Eastbound: What is happening in China?

Introduction

Written by Patrick Mayne

 

After graduating from my bachelor at Copenhagen Business School and being an active member at CSE (I participated in the 2015 GO Grow batch and have been hovering around ever since) I decided to move to China. I never been in Asia before, but all the hype created around the Middle Kingdom (that’s what “China” stands for in Chinese) made me want to experience it first-hand.

I took the leap of faith and moved to Beijing. I travelled all the way from Copenhagen Central Station to Beijing central Station by train, on a journey that spanned over 30 days. Since I arrived to the Capital, I experienced that several things where not as pictured in the west:  some being more developed, others medieval, and others just plain weird.

He was not very impressed

Why China: What’s going on in the news

For either positive or negative reasons (depending who is writing) China is always on the news. In the west we are constantly bombarded by the hype of the Chinese opening to the world, as the rise of a sleeping giant.

The government of China is backing an extraordinarily ambitious plan to make the domestic AI industry worth over U$D 150 billion in the next few years[1], aiming to catch up and later become the “leading innovation center for AI” by 2030. This is aligned with president (for life) Xi Jingping speech at the World Economic Forum of 2017, aiming to place China as the new defenders of globalization and asking other countries to embrace openness.

In terms of investment, China’s venture capital market is increasing at a galloping pace. In terms of investment, China’s venture capital market is increasing at a galloping pace. In April alone, China’s total VC deal value was 166% higher than the monthly average in the US[3]. This is being led by the involvement of the big 3: Tencent, Alibaba and Baidu.

All roads lead to Beijing

Of all the major Chinese cities, the capital takes the throne as the “Silicon Valley” of China. As a matter of fact, Beijing [4] has outpaced San Francisco as the top technology hub in the world. Of the 151 Chinese Unicorns, 66 are located in Beijing[5], followed by Shanghai with “only” 38. Interesting fact, as once would think that the most populated city in the country and the world’s busiest port would take the lead.

Let’s take a closer look at these numbers. Of all the unicorns, 60% are just 6 years old, and in terms of industry, internet service takes the lead, followed closely by online finance and culture & entertainment making up 60% of all Chinese unicorn valuations.

Beijing also relish its ecosystem, boosted by the presence of local and international heavyweight players. Particularly centered in the district of Haidan, where most of the Chinese universities are located (Tsingua, Beihang Renmi, Peking University, UCAS, just to name a few). This pool of talent is interconnected by  Innoway (state giant that manages the tech cluster at Zhongguancun), the international independent startup community Startup Grind, the university centered X lab among other players. This generates an ecosystem where knowledge flows naturally among those involved, even though it’s a city of 22 million people.

Reality check

China is awakening[6], and its doing it fast. It is easy to spot the areas where they are far ahead than Denmark, from the span of Wechat as the one-app-to rule-them-all, to Alibaba’s astonishingly logistics system with 1-day delivery for almost everything you can imagine. With the full support of the government and no questions asked in terms of ethics or any other subject that would spark debate in the west, the Chinese people are ready to adopt any new high tech that gets thrown at them, which pushes companies to implement new products fast.

However, globalization did not manage to conquer it all. The culture gap is immense: It is very rare to see Chinese and internationals hanging out together, as both groups seem to be living their own reality. The main reason behind this is that it’s rare to find bilingual Chinese,  and the lack of knowledge of the external world. This is fueled by the Great Firewall that filters, digest and adjusts the information the Chinese population are able to receive, leaving a pretty different version of the world.

Hope is not lost and for those who manage to fight, the reward can huge: the most populous country in the world is only getting richer and the people are hungry for new tech. Besides, the ecosystem is here to help. In my few months living in Beijing, I managed to get very far in terms of networking through the help and collaboration of international communities who are very established in the startup ecosystem of Beijing. Everybody knows the struggle, and everybody is willing to reach out a hand. If you are considering entering the Beijing market, you should definitely form part of these communities.

Startup Grind Beijing, the most active SG chapter in the entire world, hosts events with founders, mentors and investors about 4 times a month proving a great gathering of expats interested in entrepreneurship. I started attending their events and before I realized I was in the community meeting people from all different fields. Now I run the first ever university chapter of Startup Grind in China, at the University of Chinese Academy of Sciences. Likewise, the Danish Chamber of Commerce in China keeps a high profile among connecting Danes and Denmark- related people together.

A major player worth mentioning is nHack (nhack.io). Partnering with Danske Bank, nHack is investing in Scandinavians companies and helping them to crack China. Fore fronted by serial entrepreneurs and investors with vast experience and connections in China, is a unique opportunity to for those willing to enter the Chinese market with strong local support.

The sole advice I can give is: you cannot understand China from afar. No matter how many articles you’ve read, how many levels of mandarin you’ve reached in Duolingo, you will never understand the market if you don’t come and see it for yourself. Once you are here, you need to break the different barriers that separates our cultures and dive head first into theirs. Reaching out to those that are already settled and willing to give out a hand is crutial. It’s not easy, but for those with the skin to survive the reward can be beyond any possibility offered by the west.

 

Feel free to reach out for more info about China or if you are planning on coming, I maybe know someone that can help you out.

Linekdin: https://www.linkedin.com/in/patrickmayne/

Wechat: Patrickmayne

 

 

Resources:

[1] https://www.nature.com/articles/d41586-018-00539-y

[2] https://www.chinamoneynetwork.com/2018/05/04/chinas-venture-capital-market-tops-world-as-15-6b-deployed-in-april-alone

[3] https://www.chinamoneynetwork.com/2018/05/04/chinas-venture-capital-market-tops-world-as-15-6b-deployed-in-april-alone

[4] https://www.forbes.com/sites/chynes/2017/11/02/has-beijing-unseated-silicon-valley-as-the-worlds-top-tech-hub-one-report-says-yes/#5c24525f7acf

[5] https://medium.com/walkthechat/study-of-151-chinese-unicorns-shows-beijing-1-city-for-startups-d6f0c79d213f

[6] https://www.technologyreview.com/s/609038/chinas-ai-awakening/

Eastbound: What is happening in China?
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