The tech atmosphere is changing as a new player is quickly gaining traction: China, startups, traction, transformation and tech.
Much of the talk about the tech industry is centered around Silicon Valley, San Francisco and other western or European tech hubs like London and Tel Aviv. With all the buzz and hype it’s easy to overlook other tech and startup economies that exist around the globe. This is especially so for China.
The Winds of Change
If you haven’t yet heard of the Chinese startup space, it’s quickly morphing. With increasing investment and interest pouring into this region, it’s only a matter of time before Chinese companies make the crossover from East to West and offer their services on a globally competitive basis. Western investors and entrepreneurs would be wise to pay attention to the trends in that space.It won’t be long until Chinese companies are global competitors in the tech realm.
As Business Insider wrote recently: “The Chinese startup space is largely dominated by investments from two behemoths: Amazon equivalent Alibaba and internet giant Tencent. The two have driven up valuations of Chinese companies, many of which are similar to startups on the list of American unicorns.”
Many of the highest-valued startups in China offer country-specific versions that are similar to business models we’ve seen in the US startup economy.These include : peer-to-peer lending, ridesharing, food delivery and short-term peer to peer rentals. However, there are also some truly bold new ideas that we have not yet seen replicated in the western market.
Many of these companies are addressing problems or market niches specific to Chinese consumers. The Chinese market is sizably large, with a much bigger potential customer base than a startup in the US. In addition, local constraints in terms of government regulations mean globally successful companies like Facebook struggle to make headway in China. However, Chinese firms are better equipped to build companies that understand the market-base, cultural norms and legislation.
As The Economist put it, “China is a sort of technological Galapagos island, a distinct and isolated environment in which local firms flourish.”
So, what are the firms defying global expectations and making major headway in the Chinese market? Here are some of them:
Valued at $46 billion, Xiaomi is China’s largest smartphone maker and, in terms of privately owned tech companies. It’s valuation is second only to Uber. With a dedicated user base and global aspirations, this company has already been looking into developing markets in Africa and India.
Didi Chuxing sent a strong message to the global startup ecosystem earlier this year when it managed to acquire the local Chinese version of Uber, which decided to sell its local version instead of continuing to struggle against this established local competitor. When you look at the numbers, it’s easy to see why Didi has scaled so rapidly; as The Economist reported: “Globally, Uber arranged its billionth ride at the end of 2015, after five years in business; Didi arranged 1.4 billion rides in 2015 alone, just in China.”
The biggest of China’s peer-to-peer lending apps, Lufax is valued at a whopping $10 billion, and has 10 million users. Similar to the west, it’s clear that the peer-to-peer lending craze has a lot of enthusiasm behind it in China.
The startup ecosystem’s appetite for food delivery seems to be unlimited, and China is no different. Of all the food delivery services available, Ele.me (which means “are you hungry in Chinese”) is the largest of them all, with 40 million users in 260 Chinese cities.
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