Large companies in China dominant, but lack small firms’ vitality

By Colin Campbell Source:Global Times Published: 2015-7-2 23:18:01

Start-ups can incubate tomorrow’s big ideas


Illustration: Peter C. Espina/GT


Despite important differences between them, Chinese and North American start-ups can learn from one another.

I am an entrepreneur who has started many businesses in North America, and I have not seen anything quite like China's exciting start-up environment and culture.

China is a place with cultural complexities that outsiders often do not understand, yet there are many comparisons to be made between our two start-up cultures. And there are very important lessons we can learn from each other.

Since I first came to China, I have seen nothing but enthusiasm and energy for new business. The sheer scale of entrepreneurship here and the attention to growth and talent compares favorably even to the energy of Silicon Valley, a popular technology hub in California. Premier Li Keqiang has offered encouragement for start-ups to become key drivers of China's growth.

Therefore, a large point of departure between North American and Chinese markets is government support. In China, innovation is encouraged by the top, whereas US markets prefer spontaneous grassroots development. Both have their merits, but it takes many years to build an ecosystem like Silicon Valley, whereas China has been cultivating dozens of cities and industries around the country. There are 115 university science parks and over 1,600 technology business incubators in China dispersed broadly across the country, providing management training and office space for entrepreneurs. In North America, start-ups are concentrated in key cities and regions. This builds nodes of innovation, whereas China is trying to establish a start-up culture as a part of life.

This also links with tax support. In China, start-ups receive tax benefits and subsidies, while young entrepreneurs are subsidized by family and friends. This top-down fashion is Confucian at its core, where reciprocity with one's elders and friends is expected, and they know they will receive help in response. These benefit channels are not available in North America, which relies primarily on venture capital and spontaneous competition. As an entrepreneur, I know that market forces are ideal for entrepreneurship, but government support is also important. China is very good at grasping long-term goals, while we see policies change often in North America, creating uncertainty for an entrepreneur.

China also has a strong grasp of the steps needed to be successful. By encouraging hardware zones like Shenzhen and software zones like Zhongguancun in Beijing, China is following in the footsteps of the earlier examples in computer hardware industries like Silicon Valley. There is arguably a greater ecosystem for hardware in Shenzhen now than there is in Silicon Valley, and the synergies between these two regions are behind the great movers and shakers of the tech industry giants today. Many of my entrepreneurial friends in the West rely heavily on the skill-sets of Chinese companies and work with middlemen to get their products designed and manufactured. This is a real advantage for entrepreneurs in China as they can work directly with the manufacturers, dramatically cutting time to market for China's entrepreneurs.

China is huge, both in population and economy, and its technology firms are of a size and scale that most North American companies could only dream of. Alibaba, Tencent, Xiaomi and Baidu are rapidly becoming behemoths, but like most large companies they often lack the innovation of the smaller, more agile companies.

Size is not everything in entrepreneurship and small, unknown start-ups must also be supported. The world's greatest ideas are hatched from humble beginnings that gather momentum.

In North America, companies are built on unique ideas and new principles, to create new communities. Taking a risk in the stubborn pursuit of a completely new idea is a highly valued component of success, and the experience of failure is often viewed almost as favorably as uninterrupted success. In China, for thousands of years, failure has been seen as a loss of face. But I think gradually China is learning that failure is also a great component of self-cultivation. Companies and individuals are gaining new insights and reinventing themselves. As Confucius said, it does not matter how slowly you go as long as you do not stop.

Now is the time for Chinese entrepreneurs to take risks and build upon their first successes and failures.

This is why I support Li Keqiang's mass entrepreneurship and innovation campaign so wholeheartedly. China has been bold in leading a cultural change so that everyone has the opportunity to create a great company.

I think China has a bright future, and that is why my company is taking every necessary step to enter this market.

Many entrepreneurs have missed out on getting a great domain for their company because many millions of names have already been taken under .com and .cn. Just as Alibaba is about to connect China's consumers with North American products, so too are we dedicated to promoting synergies between these two great cultures.

China's start-ups are about to do something extraordinary, and we are excited to be a part of it.

The author is founder and CEO of .CLUB Domains LLC.

Posted in: Insider's Eye

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