US-Asia Business

Face Value: Future of Facial Recognition in US and China

From surveillance to retail, how AI and facial recognition are reshaping transactions.

Facial recognition is a multi-billion dollar business in China, not to mention a key component of the government’s sprawling surveillance ambitions. The New York Times reported in late July that investors collectively poured more than a billion dollars into the Chinese companies SenseTime and Megvii, both of which are leaders in facial recognition and artificial intelligence (AI), adding to their already sky-high valuations.

SenseTime is “the world’s highest-valued AI company,” according to TechCrunch. It has received investments from Alibaba, Qualcomm, and other high-profile names, and has partnerships with the Chinese government and with globally recognized brands. Megvii is looking to expand its business into Southeast Asian countries Thailand and Malaysia, as well. The Chinese startup Yitu is also gunning for its piece of the market, both domestically and in Southeast Asia.

That China is a leader in cutting-edge technologies is beyond dispute. China is miles ahead of other countries on mobile payments, where cashless transactions are already commonplace in the country’s major cities. Facial recognition technology represents just one aspect of how Chinese innovations are changing the game, and its use cases could indicate what business trends will emerge in the U.S. and elsewhere over time.

“I don’t think startups in America are necessarily going to reinvent the wheel and try to come up with something brand new that people will use facial recognition for,” said Daniel Levine, a trends expert. “I think they’re actually looking at China to look at what works and see if they can bring it here.”

Business applications for facial recognition

Setting aside the government’s uses of the technology, which include issuing fines to jaywalkers and identifying murder suspects and other wanted criminals in large crowds, there are a number of business applications worth watching. Chinese consumers can soon use facial recognition to gain access to buildings and to pay for merchandise, not to mention check-in for flights, withdraw money from ATMs, and pay for fast-food orders at KFC, if not already.

The latter is catching on in the U.S., with CaliBurger allowing customers to use a “smile-to-pay” option via artificially intelligent facial recognition technology. Diners can connect to their loyalty accounts via a facial scanner on the order kiosk, then input their credit card CVV code to complete the cashless, contactless purchase. Los Angeles International Airport tested the use of facial recognition for passenger check-in this past February, and Levine said he’s seeing increasing use cases in the travel industry. “That’s a place where I think Americans are first coming into contact with it,” he said.

Companies such as Facebook use facial recognition technology as well—that’s why the social media platform can pre-tag your photos before you’ve manually gone through and tagged which friends are featured. But walking into a store and paying for your items via facial scan is a more interactive experience of the technology, and it could be used as part of ever-more-integrated payments strategies.

Business applications for facial recognition technology in China are growing. (Photo credit): Gettyimages.com/Photographer is my life.

Chinese consumers can soon use facial recognition to gain access to buildings and to pay for merchandise, not to mention check-in for flights, withdraw money from ATMs, and pay for fast-food orders at KFC, if not already.

Integration and seamlessness are paramount when it comes to building effective brand experiences, so facial recognition technology could become an important component of that. Facial analysis can also be used to predict the types of products a customer is likely to buy, taking marketing and sales strategies to a new level.

Levine said such technologies are catching on faster in China because the population is already primed for them. “China is already ahead of the rest of the world as far as mobile payments. That’s a behavior the Chinese people are getting used to faster—they’re sort of first-movers in that way,” he said. Paying via face scans and biometrics is simply the next evolution of the increasingly cashless ecosystem.

China’s size also contributes to its success, according to Levine. “China, because it’s so huge, has so much more data than other countries,” he said. “Their companies are able to amass data at a much faster rate than American companies, for example. Technologically, that’s just one of the reasons why they’re ahead of the rest of the world.”

Less red tape for biometric breakthroughs in Asia

But it’s not just data, or just one form of technology, that defines China’s leadership on advanced technologies. It’s the ability to bring together fields such as AI, robotics, and facial recognition to create breakthrough systems, according to Levine.

“China doesn’t have a lock on any of this stuff, and there’s a lot of facial recognition and other biometrics happening all around the world,” Levine said. He noted that Singapore has also emerged as a leader in this space and suggested that the existence of one-party control in both countries may contribute to the rapid advancements. Their governments are creating policies and directing funds toward these initiatives without partisan pushback, which helps spur innovation.

Certainly government enthusiasm is a driving factor in China’s advances in artificial intelligence. Last year, the state issued a plan for becoming the world leader on AI by 2030. The U.S. government also uses technologies such as facial recognition—Customs and Border Protection (CBP) recently identified someone entering the country using fake travel documents via such scanners, and law enforcement agencies are building extensive databases around the technology. But it’s safe to say there is not nearly the same level of state investment and public-private partnerships in the U.S. as there are in China, which may contribute to some technologies spreading more rapidly in the latter.

Still, China’s dominance isn’t a given, said Andrew Pearson, managing director of software consultancy Intelligencia. “Obviously, with government support, technology can be rolled out in a quick and efficient manner, but oftentimes this comes with a level of censorship that hampers the technology that is created,” he said.

“Personally, I'm not completely sold on this idea that China can beat U.S. and European companies in the AI game over the next decade,” Pearson adds. “AI and facial recognition technology are also top-of-mind for some of the richest companies in the world, and I think betting against Apple, Google, Amazon, Netflix and Facebook isn't a winning combination.”

As the race for technological dominance heats up, it’s all but certain that AI, facial recognition, and biometrics will become more prominent features in businesses’ and consumers’ fields of vision.