Startup environment in ChinaSimilar to global trends, China has seen a surge in the number of startups in recent years 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. In 2019, the physical infrastructure of business environments and internal market dynamics in China were favorably evaluated by the Global Entrepreneurship Monitor.
Recent startup activitiesIn the second quarter of 2018, China surpassed North America in attracting venture capital worldwide for the first time. 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. The coronavirus pandemic did not have a major negative effect on startup investments in 2020. While the number of venture capital investments declined slightly that year, following a general trend since 2017, deal numbers rebounded in 2021 and the total investment volume jumped to 371 billion yuan.
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.