the entrance of condominiums, offices, stores, etc.

(*) The green code is a code to certify, among others, that the individual has not proven to be infected, nor has he/she left the designated area of a province or city where he/she lives. It is displayed on the individual's smartphone.

According to explanations by a Japanese medical expert, the accuracy level of PCR tests for COVID-19 is around 70%, and in addition, the percentage of patients without symptoms is high. Therefore, medically speaking, even all-out efforts to check the three points listed above are not so effective in preventing the spread of COVID-19.

The reason China succeeded in containing the pandemic early despite these facts was probably that Chinese people decreased contact with others to an extreme by conscientiously refraining from going outside.

It seems that the strict restrictions imposed by the government were not the only important reason for China's success.

In China, one often hears the phrase "The government has its policies, people have their countermeasures."

In China, it is normal that no matter how hard it tries to uniformly carry out a policy nationwide, the central government cannot fully implement it for all of its 1.4 billion people, who greatly vary from one region to another as power is decentralized.

The principal reason the central government was recently able to thoroughly prohibit people from going outside despite the normality mentioned above was probably the voluntary efforts based on the morality of traditional communities such as town associations in each area as well as the various types of well-developed social infrastructure, which enables new lifestyles.

Without such well-developed social infrastructure, a rapid spread of infections would have certainly been brought about through infected patients without symptoms as it was in Western countries even if the government made all-efforts to urge people to refrain from going outside.

Social infrastructure that enabled people to conscientiously refrain from going outside

In China, the leading actor behind the scenes that supported people in conscientiously refraining from going out was social infrastructure, which has been developed at a quick pace over the past several years.

China saw its economy and society shift to IT and digital technology rapidly in the 2010s. Ten years ago, nobody imagined that IT and digital technology would increase convenience in various aspects this fast.

Originally, since telephones were not installed in all houses, mobile phones and smartphones spread. Since there were no convenient stores, e-commerce replaced brick-and-mortar stores. Since convenient financial institutions were not available, electronic payments and fintech (financial technology) developed quickly.

That was accelerated by technological innovation in the area of AI and big data, ensuring that economic and social infrastructure based on IT, AI, and digital technology took hold in China.

As described above, the emergence of highly convenient new technology prompts next-generation advanced technology to spread suddenly, leapfrogging technology at the in-between stage. This phenomenon is called "leapfrog development" (note).

(Note) For details, refer to the article entitled "Do not miss super-megamarkets that pop up in China: "Leapfrog" development where underdeveloped infrastructure paradoxically gives rise to a cutting-edge market," which was published by JBpress on June 19, 2017.

As the use of IT, AI, and digital technology progressed in the economy and society, the percentage of online consumption to total sales of consumer goods at the retail level in China rose sharply from 10.4% in 2014 to 25.8% in 2019.

In particular, in the first quarter of 2020, when consumers were forced to depend on e-commerce owing to voluntary restraint on going outside, the percentage jumped to as high as 28.2%.

The major reason e-commerce developed so rapidly is the availability of highly convenient home delivery services unimaginable in Japan, such as the delivery of meat, fish, vegetables and other perishable foods within one hour of placing an order and the quick response of various restaurants to requests for food delivery.

Chinese consumers do not need to go out to buy basic daily necessities.

As countermeasures against COVID-19 were taken, telemedicine also evolved rapidly, making all processes from diagnosis to prescription to drug purchases and deliveries available online, though not entirely.

In addition, from February of this year, school education saw online classes begin nationwide all at once, but this was also realized in a short period of time simply because smartphones had permeated the entire society.

As described above, the major reason the government was able to impose strict, thorough restrictions on going outside throughout the entire country as part of its countermeasures against COVID-19 was probably the existence of social infrastructure that effectively used IT, AI, and digital technology, which made non-contact lifestyles possible.

Japanese businesses move to strengthen their Chinese bases

After COVID-19, Japan will need to change quickly to realize new lifestyles early. Many early examples which provide models for new lifestyles can be found in China's social infrastructure.

Of course, some of the Chinese models cannot be introduced as they are because Japan has different political and economic systems from those of China.

During the past several years, however, Japanese businesses have used Chinese success stories for reference when they have introduced payment by smartphone, bicycle sharing, and other novel systems which China had developed earlier than any other country in the world.

In the years to come, there will certainly be cases where Japan introduces new systems while referring to China's advanced technologies and services in areas such as the sophistication of e-commerce services, the development of telemedicine, and the utilization of individual number cards in a wider range of areas.

Some advanced Japanese businesses have already reckoned that in order to develop new technologies and services which enable sophistication of IT, AI, and a digitized society, it is necessary to establish research and development centers in China and build R&D systems under the leadership of Chinese operations.

The reason is that in Japan, where infrastructure required for IT, AI, and digitized society is underdeveloped, it is difficult to identify the needs of markets for products and services that make the most of cutting-edge technology.

The necessity of developing advanced technology linked to specific market needs can only be understood in an environment with fully developed social infrastructure.

Since such a requirement is not met in Japan, it is extremely difficult for Japanese managers stationed in China to make management at the Japanese headquarters understand specific needs in the Chinese market no matter how much they explain them.

It is clear that if their manager in China waits for the management at the head office to understand such needs, Japanese businesses cannot survive the fierce competition with their overseas counterparts as they vie with others to develop the world's highest-level technology.

5G-related technology is expected to rapidly accelerate social infrastructure development required for the progress of IT, AI, and digital technology in the future.

In China, the central government, which views projects such as the construction of 5G base stations as new infrastructure construction investments, is helping promote the spread of 5G-related technology.

The development of 5G-related technology is expected to gain further importance as new lifestyles that emphasize the necessity of "no contact" take hold after COVID-19.

The importance of 5G technology in areas such as telemedicine, online learning, and e-commerce is already widely recognized.

An increasing number of Japanese businesses recognize that in order to compete equally with the world's most advanced businesses in these fields, they have to implement management strategies in areas such as R&D, marketing, production, and sales in China, where social infrastructure is well developed, and that otherwise, they would have no chance of winning.