China Startup Effect
If you think both to business and innovation, it is impossible not to mention the word STARTUP. Furthermore, on an international scale, startup recalls two locations: Silicon Valley and, recently, China.
Over the past 10 years, the Chinese economy has managed to reach a very prestigious position, behind the United States, regarding new businesses. Even if the US, thanks to companies such as Uber or Airbnb, holds the world record, the Chinese startup ecosystem is rising while the US is waning. Among the most profitable Chinese startups: Didi Chuxing, the ride-sharing service that provides more than 20 million trips every day and Xiaomi, the electronic device company founded in 2010, that has become, in less than eight years, a major competitor of Samsung and Huawei.
There are at least four reasons to settle a startup in China: (1) In China everything grows at high speed, time passes faster and even the technological innovations seem to go through a fast lane. In mid-2016, Didi Chuxing doubled the number of rides and reached more than 400 cities across China, compared to the previous year. (2) Everything is bigger: cities and, above all, investments. There are still few paradises for startups in Europe and very few investments from public funds. In China, on the other hand, the government started talking about startups as early as 2014, understanding immediately the high potential of newborn digital companies in the industrial sector. (3) The procedures for starting a startup are easier and slimmer since the State Council on July 12, 2017, where Premier Li Keqiang defined some detailed measures to accelerate mass entrepreneurship and foster innovation-driven growth. (4) In a society that believes in technological development, no idea is foolish and all the voices are heard when it comes to innovation incentives. It seems China, deeply rooted in its origins, is turning towards a cultural change: every idea, that would not be considered elsewhere, could grow in China where it is easier to take the risk and eventually fail.
An Italian startup understood the high potential and established a B2C online platform that provides Chinese consumers Made in Italy products. In its first year of operation in China, the Italian startup has over 70 thousand products sold and 2 million unique visitors, without having a strong physical presence in the country (just one warehouse in Shanghai). In Japan, instead, the most successful companies are starting to look at the world of startups to keep pace with digital innovation. For example, the Toyota Research Institute (TRI) invested 100 million dollars last in year in a project called Toyota AI Ventures, to support, in their early stage, startups that deal with autonomous cars, robotics and artificial intelligence.
The most interesting component of the development of Chinese startup related to digital economy lies in the fact that the Chinese market is more transactional: in fact, companies, such as WeChat, are the starting point for any type of action or transaction, instead of concentrating most of their revenue on ads. In 2015, for instance, people in Shanghai were already educated to a certain type of technological use of smartphones. They were all permanently connected to the Internet and QR Codes were used for the most varied ways. As a matter of fact, to know in which direction technological evolution will go, it is fundamental to watch closely how China lives the next future.
Luca Masoero