Edited by William Bao Bean, General Partner of SOSV, Managing Director of Chinaccelerator and MOX
China holds one one of the largest economies in the world. Many foreigners are starting their businesses in China from scratch or expanding from overseas to the Chinese market. Plenty of opportunities exist: the biggest trend for today’s Chinese startup ecosystem is a focus on deep tech. You really need a technical advantage in order to survive as a startup. It could be AI or blockchain, but deep tech is the key to startup success in China today.
- The top or second-largest economy in the world (depending on the measure).
- A top global market in terms of VC investments, with over USD 80 billion invested.
- China has its own internet ecosystem, one not dominated by Google, Facebook, Amazon, and other names that are familiar overseas.
- Venture capital investment has declined dramatically since September 2018.
- Government backing for VC funds declined—the crash followed a bubble in the VC market, and now it takes more time than before for founders to raise money.
China is increasingly becoming a consumer market. Much of its economic growth is consumer-driven rather than coming from exports or manufacturing. Retail and service companies are probably in the best position to take advantage of that.
Another trend is automation. China’s labor supply is full. It has become much more expensive in China to operate than before, so robotics and automation will be key drivers over the next three to five years.
The third trend is China going outside its borders. China’s cyberspace development today has been mostly focused on the domestic market. Some of the most valuable internet companies in the world are Chinese, but most of them haven’t historically operated outside of China. That has changed.
Chinese companies are becoming world leaders, and you might not see them in Western Europe or North America, but you can find them in Southeast Asia, South Asia, the Middle East, Latin America, and Africa (the first mobile-only markets). These markets are very similar to the Chinese market, where people’s first experience with the internet is on their smartphone.
Promising startups to look out for
Retail | Shanghai
Ushopal is a platform operating international luxury brands in China. They established China’s first full-chain international new luxury brand group. Ushopal’s “black pearl operation closed-loop system” is an omnichannel retail platform consisting of its own online and offline ecosystem, as well as a curated selection of new luxury and all-generation brands.
Insurtech | Shanghai
The CareVoice is a Shanghai-based health insurtech company. Its solution, CareVoiceOS, is the first operating system created for insurers to fundamentally change how they serve their members while improving operational efficiencies. Insurers can leverage CareVoiceOS to help members manage symptoms, book appointments, file claims, and more. The CareVoice also partners directly with insurers to co-create innovative insurance products tailored for specific customer segments.
Edtech, Robotics | Shenzhen
Makeblock combines technology and education by building a STEAM (science, technology, engineering, art, and math) robotics construction and programming learning platform that covers mechanics, electronics, and software. The platform helps children learn from practical usage of technical devices and critical thinking training.
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Disclaimer: All content within this startup ecosystem overview is written by and reflects the personal perspective of the editor.