Seven Chinese world leaders may point to the future of tech
Business Management

Seven Chinese world leaders may point to the future of tech

This is a contributed piece by Dr. Johnny Hon, serial entrepreneur and Chairman of Global Group

China’s transformation from a poor rural backwater to the world’s second largest economy and its greatest trading nation is not only the biggest economic story of my lifetime but of the century.

When, just under four decades ago, Deng Xiaoping won support for his policy of ‘reform and opening up’, the country’s first joint ventures soon followed, with the aim of introducing western funds and advanced technologies and management techniques.

How the situation has changed. Today, China leads the world in the number of new patents. Its current five-year plan is focused on renewables and sustainability, as well as on the key features of the fourth industrial revolution, including big data, Artificial Intelligence (AI), new materials and the internet of things.

Increasingly, the big Chinese technology companies are becoming world leaders and globally recognised brands:

  • Lenovo became world famous in 2005 when it bought IBM’s PC business. Today, the company is the world’s largest maker of PCs.
  • Huawei is the second-largest provider of telecoms network equipment in the world and, together with the University of Surrey, it is in the vanguard of developing 5G. It has also moved in a big way into smartphones, with its P10 proving to be a great favourite among tech savvy youngsters.
  • Since the release of its first smartphone in 2011, Xiaomi has become the world’s fifth largest smartphone maker.
  • Tencent created the QQ messenger app, which has more users than WhatsApp, whose half a billion users earned it a $19bn buyout from Facebook.
  • Baidu is not only China’s largest search engine, its navigation system is now accurate within centimetres and is on a par with the US Global Positioning System (GPS).
  • ZTE is one of the world’s 10 biggest smartphone makers and is increasingly jostling for position with Huawei, Lenovo and Xiaomi.
  • Alibaba dominates the e-commerce scene and its Wall Street IPO was the greatest in history to date. Looking at the overall state of e-commerce in China, sales are forecast to reach US$1 trillion by 2019, larger than the US, UK, Japan, Germany and France combined.

These companies and others are among China’s ‘national champions’ and key players in its ‘go global’ strategy. But with China turning out several million engineering graduates each year, there is no shortage of other companies vying to move into the same space, from rivals who might be starting to breathe down the necks of the ‘big boys’ to the most niche and fledgling start ups. China’s universities pulsate with entrepreneurial, as well as scholastic, zeal and the vast and growing market, ever more middle class and driven by increased consumption and brand awareness, has room to accommodate many more players.

As a venture capitalist and investor, with a keen personal interest in the latest technology and new things in particular, I see this very acutely. New business plans cross my desk every week, the overwhelming majority of them excellent.

Sadly, I also know that for every great idea that succeeds, at least 100 will never see the light of day.

Whilst the potential and opportunities are great, the challenges facing technology startups and innovative entrepreneurs in China are not so different from those faced by their counterparts elsewhere. They include:

  • How to protect their IP
  • How to secure funding on acceptable terms
  • How to attract and retain top talents in the face of stiff competition
  • And how to prevail in David v Goliath contests

These are general problems, which can, of course, be tackled, but which defy easy solutions and hence will constantly recur as a feature of a market economy. There are also temporary and particular factors, such as China’s recently heightened capital controls. These have been put in place, entirely correctly, to aid the fight against corruption, prevent capital flight and improve the quality of investment in the long term. But they are also causing real, if temporary, problems to a business sector that, almost by definition, knows no frontiers.

Against this, the creative disruption of the technology sector fits well with the open minds and ‘can do’ spirit that increasingly defines the east rather than the west, in a stunning reversal of historical roles. Where London has reacted to Uber with a twenty-first century impersonation of King Canute trying to turn back the tide, in China they were simply acquired by home-grown Didi Chuxing.

For foreign investors, working with China is never easy, but for those with the ability, imagination and patience, its technology increasingly represents the future.

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