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Chinese startup makes facial recognition glasses for police

Xloong counts on demand for surveillance products from authorities

Police in China's Henan Province have been using glasses, similar to those of Xloong, that scan faces to compare with databases of criminal suspects.   © Reuters

HONG KONG -- Technology company Xloong is changing the future of policing in China. With Xloong's augmented reality glasses, police officers in China will be able to cross-reference faces against the national database, and single out suspects and criminals.

Xloong has developed these glasses that can superimpose virtual images on views of the real world and send alerts to wearers, thanks to embedded chips and cameras. For instance, a red alert will be projected onto the officer's real-world view upon matches with suspicious characters.

"We will put 80% of our focus on national security applications for now," Shi Xiaogang, founder and CEO of Xloong, told the Nikkei Asian Review in an interview during the Forbes Under 30 Summit Asia in Hong Kong.

Already, six local public security bureaus in China use the Xloong AR glasses, including those in Beijing, Tianjin and Xinjiang Uighur Autonomous Region.

Founded in 2015, the Beijing startup had released multiple models of AR glasses, ranging from sports goggles that project digital maps on cyclists' views, to industrial eyeglasses that can scan machines and share real-time video feeds with engineers, to eyepieces in military helmets that project commanders' messages on soldiers' sights. Nevertheless, none of these products has made the business profitable.

Despite generating a revenue of more than 30 million yuan ($4.35 million) last year, Xloong is still loss-making due to heavy investments in research and development, according to Shi.

Public security has been critical to the company's progress as broad-based demand for commercial or consumer applications is still undeveloped and costly to address and cultivate.

"The market and the technology are not mature enough for mass-scale adoption yet, at least five more years is needed for augmented-reality glasses to be widely used among ordinary consumers," Shi added.

A case in point is the Sport Smart Glasses that Xloong launched in 2016. Only about 5,000 pairs of the sports goggles have been sold so far and Shi said the price tag of 2,999 yuan apiece contributes "very slim profit" to the company.

Corporate applications have been similarly slow to take off. As such, Shi, a former engineer at smartphone maker Huawei, began to design AR eyeglasses for China's police force, hoping that this sector will contribute the most revenue to the company in the next two to three years. Citing the huge demand for security products in the country, the 27-year-old Shi said he is confident of achieving a gross profit margin of over 50% by providing for the authorities.

"There is no shortage of budget from them," said the entrepreneur, adding that focusing on a single sector is best for startups.

Domestic security spending reached 1.24 trillion yuan last year, according to China's Ministry of Finance. The sum accounted for 6.1% of government spending in 2017, and is even 20% higher than funding for the military.

While surveillance technology would generally trigger privacy concerns in western countries, Shi shrugged off such worries in China. "The national support for high-tech companies, as well as central government's emphasis on anti-terrorism and social stability, are important drivers for our company to thrive," Shi said.

Although Shi noted that less than 10% of Xloong's operating capital came directly from the government, state-backed BOE Technology Group has been a key investor, putting in 50 million yuan in an early fundraising round.

It also received undisclosed funding from domestic investors such as Gobi Ventures and Apple supplier Luxshare Precision Industry.

Running a 100-member team of mainly optic scientists and engineers, Shi is ready to take his company overseas, with the U.S. being its first destination. Over the next year, Xloong will set up an office in Silicon Valley and recruit a dozen research and development staff there.

It is also looking to take a path similar to that of China's artificial intelligence startup Yitu Technology -- which equips the Malaysian police force with facial recognition systems -- to work with police departments in countries that hold national security in high regard.

That said, serving public security agencies is not Shi's ultimate goal. He hopes to have broader reach in the future. He said: "One day augmented reality will be widely adopted, and become a computing platform as disruptive as smartphones."

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