In an unassuming two-story building at Beijing’s Jingxi Cultural and Creative Park, Chinese mixed reality startup Seengene is working hard to gain ground on Microsoft, Sony, and other international conglomerates that are located in the nearby Zhongguancun Technology Park.
On a recent visit to the startup’s office; Liu Yang, the CEO, and a colleague, wield their iPads as if they are steering wheels. They regularly use pilot games to test Seengene’s mixed reality technology. Both walk slowly around the office space, eyes fixed on the screen. Their colleagues pay no heed, even if the iPads are aimed at their heads or desks.
More than AR, the game is not only projected on the physical world, it interacts with it. If Liu tries to make his virtual figurine walk through an object on his desk, he will be stopped. Rather than simply overlaying the real world with static virtual information, mixed reality supports users’ ability to control the virtual technology, as well as their capacity to adjust to changes in the real world.
At first glance, it is difficult to see how these pilot versions of children’s games could be of any practical use to businesses, but they are pegged to change the operations of many industries. The interactive potential of mixed reality, or MR, if properly applied, could provide a major productivity boost to a wide range of industries.
“Our clients are either looking to improve the headset user’s experience or productivity,” Liu told TechNode.
China lagging behind?
On Feb. 25, Microsoft took the stage at this year’s Mobile World Congress in Barcelona to officially reveal the Hololens 2, a $3,500 headset that enhances users’ experience of reality in a myriad ways. The tagline? “Mixed reality ready for business.”
“China is lagging behind the US in the entire XR market,” said Eloi Gerard, CEO of China-based XR ad agency CrowsNest. XR technologies is the trifecta of augmented, virtual, and mixed reality technologies. “The main reason is that important state funds throw money at unqualified startups, creating market distortions and unrealistic expectations.”
By concentrating their resources on improving the complex technology that allows the virtual and real to interact smoothly and in real-time, as well as prioritizing market-centered applications over far-fetched experimentation, Seengene raised $18 million in a Series A funding round in August 2018, led by Beijing-based venture capital firm Legend Star.
The ability of Seengene’s virtual environment to be fully engaged with physical surroundings is based on powerful 3D positioning software. This is the technical crux of Seengene’s multi-million yuan deals with domestic security companies, over 100 tourism sites, and Chinese tech conglomerates like Huawei and Xiaomi.
Seengene’s MR glasses, called XMAN, look similar to Google Glass, but the Chinese startup has added a whole new dimension to the facial recognition apparatus by integrating 3D visualization and navigation functions that are dependent on mixed reality technology.
Seengene’s X1 and XMAN: China’s mixed reality version of the Google Glass (Image credit: Eduardo Baptista)
The seamless integration of the virtual and the real may require sophisticated technology, but workers who engage in manual labor constitute an increasingly larger proportion of Seengene’s users, especially in Western automobile conglomerates and factories.
Although Liu could not disclose their identity, he explained that the XMAN’s role in this scenario is to guide the worker in complex tasks with a high error rate, such as engine assembly. This follows in the footsteps of European automobile titans, like Renault, who use HoloLens on the factory floor, according to Forbes.
There is a key difference between the two regions—market size. Operating in the country with the world’s largest population and a government determined to become a global tech leader, the fact that adoption of Seengene’s technology is gaining pace gives the startup good potential.
“2019 is a crucial year for us as we will spend more time trying to reproduce and distribute our products on a mass-scale,” said Liu.
Seengene’s potential for growth most clearly manifests itself is the integration of the XMAN mixed reality headset with China’s e-commerce market, expected to hit $1.8 trillion in 2022, more than double the prediction for its US counterpart, according to a report by consultancy firm Forrester.
Take for example the delivery business, where legions of workers are needed to handle oceans of packages on a daily basis. Seengene hopes to use the XMAN to allow workers to easily keep track of inventories without having to constantly update thousand-page long excel files, a practice found in most warehouses around the world.
As Chinese tech behemoths like Alibaba Group declared future plans to develop logistics networks capable of handling one billion packages a day, streamlining operations to granular detail with mixed reality might be necessary if such ambitious targets are to be met.
Last year, the 33-year old Liu signed a multi-million yuan deal with Chuxiong county in the remote south-western province of Yunnan to build a location-specific mixed reality app. It allows the user to engage with the surroundings of what would otherwise be a tokenized town built for the sole purpose of peddling over-priced products purportedly related to the local Yi minority’s culture.
“Many tourists come to these places and leave without a meaningful memory,” said Liu. “With our MR app, tourists can walk into a room, tap the treasure box that appears on their screen and suddenly a suni, [an ordained sorcerer of the Yi minority] will spring up and start throwing spells with a wand,” he added.
The concept is similar to the 2016 Pokemon Go fad that brought AR into the spotlight. However, Seengene enhances interactivity by enabling the user to tap on virtual objects, such as the suni’s wand, and buy a physical version in the souvenir store next door.
“By going through such a memorable virtual experience, the tourist is going to develop a sense of attachment to the virtual character,” Liu explained, “That makes buying a souvenir far more likely.”
An outpost of Beijing’s tech hub, this Jingxi Cultural and Creative Park in Beijing. (Image credit: Eduardo Baptista)
The facial recognition features of XMAN have attracted the attention of police forces in provinces such as Guangdong, Sichuan, Henan, and Jilin. All four have purchased the MR sets. Security and surveillance is one of Seengene’s “four main projects,” and the fact China will, by 2023, take 45% of what will be a $700 million global facial recognition industry, it’s safe to assume the order form is getting longer by the month.
Liu avoided divulging into specifics, but explained the use of MR in policing. “Say you’re a senior cop in an airport and your glasses detect the face of a criminal suspect,” he illustrated. “The XMAN can allow you to visualize other police officers on all floors of the airport so that you can guide them towards the suspect, reducing the probability of escape.”
Liu also attributes China’s AR/MR boom to central and local government’s favorable policies towards tech startups. “In cities like Hangzhou, Ningbo, and Chengdu, local governments will make it really easy for tech startups to register, help with personnel recruitment, tax cuts, even funding,” he said.
“The Chinese central government is the prime driver of China’s tech initiatives, of which VR, AR and AI are the latest subjects,” commented Kevin Geiger, an American producer and professor of animation & VR in Beijing. “On the one hand, this means that things can happen very quickly… on the other hand, in a country where a party has the absolute say on everything, this creates limitations for innovation.”
Seengene disagrees. Many of its clients are government departments, and Liu confirmed the Beijing local government provided funding for his startup.
Regardless of whether government involvement is beneficial or not, China’s MR market is starting to attract US conglomerates to their competitors’ den. On October 2018, Microsoft formalized plans to open a MR incubator in Nanchang, the capital of Jiangxi province, which has partnered with 150 companies to invest RMB 63 billion in VR and related industries.
In the same month, Seengene partnered with Chinese research institutes, such as Peking University’s Department of Information and Technology, allowing it to test out the latest developments in computer vision technology research on its own products before domestic competitors.
The three-year old startup is not worried about competitors at this stage. Asked whether Seengene was concerned about competitors in the domestic market, the wispy-bearded CEO simply smiled and answered, “It’s hard to talk about ‘competition’ at this stage, the Chinese MR market is like a huge cake—and we’ve only cut a small slice of it.”