Similar to global trends, China has seen a surge in the number of startups recently as the government promised to implement an innovation-driven development strategy and make the country more competitive. China’s tech-related initiatives include bringing in overseas talent and more tax incentives for venture capital (VC) investment. At the end of 2017, President Xi Jinping listed internet, big data and artificial intelligence (AI) as the priority fields to be developed on China’s way to becoming a global innovation powerhouse.
In recent years, retail, health, and education have been among the sectors attracting the most early-stage entrepreneurial activities in China. Over 70 percent of newly-started Chinese business people acknowledge being opportunity rather than necessity driven. In 2018, the physical infrastructure of business environments and internal market dynamics in China were favorably evaluated by the Global Entrepreneurship Monitor.
In the second quarter of 2018, for the first time China surpassed North America in attracting venture capital worldwide. At that time, startups in China accounted for 47 percent of the global VC funding compared with a combined 35 percent for the U.S. and Canada, according to a report by Crunchbase. Partly due to the U.S. government’s increased scrutiny of foreign investment deals, Chinese investors’ money that once flowed into the United States have started returning to China and are likely re-invested into domestic companies. This may account for the fundraising success that Chinese startups have witnessed in the first half of 2018. Alibaba’s affiliate Ant Financial, ride-sharing and tech conglomerate Didi Chuxing, and world’s largest bike sharing operator Mobike Technology were among top-funded Chinese startups and tech companies.
With Chinese startups on the rise, the flow of knowledge that is reversed to the traditional “copy-to-China” is already on the way. Some entrepreneurs and investors are starting to talk about the “copy-from-China” era in the business world.