China VC has overtaken Silicon Valley, but do aggregates tell the whole story?
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Secondly, American companies have received enormous pushback when they do attempt expansion overseas. Some of this pushback is valid, and some is not. But often American companies are hit hard for stupid reasons because they don't have the political cover that Chinese companies ostensibly possess.
Which leads to the next point which is that Tencent, Alibaba and Baidu (which are the biggest Chinese tech players) are effectively government sponsored entities. Baidu especially was created after the Chinese government ran Google out of the country. This gives them much more political firepower when working out deals with other countries.
American anti-corruption laws are some of the strongest in the world, which is a good thing, but this does mean that American companies are operating at a big disadvantage when working in countries and industries where bribery is practically required. Russia, Brazil and Mexico are often problem countries for example. To get away with the backroom shenanigans required for dealing in those countries, you need the kind of political clout that companies like Exxon possess, and nobody in the tech industry wields that kind of power.
American companies operate under a number of "disadvantages." Some of these are disadvantages are good and some are not, but it does mean Chinese tech companies have much wider latitude to act and have much closer access to the political levers of their country. The biggest question here (as always with China) is how much do metrics that are developed for a free market actually matter when applied to a country that is not a free market but is pretending to be one when it suits their needs. The west faced a similar problem with the USSR during the cold war. The only news the west had access to was news that made the USSR look good, so we were constantly panicking at how powerful the Soviet Union seemed to be while they ineptly blundered from one error to another.
But, I must add that China's notorious protectionism is also playing it's part. No international company can take money from Silicon VC and then pump it in China to build their brand. Uber tried and failed. This is in complete contrast to India. If you look at it ecom saw bigger and bigger deals for Flipkart until Amazon happened. Same with Uber holding it's ground against Ola. I am sure if India had similar protectionism, we might have seen similar headlines for them too, maybe not at the same time but couple of years give or take.
It's not really an apples to apples comparison. Massive government funding is providing huge amounts of capital to make this happen and there is speculation on bubbles forming by cheap credit with few strings attached.
Links:
http://www.chinadaily.com.cn/business/2017-07/28/content_302...
https://news.crunchbase.com/news/one-china-based-vc-backed-g...
https://www.wsj.com/articles/chinas-tech-startup-funding-the...
That's why there is no SpaceX or anything that can used in weapon area.
(1) Very few VCs here speak fluent English. I have had to pitch in Mandarin many times, even to partners at local branches of leading international firms.
(2) Many mainland VC firms now run USD denominated funds, some are explicitly looking out of China, especially to Southeast Asia.
(3) A great place to be for VC next week is RISE in Hong Kong, http://riseconf.com/ ... please reach out with an email if you are attending.
(4) Many companies here seem open to partnership deals. I suspect that non-equity sources of funding may have a greater influence here than elsewhere.
(5) An environment of extreme capital availability combined with a huge largely homogeneously regulated market definitely affects business model and growth strategy. It would be interesting to see aggregate research in this space.
High office prices only applies to Shenzhen, Beijing, and Shanghai (and maybe GZ and HZ).
As for labor, good programmers and managers are definitely not cheap in China, even if cheaper than SV.
a) The VC funding b) The overall startup environment c) Cheaper worker wages
Theres definitely communist red tape but right now tech startups are in vogue unless they directly/indirectly interfere with communist or harmonious society guidelines.
Access to VC is nice, but Chinese VCs ar emote conservative than American ones, the business plans that get funded are going to be very different anyways.
The state now very openly controls all companies in China, directly or indirectly. They dictate what you can do, what you can build, what you can say, what you can sell, where you can sell, what you can do outside of the domestic market, how much capital you can move internationally, when you can move it, who can own your business, how much of your business foreigners can own, etc. You're not allowed to cross their edicts under any circumstances. If you fall out of favor for any reason, at any time, they will destroy you personally.
SV start-ups get the entire rest of the planet as a playground, almost entirely unencumbered by the type of highly restrictive state policies that Chinese tech companies constantly deal with. That's why Baidu was never able to go global and challenge Google. It's why China can never fully go global with most of their social products. They can never compete properly on the international stage with Google, Facebook, Instagram, Amazon, Reddit, Github, Snapchat, Twitter, Salesforce, Workday, Oracle, Windows, iOS, Android, MacOS and countless other types of companies and product categories. It's why WhatsApp & FB captured the world, and WeChat primarily owns China, but does not - and will never - own the rest of the world: aggressive state censorship sucks.
If I want to say that Xi looks like Winnie the Pooh, I can do that on WhatsApp. If I want to make jokes the Communist Party dislikes, I can do that on WhatsApp. If I want to mock Mao, I can do that on WhatsApp (or Reddit, or Twitter, etc). You can't do that in any ecosystem controlled by China (note, those are intentionally non-serious, illustrative examples, China's restrictions are far more smothering and comprehensive).
SV can't get into China. China mostly can't get outside of China. SV wins.
Taxis are cheap, you just need to schedule your commute right.
I have worked with good crews in China before. You are looking at 8k USD per month for a solid chinese team member. Anything less than that - you will get into language issues, skill breakdowns or copyright theft. You need to factor in extra project management costs (it is more complex than managing a us based project) and time loss due to timezone delays. Ironically, if you add in the location factors good chinese crews cost about the same as a US based worker.
This has been absurdly obvious for about 3-5 years now. The knowledge of actual hardware creation & manufacturing has largely migrated to China (hello outsourcing). Costs of living in reasonably stable environments (required for broad innovation) in the US is absurdly high. Government support and funding for innovation - which is required for high value research - has been gutted since the Cold War. These things have a long-term effect.
All of the above are USA policies driven by politics. They can all be 100% fixed with political muscle and will. Much like our infrastructure. We can fix it: we choose not to.
China's government is not stupid; they can watch the US hamstring itself via libertarian policies and work to avoid such approaches. I don't like their approach to human rights, but they are working very hard to fund innovation and infrastructure.
Do you know what else is within 300 miles of Cleveland Ohio?
Absolutely nothing.
All of these are about 400 miles away, some less than 300.
And did you edit your comment, because I think it originally said 500 miles.
~50 million people live within 300 miles of Cleveland vs about ~16 million within 300 miles of SF.
I grew up in Akron, the former Rubber Capital of the World. There is literally nothing in Northeast Ohio but cornfields, soybeans, brutal winters, and rusting artifacts of the 20th century economy. Columbus could be a good choice for growing tech firms to add a second HQ due to OSU being a pretty decent school, but Cleveland really has nothing going for it. The geographical advantages that led to it's existence and growth during the industrial revolution have gone and will never return.
You are still speaking a bit too strongly though. There is plenty of things in NEO. For starts world class museums and cultural institutions (having been rich in the past helps).I'm living in San Francisco right now, but I could definitely see myself going back someday
http://aqicn.org/map/northamerica/
And compare to:
- stable health insurance and medical coverage.
- economy big & stable enough that when one job is lost, another can be found without substantial financial injury.
- geographically dense and large network of innovative people (this requires a good university - or two).
Essentially you need a place where you can take risks and fail without causing a total life crisis. that is why SV started as a thing: fruit farms with cheap land. Universities were nearby and the Cold War was in full force: a lot of funding was present. The interaction of knowledgeable people is a huge support base for increased research and innovation.
The size of the US federal budget has only gone in one direction regardless of which party was in power, and it hasn't been to get smaller. And they keep passing anti-startup garbage like FOSTA or the incredible bureaucracy that de facto prohibits small businesses from participating in the finance or medical industries. These are not libertarian policies.
The problem is they're spending trillions on unnecessary wars and buying the elderly vote with outrageously expensive program expansions, and then there is nothing left -- less than nothing, since it's all debt-financed -- to fund the actually-beneficial (and much less expensive) programs that you're asking for.
Yup, all correct. I say this with the slight bias of a dual national, but if you want a glimpse into the future that current US policy gets you, look at Italy. And then keep in mind that Italy still provides education and healthcare.
EDIT: Not sure why I'm getting downvoted. I didn't make this comment to be inflammatory, moreso to point out that our policy promotes wealth concentration and erodes middle class opportunities. I'm not suggesting that libertarian policies are a solution, nor that the US has adopted them. Just saying that the Italian regulatory environment favors incumbents and that my take is that we're headed in that direction as well via corporate capture. Italy's not a disaster - it's still the 9th largest economy in the world - but it certainly doesn't live up to its potential following its post-war boom.
The Iraq war had significant buy-in from (some now mainstream) libertarian writers and thinkers. For example, Megan McArdle, under the name "Jane Galt", wrote feverishly in favor of the war on terror and mocked those who opposed it. The libertarian argument was that by toppling dictatorships and theocracies, these "liberated" middle-eastern democracies would all have liberalized economies.
I don't want to single out libertarians here though, I just want to point out interventionist policies have widespread support in the United States across the political spectrum (after all "even the liberal New Republic" supported it) and I don't see that trend reversing any time soon.
Identifying someone who claims to support an idea and then makes an argument inconsistent with that idea is a valid criticism of the person and their bad argument, not of the original idea.
> I don't want to single out libertarians here though, I just want to point out interventionist policies have widespread support in the United States across the political spectrum (after all "even the liberal New Republic" supported it)
Sure, right after 9/11 when everybody was angry. Angry makes for irrational. Maybe it's time to revisit a lot of that stuff and roll it back.
> and I don't see that trend reversing any time soon.
The public is made up of people. Things change when somebody changes them.
This is a good thing. These areas are not places where you want to "move fast and break things."
Nobody wants anybody to "move fast and break things":
That was the motto of one jerk who nobody likes, who incidentally runs a multi-billion dollar company and not a small business, whose company has since disavowed it, and is in general not how small businesses actually operate.
You don't want doctors to "move fast and break things" but you also don't want them to spend 95% of their time filling out paperwork so that medicine becomes so expensive that people go untreated because they can't afford it, or it bankrupts the government.
You don't want Nazi experiments but you do want a cure for cancer. There is a trade off here. If you choose wrong people die, no matter which wrong you choose. Which is why the correct solution has more to do with informed consent and less to do with massive regulatory burdens that exclude small entities, increase costs and deter participation.
Honestly, why is this news?
https://news.crunchbase.com/news/in-q2-2018-global-vc-scales...
Now, we are at the tipping point where China is looking more and more like the world most powerful country.
It's really just that China is doing an excellent job of developing itself, and they have 4x as many people. Once they reach a reasonable level of development - doesn't even need to be close to the US - of course they will have more VC, and be more powerful
Also, you can only buy something if somebody has the will to sell it.
>>China is driving ahead of Silicon Valley and the rest of the United States on venture capital dollars invested into startups
Sidenote: The Alipay deal is really more private equity than VC.
IMO this is the meat of the article:
The U.S. can’t continue to look inward and expect the high
rates of growth we have seen in the tech sector over the
past two decades. Only new, global markets are going to be
the driver of prosperity, and right now, China has its
money where the action is.Also Nigeria was a particularly bad example because they're developing spectacularly well, should have picked a large population country with a poor business climate.
By the way, we are looking for a money receiver. Please inquire!
https://www.bloomberg.com/view/articles/2015-10-13/it-isn-t-...
Lesson learned: Sometimes a little bit Racism is healthy. No kidding!