Blog 05 Jan 2018 Updated 17 Jan 2020 China's Tech Scene What Singapore Tech Startups need to know when going to China Lim Ai Leng, Deputy Director (North China), Enterprise Singapore Share: China may be a competitive market, but its huge market and vibrant tech ecosystem still abound with opportunities for Singapore tech startups. Companies can look at China in 2 ways: As an end market (due to its sheer size); or As a partner for tech sourcing or internationalisation. Given the intense competition there, companies who are even thinking of going in need to be clear of their unique value proposition, what they are using the market for, understand local needs, and find a strong partner to scale up quickly there. Driven by private sector, but government still a key influencer in shaping the environment In line with its Five-Year Plan – which supports mass entrepreneurship and innovation – the Chinese government remains a major influence for tech developments in China, using regulation to support the development of the private sector. This year, the State Council enhanced its directive to encourage the expansion of makerspace and promote innovation and support business startups. It enabled one-stop registration for foreign enterprises and their domestic counterparts to encourage companies to set up in China. At the 19th China Party Congress meeting, President Xi also stressed the country’s focus on Artificial Intelligence (AI). For example, the State Council laid out goals in July 2017 to build a domestic AI worth over S$200 billion. In the last decade, China has also surprised the world by creating a huge digital economy with one of the world’s largest e-commerce and mobile payments market. Today, for every 3 unicorns in the world, 1 is a Chinese company. Chinese unicorns also account for ~43% of the global value of unicorns. And Chinese companies continue to remain ahead of the curve in the development new technology or acquiring new technology through M&A. Midea, China’s top home appliance manufacturer, acquired German robot maker Kuka to upgrade its manufacturing capabilities for its automation business. Besides the ‘BAT’, i.e. Baidu, Alibaba and Tencent, the next up-and-coming Chinese enterprises Toutiao, Meituan Dianping and Didi Chuxing are companies that make use of data and AI for their businesses. Influx of investors, VCs, and accelerators It’s no secret that the presence of many VCs and accelerators in China now is a powerful tool for Singapore startups to leverage. Beijing and Shanghai rank 4th and 8th respectively in the Startup Genome Report 2017. As of 2015, there are over 2,500 technology business incubators across China Chinese VCs have been growing tremendously, with 75% of Chinese VCs grown domestically (compared to 25% a decade ago). Navigating China’s tech scene To succeed in such a competitive space, companies need to: Be clear on what you are using China for As an end market: The sheer size of China contains many opportunities for companies to scale up once you have a suitable product for the market Collaboration: You can co-create, or adapt and adopt solutions for expansion to other markets, especially in Southeast Asia. Many Chinese enterprises and startups are internationalising as a key growth strategy for the future. Singapore’s familiarity and connections with the region – as well as strengths in the English language and Intellectual Property – are good value propositions to our Chinese partners. Build a deep understanding of local market needs and habits Identify a strong value proposition or novel idea that fills a gap in the market and cannot be easily replicated. This goes especially for consumer-centric products, so Singapore companies might have an edge in B2B solutions. Be quick, and find a strong local partner Instead of seeking a perfect product or solution, go swiftly into China to trial and testbed your product or solution. You can always improve it along the way. Next: So My Tech Startup Is Ready For China. Where Do I Go?