Silicon Dragon Salon at China Institute
Tech experts see innovation and growth
From bike sharing to blockchain, can China tech companies really go global? In discussion at a jam-packed Silicon Dragon Salon at China Institute last week with legendary venture capitalist Gary Rieschel, Mobike exec Florian Bohnert, and blockchain expert Shuonan Chen, the answer was clearly yes. Some highlights:
This round of Chinese enterprises going overseas is not about bringing notorious copycats abroad. In fact, the days of Chinese companies merely copying Silicon Valley technologies are fading, according to the panelists, as more and more Chinese tech-preneurs are shifting to leadership and innovation. “Anyone who is trying to understand China today without understanding what’s happening from the innovation perspective or what’s happening to China’s entrepreneurs, is not thoughtful,” said Rieschel, founding partner of Shanghai-based Qiming Venture Partners, “and that’s a huge blind spot for a great amount of policy specialists in United States working on China.”
Financial technology is an obvious example—with people in China even paying for street snacks through their phones. And Chinese-style bike-sharing contenders, which have initiated a new bike revolution in China, are moving to Western markets. The bike sharing trend has become so hot, in fact, that recent video clips show mountains of broken share bikes, raising concerns about the competing companies’ viability in addition to environmental waste.
But according to Bohnert, unlike other companies, Mobike’s bikes are built to last for four years, and its business is driven by a data-driven management platform that can ascertain where bikes are at any given moment—in theory allowing the company to avoid the pileups that have been occurring in China’s current glut. Mobike, the first and largest of the bike-sharing companies that have swept across China, is going global: it has already entered 11 international markets, including Washington, DC.
The global expansion of Chinese technology companies puts them in direct competition with their American counterparts, especially in emerging markets such as India and Africa. For example, most of Tencent’s revenues comes from transactions, while most of Facebook’s comes from ads. “You have to think about emerging markets. The question is who is going to win? The model from the U.S. or from China? Which model is better for those emerging markets? That’s a (question) that doesn’t get nearly enough attention.”
China has its own advantages when it comes to technology. Artificial intelligence is one of the areas of greatest promise for China’s tech market, according to Rieschel, largely because the country has such enormous data sets. In terms of scanning tumors, for example, China—which doesn’t have HIPA privacy constraints like the United States—can scan hundreds of thousands of tumors very quickly to avoid false negatives or false positives.
China’s entrepreneurs are not to be underestimated. “China’s entrepreneurs have been forced to raise their game, because China has the fiercest consumers in the world. Chinese entrepreneurs’ ability to deal with ambiguity – the rules are unclear, they are not enforced, or they change – allows them to be very very nimble. That’s an incredible asset!”
What are the greatest challenges for Chinese companies going overseas? According to Rieschel: localization. “It comes down to trust. They need to give local leadership the opportunity to run their companies overseas,” Rieschel said. “Chinese firms are lagging in hiring locals. It’s hard for them to make Indian or African entrepreneurs part of the mothership. That’s the ‘ju jitsu’ that U.S. companies have—going local and be really aggressive.”
One thing should not be overlooked: China’s venture capital, at $50 billion annually, has risen to U.S. levels, according to Rebecca Fannin, founder of Silicon Dragon, a media and events company focusing on China tech, who moderated the discussion at China Institute.
“The growth of China’s Silicon Valleys is expanding and is definitely going mainstream,” writes Fannin in her Forbes column.