Cafe “Hate” (HeyTea) in Beijing Chaoyang district is the epitome of elegant minimalism. Its led screen and black tiles gives a little retro. Last weekend, when we had the really warm weather in one of the last days of “Indian summer”, the cafe was crowded with visitors, and considerable wealth: families with strollers, young people in fashionable clothing design brand “Supreme”. All they wanted to enjoy the newcomer to the fashion of the so-called cheese tea (new drink promoted by the company HeyTea, in the manufacture of which is actually used cheese and condensed milk and cream — approx. ed.). On the facade of the front door hung a picture of a hand with phone and the two-dimensional barcode. “Scan the code in order not to stand in line,” reads the caption.
THE STRUGGLE WITH QUEUES AS THE ENGINE OF INNOVATION
A year and a half ago, the situation in this cafe was quite different. Then the “Hate”, which became one of the most fashionable brands in China, was notorious for its long queues. In the social network and the messenger Vichat (WeChat) which is used by many in China, you can read what visitors have to wait in a queue for two, three and even four hours. But it only increased the demand. “I think this is due to human nature. The willingness to stand in line for two or three hours, because everything is a reflection of something fundamental to Homo spaien,” said technical Director of “Haiti” Palin Chan (Peilin Chan). But although the cafe has got a considerable profit from such a powerful ad, Chan knew that it is long, if the “Hate” will remain just a gimmick in pop culture and will go no further. Visitors hired people who were behind them in the queue (this tradition is called “dagou” or “substitution of buyer”). Shipping took a lot of time, and it had a negative impact on the quality of tea. The Internet began to receive complaints.
To solve the problem, Chan turned to the platform where the cafe even received an overabundance of visitors. In early 2017 the social network Vichat announced the implementation of new applications, calling them miniprogramme. Such miniprogramme are part of the social network, and upload them is not necessary. Therefore, any user can open in Vichte online store. Chan could create a regular mobile app, but since miniprogramme combined with a mobile payment service of WeChat Pay, billing there much easier, and, most important, there was already buyers. “At that time we just thought that the miniprogram creates convenience for the user,” says Chan. The result was a miniprogram called HeyTea Go (“Haiti GOU”). It opens after you scan the barcode and gives the user the ability to make a reservation, no standing in line. At the same time it has created a lot of technological opportunities for the company — such as online advertising and data collection on the permanent visitors. Chan calls the creation of the platform “starting point of our digital transformation” that can be said about the hundreds of thousands of other companies in China.
ENTREPRENEUR OF THE INTERNET AGE: THE CHINESE VERSION
Slim and energetic Chan with the slicked back hair style Korean youth pop groups born in Guangdong and was a typical representative of the Chinese generation of the 90s that grew up in a time when China’s rapidly developing Internet. Chan says that in 2008, when he went to College, if people ordered something online, it came the courier, handed over the purchase, and the customer paid cash. The download speed across the country was low, and some people in small and remote villages do not have access to the Internet. Over the next 10 years, China has experienced digital transformation is no less impressive than the building boom that changed the Chinese urban landscape. E-Commerce has grown explosively. Thanks to the mobile payment application cash began to become obsolete.
In the life of Chan’s special place was taken by one such application Vichat. Developed by the giant of social networks, as they call the company “Tencent” (Tencent), Vichat first was an ordinary messenger, but eventually turned into specilaities. Today he has over a billion active users, and, as reported in 2018, his marketing firm “Makecat” (WalktheChat) receives approximately 34 percent of the total Chinese data traffic. It is both a social network payment system, the medium of communication and, most importantly, the infrastructure for companies like “Hate”. Vichat for the first time entered the market in 2012, announcing the creation of “official accounts”, reminiscent of a Facebook page. In early 2017, he began to introduce miniprogramme.
Since then, the company has created more than a million such miniprogram, which is two times less than the number of iOS apps in an Apple store. They create international conglomerates such as “McDonald’s” and “Tesla”, as well as local companies such as restaurants, hairdressers and gyms. All they’re being pulled by gravity into orbit Wichita, which has a huge number of users and standardized software infrastructure. This resembles the EU in terms of how he was turned into a market ecosystem. Developers miniprogram benefit from a common currency (mobile payment system Vichat), system identification (username and password Wichita) and a very small number of impediments to trade and movement (easy integration with any number of other services on Vacate). Because miniprogramme work inside Wichita, customers, companies do not need to register to login and enter their credit card numbers.
Companies wishing to go online, has long been faced with a number of challenges such as handling payments and Analytics. In particular, small and medium enterprises is difficult to compete with ambitious technological giants such as Amazon. But as far as miniprogram, that the greatest benefit they receive from local firms, whose business depends on foot traffic and attendance. By scanning the two-dimensional barcode, the client tells the miniprogram your location: let’s say I’m in “Haiti” drink so-and-so cheese tea. These data combine user actions, offline and online profile, and then help in decision-making regarding a particular product. In the case of “Hate” the miniprogram has provided the company with information about the popularity of different flavors and additives to tea, and the flow of visitors. Accordingly, adjusting its menu and reducing the queue “of Haiti” could “climb”, and as small and midsized businesses in the United States could not. Six months since the debut of the HeyTea Go attendance of regular customers has grown three times.
Of course, miniprogramme can’t work miracles, they are not omnipotent. Without good advertising, they can wither, they can slow down and require resources for development and development. And yet they are very firmly tied to Vicutu company that may eventually go to the detriment of their financial and strategic interests. But the success of miniprogram in China indicates the presence of amazing alternative concept of the mobile Internet, which is integrated in many dimensions and in fact is a huge single market. What kind of innovation gives rise to this trend? Better the architecture than the West where each company has its own mobile app that exists in isolation, but after downloading most of the day just idle?
INSULATION? NO COMPETITION: THE WEST BEGINS TO IMITATE CHINA
On the Chinese Internet has long been the conventional wisdom that he “disconnected” from the rest of the world 10 years ago and that for every IT company in America has its equivalent in China. This is largely true with regard to applications for users (the app search for travel, search engines, social networking sites), but in fact, two of the Internet is not yet fully dispersed. Android (manufacturer — the company “Google”) and iOS (it makes “Apple”), remain the dominant operating systems in China. Platform type programming React (made by Facebook), and languages such as Java and Python — all of them Chinese developers still take the “Bang”. After all, to the latest infrastructure innovations are mainly in China from the West.
But the so-called model Wichita may be the first case when this thread will unfold in the opposite direction. Although the relationship between China and the United States remain tense, and the contradictions relate mainly to intellectual property in the field of technology, an American technology company in Wichata find a lot of interesting, delicious, and many are beginning to emulate. In 2017, Google has submitted applications with instant startup, and last year, Instagram announced a number of initiatives, purchases and payments. This year, mark Zuckerberg gave the order about the integration of Facebook, Wotsap and Instagram, which indicates his desire to create specilaities. Given the political situation in the West, where major Internet companies are subjected to strict measures of regulation and antitrust audits, model Wichata is unlikely to be imported whole. But elements of its design will appear in the West. This model offers a lot of advantages such as attractive mobile payments, the use of two-dimensional barcodes, as well as simple convenience, which is that you don’t have to remember 100 passwords. The era of mobile Internet started in 2008 with the advent of the app store “Apple” (Apple App Store) and lasted more than 10 years. Internet Wichita gives you the opportunity to look at what probably awaits us in the future.
DAY CHINESE ERA WICHITA
If you’re a 30-year-old office worker and live in China in a small town, your day today is as follows. In the morning you Wake up and check my mobile phone (it can be an iPhone, but most likely, the new model “Saami” or “Huawei”, which, however, have all new filters in the camera). You scroll through news feed “Moments” in Vichte (this is something like news feed of Facebook) and sent a couple of messages in group chats Wichita are members. For Breakfast you eat a couple of pancakes, buying them from a dealer on the first floor, and paying via WeChat Pay. On the way to work you read the app Jinri Toutiao, which is a news aggregator and can recommend a couple of articles about how to deal with heartburn. Then you remember that it is necessary to see a doctor, as this process previously took a lot of time and effort, because we had to run around all day at the hospital and wait in queues (as in café), and then pay for prescriptions. Fortunately, now everything can be done virtually on Vacate, and even to pay medical bills.
Finally, you get to work. You are the sales company of medium size, and because in China there is no separation between working and personal life, and since nobody uses e-mail, all your communication with customers occurs through Vichat. During the break you’re scrolling app short video Koiso (Kuaishou) and check the Chinese Twitter, the wave hotel. You pay through Vichat your bills for communal and book tickets for train miniprogram Chinese Railways for the New Year to go home to parents. You see that a neighbor has sent a group of your apartment building in Vichte special offer — 70% discount on imported soy sauce! This proposal can be found in the social application of e-Commerce Penduduk (Pinduoduo) offering great discounts on wholesale purchases which you make together with your friends. (You decide that it is necessary to participate.) After work you’re having dinner in a restaurant near his home, where the order is doing through the food miniprogram. Back home, you read the new posts from the column Wichita “opinion Leaders”, and then you’re attracted to is the remedy of pimples, and you start to think whether to buy it through the online store Taobao. Through the application to do so, you check how many steps walked per day (alas, less than 10,000), and then go to bed.
CHINESE VILLAGE LIVES IN VICHTE
Having lived in China, even quite a bit of time, you begin to understand why it is said that “people live in Vichte”. But at the time of its inception in 2011 in Guangzhou Vichat was a common app for messaging. “There was not a single standard platform of correspondence, which in the US, I think, is an e-mail, says chief partner of the venture capital firms of Silicon valley “Andreessen Horowitz” (Andreessen Horowitz), Connie Chan (Connie Chan). — Vichat was created specifically for mobile communications. This was not a simple transformation of the computer platform to the mobile, and as a result we saw a number of convenient mobile communications elements: the two-dimensional barcode, a voice message”.
First Vichat developed slowly, but then there was a real explosion. The initial stage occurred in the period of major demographic changes among Chinese Internet users. When the price of smartphones in this decade decreased significantly, the Internet has become accessible to hundreds of millions of ordinary people living in the Chinese hinterland. For many users the mobile phone has become a means of exploring the Internet. People who are not used to download other apps, almost all my online time in Vichte, posting photos and communicating with friends. Then in 2012 came the official accounts, and then Vicutu began to connect companies and media celebrities. For Chinese consumers official accounts have become not just a means for extra free time in Vichte. This area also became a place for trade. Official accounts allowed Chinese businesses to jump over the stage of traditional websites and direct the customer directly.
The final ingredient came in the Chinese New Year in 2014, when Vichat offered virtual red envelopes, which you can send to friends. It was embodied in the Internet the Chinese tradition of giving money to relatives and friends. But the gifts did not stop, and there was a full-fledged mobile payment service WeChat Pay. Then arose the competition between WeChat Pay and Alipay of Alibaba marked the beginning of the emergence in China of a cashless society — the displacement of cash from the financial turnover. By scanning the barcode with your phone or a piece of paper, the buyer can now pay a seller without cash and credit cards.
Providing the two main needs of digital society (identification and payment), ecosystem Vichat since mid-2010 years has entered a period of prosperity. Companies like “air China” has expanded its official accounts in fact to the size of the websites. Fashion bloggers and authors make money on everything they post on their official accounts, through the donate button, which is connected to WeChat Pay. Silicon valley has long been came to the conclusion that Internet users will not pay for content; but as it turned out, if the reader is quick and simple and if we are talking about small amounts, he is willing to pay.
ASSISTANTS COMPANIES: STATE SUPPORT AND COMMUNICATION WITH DEVELOPERS MINIPROGRAM
In the early years of Wichita the state allowed him to grow and develop virtually unimpeded, in contrast to the US, where it is believed that for large IT company need to put pressure. The Chinese government saw in technology companies driving force of the economy, which must be used. “Being an American politician, you answer to the citizens, and so you’re going to solve those problems that will give you the highest number of votes, — said the partner of the company “Dzhi-es-Ar ventures” (GSR Ventures) Yecheng Zhao (Zhao Yuechen). — In China, you are responsible before the authorities, and because the country loved technology, the authorities have a powerful incentive to look for ways to use modern technologies in their cities, in the sphere of public services.” As Vichat grew, various medical and educational institutions, and transportation firms, it made sense to join this platform or through official accounts, or through miniprogramme. In addition, in the Chinese political system where the state Directive suppresses any protests of companies and individuals, the implementation is clearly useful for all society programs is much easier. The result is a deeply integrated and extremely useful Internet Wichita which is hard to imagine in democratic, free-market West.
In February, I met with an expatriate from Barcelona Sergi de Pablo Quesada (Quesada Sergi de Pablo), who runs a Shanghai company for the development of miniprogram “Out 1 EN” (Out1N). Unlike the “Hate”, the majority of small and medium enterprises there are no engineering resources for the development of miniprogram. So they order them on the side, usually 2 000 — 3 000 dollars. 30-year-old de Pablo Quesada on education not an engineer, but before you open “Out 1 al”, he created some of his own mobile applications. He found that miniprogramme very similar to the local mobile application and at the same time much different from them. Such local application, like most applications used in the USA, built directly on a mobile operating system (iOS or Android), which is the layer of software associated with the instrument. On the other hand, miniprogramme Wichita are built over it and the application itself is built on top of the operating system.
Like Apple with its iOS operating system, Vichat provides a Toolkit which is a set of coding tools that helps programmers to develop applications for specific platforms. Among these tools there is usually a code editor, which is something like Microsoft Word for programmers (it’s written the code itself); the program-compiler translates human readable code into Assembly language that is readable by the machine; as well as the emulator, showing how the app will look in the eyes of the end user. The Toolkit has a set kind of hooks called application programming interface, which connects miniprogram infrastructure payments and login Wichita. Thus, if you are a developer you can download the Toolkit Wichita to your computer, start the editor, ask the software engineers to write code to run your miniprogramme, draw it, visualize, test and repeat. When the miniprogram is completed, the developer sends it to the approval of Vichat.
Apart from the differences in the languages, encodings and procedures, the process resembles a production application. But the fact that he is on a level removed from the operating system, has some advantages. Developers miniprogram don’t need to do double work for iOS and Android or to choose between them. They can work with only one Victom. Instead of thinking which of the 10 stores Android to place it (with the departure of Google from China in 2010, there was a huge vacuum which was filled by hundreds of different app stores that are created by the manufacturers of the phones “Huawei” and “Saami” and mobile operator “China mobile” (China Mobile) and IT giants such as Baidu and “Tencent”), you can just to do everything in Vichte. If you imagine that the miniprogram is a painting, Vichat provides the canvas, brushes and the Studio for painting.
THE COMPUTER IS REPLACING THE PHONE
But not advertising. “Success not all companies wishing to sell through miniprogramme,” says de Pablo Quesada. Those that do succeed usually rely on marketing thought leaders or real selling point of the “Hate” because they can advertise their online services. As the official shop of miniprogram no, advertising them is quite difficult. However, de Pablo Quesada said that the business he has been very successful. Among other things, he creates miniprogramme for customers who need to automatically produce the quotation, and also for retailers such as the popular bakery.
In April of last year, I met in Shanghai with 35-year-old Director of “Laie” (Laiye) van Guantanam (Wang Guanchun). His firm develops virtual assistants on the basis of artificial intelligence, including “Saali” which is available as an official account and as a miniprogram on Vacate. He established his company in 2015, when he noticed that not only search for travel and delivery of food, but also traditional services in areas such as financial management and real estate are increasingly moving online within Wichita. “In this situation, the virtual assistant will be able to go far beyond casual conversation or a simple search,’ he told me. He will be able to perform real tasks for users”.
The assistant “Saali” there are similarities with the “Alexa” the company “Amazon” and “Google assistant”, but to work with it to some extent easier. “Alex” and “Assistant” has not yet managed to take its place in the real world, because you can’t call a taxi, order a meal, a table in the restaurant or record the person to the doctor. For each of these tasks has its own application (“Uber”, “Zocdoc”) with which to integrate the virtual assistant.
A “Saali” I can, say, ask to order tickets on June 3 for a flight to Nanjing, and the assistant directly searches in the miniprogram “air China” on Vichte, check the schedule and make the purchase, paying for it through WeChat Pay. And compare these opportunities with the artificial intelligence technology Duplex (Duplex) from Google, which with great pomp, were presented last year. “Duplex” is an impressive achievement in the field of machine learning with text-to-speech. This service is capable of real time talking on the phone with the person on the other end, in what he is not yielding. But in China, at the other end of no man, and there’s a miniprogram Wichita. When the CEO of Google Sundar Pichai (Sundar Pichai) have introduced a service “Duplex”, he noted that 60 percent of small businesses in the U.S. still no online ordering system. In other words, “Duplex” is based on the fact that phone calls are inevitable, and “Saalai” based on the fact that they are not needed.
ACCUSATIONS VICUTU: FROM “FEUDALISM” TO SECURITY
The market Wichita has its drawbacks. In the sphere of high technologies are constant arguments about the merits and shortcomings of consolidation. When I talked about it with employees of companies involved in the development of miniprogram for Wichita, they recognized that this platform is of a feudal nature, as closely binds miniprogramme to “Tencent” to the detriment of their independence. “But what are we to do?” asks Chan from “Hate”, indicating that traditional mobile applications are also built on operating systems that are owned by the giants of information technology.
Even in the West in recent years there has been a tendency to enlargement of the already large companies. Using his size, capital stock, ability to attract leading engineering talent, to innovate in the field of computerization, having an extensive user base and wide range of products, they carry out an invasion farther and farther. In particular, in the field of mobile Internet is all the cream is removed “Apple” and “Google”. These companies can accept and reject requests for access to their app stores, and by publishing a software development kit of the software, they control the technical characteristics of the mobile applications. With their miniprogramme Vichat plays the same role: the developers create miniprogramme that meet the requirements Wichita, and the company claims. She has the power and privilege to decide who will have access to a billion customers.
While “Vichat” does not show any signs of wanton to block or close miniprogramme. But it is easy to imagine how in the future the company will start to squeeze the money on a huge market, which she created, gathering for themselves a share of each transaction with miniprogramme. Then it will be similar to the app stores “Apple” and “Android”, which take 30 percent of the profits of the first year from the sale of paid apps. At this point, companies that have spent years building up traffic to their miniprogramme, just not one to ask for help. Therefore, the most far-sighted users, such as “Hate”, I think of miniprogramme just help for their applications.
Internet Wichita also raises a number of questions about privacy and security. A former Economics Professor Christopher balding (Balding, Christopher), who worked at the Shenzhen business school of Peking University, gives examples of how companies sell on the black market users personal information stolen from Wichita. “In many stores, if you scan the barcode, they will immediately begin to suck a huge amount of information, he said. — You can go to a regular store around the corner that sells noodles and say, “you Know, I want to buy some information.” Some of this information eventually will be in the hands of Internet fraudsters.”
And since at present, the authorities have taken tough measures to consolidate the right to information of citizens for relevant government agencies, and not for other citizens or foreigners, much of this information will fall into the hands of the state, which conducts surveillance. Vichat developing and the authorities are developing increasingly sophisticated methods for using this network to penetrate into the private lives of citizens, and to its use for political purposes. For example, the Management of cyberspace in September 2017 issued new rules that specify that the administrators group chat Wichita are legally responsible for the appearance in their conversation groups, pornographic or critical political contents. In fact, it is the beginnings of censorship in the field. “They will be able to control Vichat without destroying it, says well-known analyst and an expert on China bill Bishop (Bill Bishop). And it’s amazing — regulators there is really very smart.”
The negative side Wichita is that the factors that turned it into such a lively and vibrant ecosystem with recognition of the individual, with the payment system, with user interaction, also made him incredibly dangerous. Mobile payments leave a financial trail that can be easily fixed. Emerging in China, the accounting system of “social loans” may eventually become a tool for the analysis of payments and online user activity, helping to determine whether a particular client is entitled to various social and financial services. Since the Chinese Internet is becoming the Internet Wichita, the company will increasingly be in the public domain, and it will often be subject to direct intervention. The Chinese company always bore the costs of this kind, but the Internet Wichita exacerbates the problem. Focusing on a single platform and in miniprogramme user activity, previously distributed on different sites or carried out outside of the Internet, they turn them into easy targets.
This fall I met in Shanghai with Geniteam Thibault (Thibault Genaitay), 30-year-old head of the Chinese branch based in France, training center coding “Le Car” (Le Wagon), which in China is three points. Two years ago, when the era of miniprogram just begun, “Le Wagon” was to invest in miniprogramme. The center tested their coding system and included in its curriculum a course of lectures on miniprogramme. Today, many staff choose to develop their own miniprogramme, helping foreign brands to expand its presence in Vichte. But “Le Wagon” became the link between the international market, seeking to access the Chinese audience, Victom, which increasingly serious international ambitions. “”Tencent” stubbornly pushing miniprogramme, trying to make them more popular abroad, told me Genital. They spend their developer forums in Singapore and Europe. They want providers in collaboration with the merchants developed miniprogramme, mostly for Chinese consumers abroad.” Geneity continued: “we are Talking about multi-million dollar Diaspora users Wichata living outside of China. This is their main center of attraction”.
In many ways it’s a bad time for international expansion of Chinese companies. U.S.-China relations dropped to their lowest level since the cold war. In the field of technology is gaining weight nationalism. The fragile truce between “Apple” and “Vichat” (miniprogramme displace the app store “Apple” and turn Vichat in a single app on the phone which you need) are unlikely to persist forever. And political currents can force “Tencent” go to its own operating system, as has already happened with “Huawei”.
But the rest of the time was very good. In 2013, when the company “Vichat” attempted international expansion, it lost the instant messaging Votsap, which has similar functionality, but perhaps more of a cultural appeal. Today, however, Vichat — it is not only the messenger but also the world’s largest marketplace. Those foreign companies that want to sell their products to Chinese buyers, miniprogramme give the opportunity to go a short way, avoiding the large army of middlemen, distributors and partners for imports. De Pablo Quesada says it this way: “This gives small companies the opportunity not only to sell goods to Chinese tourists when they are in new York, but also to maintain these relationships after their return to China. Having miniprogram, you can see, I wrote something new your favourite artist from new York; you can buy his picture right there, and it will send you to China. Miniprogramme is a real revolution, because they give you the opportunity to sell products to any Chinese who has Vichat, that is, almost all of China”.
Now American technology went on the Chinese tracks. Recently we announced the creation of a platform for local companies WhatsApp Business that provides information and deals with the clients of these companies. It is very similar to miniprogramme and is gaining popularity in Mexico and India. Mark Zuckerberg this year has publicly referred to “the digital equivalent of a drawing room” and “secure payments” that already exist in Vichte. Facebook with their significant acquisitions, such as Facebook Messenger, Instagram and Votsap, begins very much to resemble Vichat. Now this is the app for messaging, social networking and a platform for e-Commerce. Like Vicutu, Facebook gathers under one roof many of the company. Can you imagine Instagram, where each account is an electronic show-window, a kind of miniprogram, where the user can make the purchases and show them to others, even without leaving the app.
Gradual movement toward models of network Wichita evidence of serious changes in the dynamics of the relationship the Western and Chinese Internet technology. For decades, the on-line infrastructure came from the West, starting with design and programming-language to wireless protocols. This kind of innovation, often comes for free and not give a quick profit, however, gave its developers a kind of soft power. They overcome cultural differences and help to wash them. Now this function first performs a Chinese concept. Miniprogramme Wichita is the technology that China does not copy, and offers.
AN EXPLOSIVE MIX: CHINA APPLICATION PLUS AN AMERICAN TEENAGER
The consequences of these shifts are subtle but pervasive, and many of them we are not yet aware of. In conversation with Geniteam we moved to the company Bittens” (ByteDance), created the application “news Czinege of Toto” (Jinri Toutiao) and to the network short video Tiktok (TikTok), which became the first Chinese product is included in the Western network consciousness. “Bittens” was probably the coolest startup in the world because its market value is 78 billion dollars, and it is increasing its efforts to produce and search. It is the younger generation of Chinese companies, which has now reached the pores of maturity. At the head of these companies are the founders of generation zero, who crave for recognition in the outside world. “Bittens” also has miniprogramme. “”Bittens” has the advantage because it already works abroad Tiktok, said Genital. — If they manage to create an ecosystem of miniprogram on Doing (the so-called Chinese version of Tictoc), they will be very easy to copy it on Tictoc”. In other words, “Bittens” will be able to challenge Vicutu as Annex with full set of services.
Genital stressed that if not to take into account the technology, the efforts of “Batemans” in the field of miniprogram are still at an early stage, and now, it is unclear whether the company is to open a closed ecosystem, which is only available to official brands. Of course, miniprogramme of the type that we see on Vichate may seem very strange in the world Tiktok, which is bizarre and surreal, not having a commercial vein. But if “Bittens” succeed, it can become a revelation. Despite the efforts needed to superpalette the Chinese sample was published in the American teenager is very much like the future of the Internet.
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