The changes in the Chinese entrepreneurial scene throughout the years are inevitable. In 2005, one could essentially count the number of venture capitals in China on two hands, according to an article in The Asian Entrepreneur. However; now, venture capital investments in China hit an all-time high last year despite a global slowdown--with over US$31 billion pouring in. I was lucky enough to get a glimpse of this incubator and VC wave firsthand during my recent trip to Chengdu for the Global Business Incubation Summit to represent Dashmote. This makes one wonder--why the sudden wave of entrepreneurship in the Chinese sector and how exactly does entrepreneurship in China differ from the norm?
According to the South China Morning Post, owned by Alibaba, “China’s strong venture capital investment performance last year was driven by several mega-deals, such as Alibaba affiliate Ant Financial’s US$4.5 billion round in April, hailed as the world’s largest private technology funding round.” Chinese venture capital investment is nowhere near slowing down. On the contrary, it’s expected to continue according to KPMG, as companies look to acquire technologies for their home market.
According to a recent Fortune article, China's government-backed venture capital funds are enormous—reaching almost 10 times the amount spent by venture capital firms on Chinese startups in 2015: $32.2 billion. With this being said, although China is rapidly advancing--if not surpassing Western standards of the business and tech sector; there is a very distinct difference in HOW this business is conducted.
Chinese entrepreneurship differs from the Western sphere starting with its emergence. Venture capitalists sprouted up during the 1970s in the US as opposed to the 1990s in China. Since entrepreneurship has such a substantial history and presence amongst the US--naturally a wide network of financiers, incubators, and business/government organizations are also prevalent. China, however, lacks this network of support--as well as inspiration from success stories such as Google and Apple.
The differences are mainly all between the ecosystems and cultural norms. As an American, developing a bold and different idea and making it big is considered a “wow” factor and inspirational and admired. As a Chinese entrepreneur, the mindset is not entirely coherent to this concept. It’s thought of as a ‘herd mentality’. You should not want to stick out from the norm, you should only follow what is expected and very subtly progress or achieve better results. There is actually an old Chinese proverb which represents this business mentality, 枪打出头鸟, which translated means, “The shot hits the bird that pokes its head out.” This can be interpreted as “nonconformity/show offs gets punished”.
Because of this cultural and business loyalty, China’s well known concept of censorship also comes into play. Although social media is not entirely banned and prohibited, restrictions are placed on foreign websites and social media to result in flourishing a home-grown, state-approved ecosystem in which Chinese-owned properties thrive. Yes, YouTube, Facebook, and Twitter are blocked in China, but their Chinese equivalents are expanding and usage of Chinese social media is considered some of the most intense in the world.
With this censorship and loyalty to local home-grown social media, comes WeChat. According to China Internet Watch’s 2017 statistics, More than 95% of Internet users in China access the Internet via mobile devices, and of those mobile users, about 80% use WeChat. In case you aren’t familiar with this all-in-one app, WeChat is a social media app developed by Tencent (a Chinese investment holding company and one of the largest internet companies in the world) with over 889 million active users spending 66 minutes a day on the app on average. WeChat is not solely a messaging app, it’s a lifestyle in the Chinese business sector and daily life. WeChat builds a unique social community amongst users and between users and vendors/organizations. This app is enabled on mobile phones, and more than 300,000 retail stores have integrated WeChat Payment into their point-of-sale systems, allowing for easy payment almost everywhere--including taxis, supermarkets and hospitals. WeChat allows for Chinese consumers to easily partake in more business opportunities by connecting overseas vendors and allowing them to pay for their transactions.
So what’s to be expected with the massive boom and changes in funding, partnerships, and innovation within China? Going global, of course. China and the Western sphere, especially America, must look to one another for combined strengths to achieve market expansion. China is already on its way to becoming internationally successful--as seen with Huawei, whose Android smartphones are now the second most popular smartphone brand in Europe and Kuaiya, an InnoSpring portfolio company, which already has 300 million users spanning Europe, Southeast Asia, and Latin America--the number of users being almost as much as the number of US citizens. The goal is to combine both interpretations of doing business and leveraging the advantages of both ecosystems for the ultimate internationalization and collaboration--which provides the strongest form of success.
Attending the Global Business Incubation Summit was tremendously rewarding and informative and it was a great honour to represent Dashmote there. I’m eager to initiate a deal coinciding with the Chinese entrepreneurial sphere and very enthusiastic about China’s plans for attracting global capital, business and innovation products, and building an international entrepreneurial ecology.