Why Would you go with a Tech Startup in China?

The development of China's technology market is due to both tech companies and other economic and social factors that have had a major impact in the last decade and continue to have it now.

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The Chinese are promoting more and more innovative projects. Recently, The Nanjing City government announced plans to launch a $1.4 billion investment fund. It is expected that in 2018, the tech sector will grow by 8% over last year.

It is not the first region in China to support such projects through investment funds. Hangzhou and Shenzhen invested $1.6 billion, or $80 million. The Chinese government also supports the investment fund.

The government will contribute 30%, and the other 70% will come from the private sector. How will the money from the fund be divided?

30% of the money will lead to early-stage startups and innovations from Chinese universities. 40% of the funds will be to traditional industrial companies willing to implement blockchain technology, and the rest of the money will be used to support crypto projects.

As per a recent Reuters report, China’s National Development and Reform Commission (NDRC) has reached an agreement with China Development Bank (CDB) to invest 15 billion dollars in big data and cloud computing. The money will be invested over the next 5 years, and the goal of this initiative is to support China’s digital economy.

Blockchain technology concept
The chain with data. 3D illustration

Thus, China aims to become a world leader in technological development. According to President Xi Jinping, China wants to dominate the artificial intelligence area by 2030, this being a pretty good reason for you to go with a tech startup in China.

The struggle for innovation has been pursued at both governmental and regional level, given that a Chinese region has announced it is supporting a huge new $ 1.4 billion blockchain project and the regional government will invest 30 % of this amount. At the same time, a study by Deloitte shows that it could become a superpower in the blockchain in the coming years.

There are other several reasons why China is the most fascinating technology market in the world and how the Chinese market has boosted the opportunities for tech startups.

China has the largest middle class in the world

In the last 10 years, the size of the middle class in China (whose available income exceeds $10,000 a year) almost tripled. This is important to consider as this class has spent over $260 billion last year, more than any other state.

E-com goes real world

There are also many startups, driven by the rapid growth of venture capital focused on digital companies. From 2011 to 2013, these investors had invested the US $12 billion in Chinese startups. Between 2014 and 2016, this figure exploded: US $77 billion.

These goals and high investments are possible because the Chinese government has been running to create infrastructure and has been itself an investor of new digital companies. It is amazing how the Chinese companies including Alibaba have clear medium and long-term plans.

The results are quite concrete. China already accounts for 42% of global e-commerce. Internet purchases in China are larger than those in the United States, Japan, the UK, and Germany added.

chinese-mobile-penetration

Integration with offline stores is also immense. The country processes 11 times more mobile payments then the United States. Physical money is virtually disappeared in China. Even street people ask for help with a QR code, which allows small or large downloads per application.

The three Internet giants in China – Baidu, Alibaba, and Tencent – have created a huge and unbelievable ecosystem around them. They offer “super apps” where users can shop, get informed, have access to entertainment, talk to friends and make payments.

Cross-border e-commerce exceeds the internal market

Cross-border e-commerce accounts for 7% of e-commerce spending, which represents over $100 billion in annual revenue, as Chinese customers increasingly focus on higher-quality products from outside. In addition, the cross-border market is expected to exceed 140 billion dollars by 2021. So, businesses should think about the potential customers there, even if they do not plan to open a headquarters in China.

china-payments-booming-ecommerce

Great Opportunities in Small Towns

Rural markets have seen significant population growth, high internet penetration, and disposable income. A study by Goldman Sachs who estimates that rural cities will account for 71% of new online buyers over the next few years.

Technological development

Unlike other markets in the world, China burns the stages and often jumps over generations of platforms. It is because, as emerging markets develop a consumer’s need around a platform, Chinese consumers choose the best available solution at the time, instead of pursuing the same evolution of the platform in mature markets.

At present, China’s such a leap is made in payment methods and artificial intelligence. China jumps over credit cards as the dominant payment platform and switches directly to mobile payments. The same is true for computer-assisted tasks. China is in full swing at the decisions made by Artificial Intelligence without human support.

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