Cainiao Future Park in Xinwu district of Wuxi, Jiangsu province integrates internet of things technology with the logistics business. [Photo provided to China Daily]

Wealth delivered to China's smaller cities, rural areas

The application of automation and artificial intelligence to China's logistics networks is improving normal life in unexpected ways. It is enabling the upgrading of the real economy of factories and agriculture. Plus, it is important in reducing poverty.

The capability to move many millions of packages is a key enabler to digital commerce which is building wealth and entrepreneurship in China's small cities and rural areas.

Also, a rapid and efficient logistics system is key to the Belt and Road Initiative's core goal of building a new Silk Road that supports trade throughout Eurasia.

The Cainiao warehouse in Wuxi's Xinwu district illustrates the upgrading and high-tech transformation of business in Jiangsu, and throughout China. Cainiao is the wholly-owned logistics arm of Alibaba.

Partly because of rising wages and great competition for workers, the warehouse has implemented some of the world's most advanced automation to cut the labor count from more than 2,000 to less than 1,000.

As in many other industries in Jiangsu province and throughout China, Cainiao shows that the idea that the nation's economic model is based on cheap, unskilled labor is outdated and wrong. Many companies in Jiangsu said that competition for labor is one of the factors driving them to upgrade their production processes.

Li Kaifu, Chinese AI specialist and founder of the venture capital firm Sinovation Ventures, said in an earlier interview with China Daily: "When you measure implementation and value creation, China is ahead. Roughly speaking, China's AI engineers are more massive in number, more hardworking and tenacious, and are moving forward and creating momentum."

He added that the Chinese tech sector is more competitive and its business model innovation is "definitely way ahead" of Silicon Valley.

He argued that massive amounts of data are a key factor in the success of China's AI and big data industries.

Yao Xinyu, senior manager of the east China region for Cainiao, said: "The key is AI. When we deploy more robots, we need to store more data on our system. So only Cainiao is able to support the huge orders from Tmall. We are the only company able to process this huge amount of data because we have the needed algorithm and system."

He added that Cainiao designs and builds the robots themselves. The core is not the robots but the system and the algorithms. "If you visit us next year, you'll see new robots in our warehouse. They are faster and able to hold up heavier products," he said.

Another large benefit of automation is that the robots do the dangerous work of moving heavy packages, so workers' injuries have been practically eliminated.