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Beijing is Silicon Valley's only true competitor
- bwilli123 10y agoA better title would be, "The unspoken dread of Silicon Valley". Or else , "Yes they're coming for your job also". Possibly why this article has no previous comments
- dhruvkar 10y agoI lived/worked in Shenzhen 2011-2012, and even then, young companies, founded by westerners and locals alike, had started targeting the domestic market. Companies in the hardware/manufacturing space had realized there was no need to spend time and energy pursuing western clients when there was such a large, underserved demographic locally.
- supster 10y agoIt must help Chinese startups that many SV companies are blocked from competing in China. For example no competition from Facebook, Messenger, Instagram, Twitter, Snapchat, Youtube, Gmail, Dropbox, Vimeo, SoundCloud... more info: https://en.wikipedia.org/wiki/Websites_blocked_in_mainland_China https://en.wikipedia.org/wiki/Websites_blocked_in_mainland_C...
- ignoramous 10y agoYou're undermining the fact that to build services of that scale is not trivial at all, and the fact they have managed to do it is the basis of why they are an effective competition to SV, now that they are as economically strong as the Bay Area is. Once they are done with "replicating" SV, they'd start "inventing" too. What's stopping them from that?
- supster 10y agoI'm not undermining them - simply stating that there was a vacuum created by the lack of competition. Even cloning successful services at scale is incredibly difficult, but it's not 0 to 1, it's 1 to n. Nonetheless, I agree Chinese startups are using their current leverage to innovate in really interesting new ways.
- doppp 10y agoI highly doubt there is a "lack of competition" in China. For each and every one of those "Facebook, Messenger, Instagram, Twitter, Snapchat, Youtube, Gmail, Dropbox, Vimeo, SoundCloud" you mentioned, there are a hundred similar companies. In fact, I'd argue that competition is rife and more ruthless in China than in Silicon Valley. The moment you have a good idea, ten companies will appear the next day hot on your heels. Even if the American stalwarts were to enter the Chinese market, who's to say they won't be crushed by Chinese competition?
- Apocryphon 10y agoOn the other hand, the customer base is also much larger in China.
- bx_ 10y agoWith that said, reputation and word of mouth is everything in China. Before an app like Didi was the king, people were changing ride share apps every month. New deals, new coupons, new rumors, etc... The tide changes really fast here. Didi just happened to be the only app that could hang in there. Regardless of how many people there are, if 10 people online say something is not worth using, no one else is going to use it.
- api 10y agoI've been told that the great firewall is actually more about protectionism than censorship. They know they can't really contain information, but they can block or degrade foreign services to favor their own. Of course this does serve a state censorship and surveillance agenda indirectly since home grown services can be more easily controlled. As much as I can't stand Trump and could never vote for him, I do think he's one of the few candidates raising the issue of how unfair our trade relations are with China. The WTO limits tariffs but the Chinese have found tons of indirect ways to implement protectionism: the great firewall, manipulating their currency, making it hard for US firms to take payments in China, etc.
- chx 10y agoStop right there. Think of what you are doing. You are already trying to find positive values in Trump. Don't. Resist him. The whole world is in deep shit if he gets elected. Check https://twitter.com/ivan_hernandez/status/694388187284795392 https://twitter.com/ivan_hernandez/status/694388187284795392 as well :)
- tmptmp 10y agoNo, Trump has made many important and crucial things about USA. The matter of shoddy trade practices by China is one such thing. I guess, Trump is a right candidate for USA now given the situation of Islamist immigration and China and such things.
- mrb 10y agoI think most economists will tell you the USA-China economic trade benefits both countries. Few will tell you it is "unfair". China get American money, and the USA get swath of cheap goods.
- seanmcdirmid 10y agoChina's environment is ruined in the pursuit of cheap goods, which considering weren't really as cheap as China sold them for. China gets American money, which then goes back to buy America real estate just like Japan decided to do on the late 80s after investment oppurtunities started drying up at home. And we know what happened next....
- jfoster 10y agoAbsolutely. Corollary: When running a country, protectionism of tech businesses can really pay off if your population is large enough. Should every country follow Beijing's example? I'm not sure it leads to a good outcome globally, but on a per-country basis it seems like countries with large populations do have something to gain by acting selfishly.
- Drakim 10y agoProtectionism is a sorta tragedy of the commons type of deal, if everybody did it the advantage it offered would disappear.
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- yummyfajitas 10y agoWhat's wrong if black people only pocket black people's money and white people only pocket white people's money? (And of course if anyone chooses to engage with those of the wrong group, violence will be used to stop them.)
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- akshatpradhan 10y agoSo is protectionism then the same as racism?
- yummyfajitas 10y agoI simply asked a question. I see nothing in your argument which distinguishes between protectionism motivated by racism and protection motivated by nationalism. What principle do you use to distinguish between them? (Incidentally, if you want my view, it's the following. Racism and patriotism/nationalism is just a feeling and is intrinsically harmless. However they often motivate intrinsically harmful behaviors such as protectionism or other more direct forms of tribal violence.)
- nbevans 10y agoI wish the UK would block American SV firms in a similar way, to be quite honest.
- kyledrake 10y agoFunny, I gave a tech talk at the Chekku (Garage) cafe a few years ago, and even then it had a pretty impressive energy in the place. The host that set it up expected maybe 15 people to show up, over 150 did. China was and still is lacking some very important infrastructure for successful business development: a stable legal and contracts system, strongly enforced property rights, institutional access to capital, investment focused on demand rather than supply (see also ghost cities), and a well regulated stock market more based on revenue than pure speculation (not that the events of the last 10 years in the US stock markets haven't shaken my opinion on their strength). Chinese entrepreneurs make up for these business problems the same way people that lack resources do in the states: through hard work and sheer tenacity. They're hungry for progress, and at the end of the day, that's what builds an economy. I met some great people at Garage cafe that night, and they left a strong impression on me that Chinese entrepreneurs are going to do some really impressive stuff over the next ten years. If you're ever in Beijing, I highly recommend spending an evening there. It was the highlight of my trip.
- seanmcdirmid 10y agoIs that the one near Haidian book city? I had lunch there once, but I didn't notice anything.
- kyledrake 10y agoI would try going at night.
- 50CNT 10y agoIt's cool to see Cheku mentioned on here, they just celebrated their 5 year anniversary a month or so ago. Does seem like a lot of the cooler projects have left for greener pastures though, and the people that are left, ah well.
- kyledrake 10y agoThere's an endless supply of people to fill in those that leave. Mind you, the greener pasture might just be Shanghai. Shanghai looked a lot more developed than Beijing, but I was only there for the day, so I didn't have time to really explore the city. It reminded me a lot of Hong Kong in many respects. I'd love to spend a month deep diving into the tech scene there.
- seanmcdirmid 10y agoSpend 3 weeks in China, and maybe it is clear that it is, but spend 8 years in China, and it is overwhelming clear that it is not. > Yes, they clone where they can. But cloning is starting to reach its max — there are just not enough successful ideas to clone. In addition, clones often fail in the local market due to different consumer behavior and needs. China is still fairly closed, startups here in Beijing are 99% focused on the local market. Release a product with Facebook integration? Who even knows what Facebook is, is it like WeChat? Even in surrounding countries in China's sphere of influence that are just ramping up on the Internet now, like Cambodia, Vietnam, and Myanmar, Facebook and YouTube rule, while Chinese services are completely missing. Business models in China are oriented at copying business model X that has shown to work outside of China, and adapting it to the local market. Not because Chinese lack creative (believe me, they have plenty!), but because the VCs see it as low hanging fruit, a more pragmatic reasonable investment, especially since many of the big players are locked out. Perhaps the low hanging fruit has been picked, but it is hard to see startups actually pivoting towards innovation, especially in the Beijing scene (maybe Shenzhen?). > In China, there is a company work culture at startups that's called 9/9/6. It means that regular work hours for most employees are from 9 am to 9 pm, six days a week. If you thought Silicon Valley has intense work hours, think again. For founders and top executives, it's often 9/11/6.5. That's probably not very efficient and useful (who's good as a leader when they're always tired and don't know their kids?) but totally common. This. A colleague recently transferred to a big e-commerce company in Hangzhou. They expect a lot of face time, in the office 12 hours a day, 6 days a week, but this doesn't correspond to productivity at all. It is very ridiculous. It isn't about "hunger or drive", but simply an old-fashioned throwback to the pre-00s when 6 day work weeks/12 hour days were expected from everyone, regardless of whether they were productive or not. > The recent generation of Chinese entrepreneurs is driven too much by money and financial success ("get rich fast"). A lot of people are in it for the money, they aren't really technologist. Additionally, engineers who are decent run to and are pushed into management roles way too quickly, given that (a) your success is judged by how many people are working for you and (b) China really lacks good leadership/management. This means that practicing engineers are mostly very junior, which has its own problems. > Finally, Chinese startups lack clean air. San Francisco/Bay area is attractive because it is a good place to live, and was initially attractive because it was cheap (garage startups in the valley). Beijing has none of that...the housing bubble means even a small apartment costs $1 million, the air is incredibly horrible, the traffic...maybe if Beijing cleaned up its act, it could be an international draw, but that is a long way off. Beijing also has a shockingly low expat population, something like 40K in a city of 20 million. > And, yes, China has massive issues, from freedom of speech (The Great Firewall) to competition that can get out of hand in terms of business practices. I always find it funny when people come to visit and expect to use Facebook and Google docs. Even VPNs are seriously under seige lately, with the internet situation has gotten noticeably worse over the last two years, which I didn't think was possible.
- fighting 10y agoLack of clean air to breathe and rampant corruption and authoritarianism seem not very conducive to a successful startup culture. There is a huge churn of chinese money trying to find places to go and get a good roi. It is not clear that this will last though. Also, I find it unlikely that without a free/open software ecosystem like linux or bsd they will get very far. Building a startup culture on a general computing foundation of massively pirated windows os is just not going to work.
- seanmcdirmid 10y agoThe lack of good investment options has something to do with money chasing tech startups, I agree. > Building a startup culture on a general computing foundation of massively pirated windows os is just not going to work. This really isn't true anymore. Much of Beijing startups are built on Linux/Android, piracy of Windows seems to be way down in general.
- FreeInternet 10y agoand nobody uses windows anymore anyway. I mean its less than 90% of pc users and rapidly declining. And linux is used on at least 1% of pc's and again, rapidly increasing. Also, with Linux finally on windows, 2016 is the year of linux on desktop so linux >> windows
- 50CNT 10y agoI've been proselytizing linux over here. Ubuntu Kylin is pretty cool to set up for people, but the wifi cards on a lot of laptops don't take too well to it.
- rememberlenny 10y agoI lived in Shanghai and worked in the startup community there from 2012-2013. Im happy to answer any questions people might have. Very interesting space. The government is taking a very active role at developing startup "infrastructure", but it looks incredibly different from anything in the West.
- epoxyhockey 10y agoThe government is taking a very active role at developing startup "infrastructure" Could you elaborate on this statement? Are you referring to financing of startups, or more? Thank you for the offer to answer questions!
- 50CNT 10y agoInvestment into incubators, co-working spaces, government projects such as tech parks, building office space, streamlining of company registration and visa's, doing official visits (XiJingPing at Cheku, China's finance minister at 3W Cafe), yeah, they're pretty involved in things.
- seanmcdirmid 10y agoI've heard about these places from colleagues. Every local government is starting incubators, but many of them are like ghost malls. Which is funny, because they are converting a ghost mall in Beijing Zhongguancun near my office into an incubator space....
- 50CNT 10y agoYeah, haven't bothered checking any of them out tbh, don't really see the draw of it. I do have a friend who was trying to get a spot in one of them, but the materials he showed me seemed pretty sterile. Can't fault them for not trying though.
- chw9e 10y agoI know someone who works at one of the government backed incubators in Shanghai and he told me that a few of the companies they have are pretty promising, but there are a lot of accepted companies who don't have much of a shot. Startup solve a national problem of having too many college graduates and not enough job opportunities, so some of the incubators just soak up some of the extra graduates with the hope that maybe they could make something useful with time. Of course, with continued government support the incubators could improve and become more focused, but for now it seems at least a few are a way to provide jobs to what may otherwise be unemployed college grads.
- turingbook 10y agoNative Beijing guy here. I'd like to answer any question about the city or the startup ecosystem.
- igravious 10y agoIs Beijing the biggest tech hub in China? Silicon Valley is really a long corridor of tech between two cities, SF and San Jose. Is there something similar in China? Would you say that China has multiple tech hot spots or is Beijing it? Is Beijing more like New York in this respect? Do you see what I'm driving at?
- seanmcdirmid 10y agoBeijing is more like the DC area, but even then the comparison is flimsy. As a long time Beijing resident, I would say Shenzhen and Shanghai have more to offer. Beijing's importance is mostly driven by the government.
- turingbook 10y agoBeijing's importance is not driven mainly by the government (although open-mindedness of the government definitely contributed to this), but by the ecosystem: best universities (Peking University and Tsinghua University among dozens of others) and best research institutions (the Chinese Academy of Sciences and research centers of big companies), most big VCs, IT communities/media, and most important, entrepreneurs. In Beijing, if you have time, you can attend some interesting IT meetup everyday. It is what you can not see in Shanghai or Shenzhen. Talk to somebody in Shanghai or Shenzhen startup community. You will have the insights.
- seanmcdirmid 10y agoBeijing is more like the DC area, but even then the comparison is flimsy. As a long time Beijing resident, I would say Shenzhen and Shanghai have more to offer. Beijing's importance is mostly driven by the government.
- chw9e 10y ago
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- iveqy 10y agoActually, if we count unicorn companies per capita, the number two after silicon valley is stockholm. http://www.forbes.com/sites/knowledgewharton/2015/11/11/how-stockholm-became-a-unicorn-factory/#1a4c8944634b http://www.forbes.com/sites/knowledgewharton/2015/11/11/how-...
- ximeng 10y agohttp://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/11689464/How-Sweden-became-the-startup-capital-of-Europe.html http://www.telegraph.co.uk/finance/newsbysector/mediatechnol... Alternative source without interstitial. Also comments here: https://news.ycombinator.com/item?id=10693764 https://news.ycombinator.com/item?id=10693764 And actual companies here: http://stockholmitregion.com/2015/08/31/stockholm-unicorn-factory/ http://stockholmitregion.com/2015/08/31/stockholm-unicorn-fa...
- uola 10y agoStockholm has produced a few successful startups, but it's not a competitor to SV. It's is a global competitor in telecom systems and games (though I guess many game companies are now owned by US companies). Spotify is basically the same service as when it started, just with more users. Stockholm has no real momentum in building something of their own.
- dschiptsov 10y agoThere is a huge difference between the valley - home of the whole industry and Stockholm, which hosts a few niched companies. Compare the hiring. In Sweden there is no demand for CS skills, there is no immigration programs for techies, etc. Also, which is also important, Sweden is traditionally a consumer of technology, not producer (with exception of Ericsson, of course) - MS land where Linux is frowned upon outside academia and almost nonexistent in the market. There is not even a dim analogy to what is going on in the valley.
- lawyao 10y agoHe needs to spend way more than 3 weeks in Beijing before jumping to conclusions.
- NnamdiJr 10y agoI'm curious, where exactly do you think his conclusions are wrong? I lived and worked in Beijing for over 5yrs and I think his conclusions are in general pretty accurate. Which is fairly impressive for spending only 3wks there.
- flyrain 10y agoUnless there is no air pollution in Beijing. One of my colleague just moved from Beijing to Bay Area because of the severe air pollution of Beijing.
- joe_the_user 10y agoIt don't know if the author noticed that the news out of China for the last year has largely signaled the disintegration of the Chinese development model, with the state relentless intervening basically everywhere to prevent the collapse of the stock market, prevent capital flight, prevent the massive bankruptcy of various firms, prevent worker unrest from economic dislocation etc. With contradictions of the Chinese economy now becoming visible to the rest of world, even if the Chinese state continue to distort it's statistics, the idea that the Chinese tech sector is oh-so-vibrant-and-healthy seems much less plausible. The tech sector depends on the Chinese internal market and that just doesn't look good or healthy or competitive - especially not competitive. Western companies are shut out but it's pretty clear native companies need connection to stay healthy too.
- sandGorgon 10y agothe title is clickbait. If we are looking at Asia then India is the more relevant competitor. With a huge Valley-returned entrepreneur community as well as being open for Silicon Valley to do business, I am betting that India will grow faster. Indeed Ola and Flipkart's senior management comes from Facebook and Google at this point ... and were forced to innovate faster and harder when Amazon and Uber entered India. This happens across all categories of startups. Sure China has a larger customer segment than India at this point, but that is not something that is going to continue for long. Oh and fundamental freedom and democratic rights go a long way to attract talent. Its not for nothing that talent chose to settle in the extremely vibrant and tolerant San Francisco area. Pretty much the exact same reason why Delhi and Bangalore drive most of the tech ecosystem in India. The biggest problem I see with India is lack of infrastructure at the same level as China. That I admit, is going to be a make or break.
- jasim 10y agoValley-returned entrepreneur community doesn't mean anything in terms of innovation. App-powered logistics companies are no longer innovative; the wave was in the realization that commerce can be driven through smartphones and the internet, and that logistics can be massively improved by a combination of location-aware devices with abundant cheap labour from under-privileged population (not a value judgement). We are still a long way from doing ground-breaking scientific research. Innovative business models can only take us so far; fundamental progress has always been driven by the courage to think new thoughts, and that typically comes from the scientific community, not the business world.
- sandGorgon 10y agoThat is where you are wrong. There is already fundamental work happening around vernacular linguistics, robotics (especially Grey Orange) and fintech. People misunderstand how much technology needs to be built to be able to reconcile something like cash on delivery. We are definitely far away from valley level innovation, but having people germinate the ecosystem with management styles and culture is extremely important. What is fundamentally broken is somewhere else - the investor ecosystem. Indian investors are young, barely out of college and are professional MBAs without a lot of experience in a startup. It is very hard to explain the value of technical debt, innovation etc...when we can chase copycat business models without innovation. It's been extremely hard finding bthe right culture fit in investors. Combine that with the fact that most entrepreneurs have not become billionaires in India...so you don't have that savvy, experienced angel investors with deep pockets (the Paul Grahams or the Peter Thiels of India). That is what needs fixing. China already has a couple of Jack Ma who are being the second wave of investors.
- igravious 10y agoInteresting article but I feel it's light on actual hard data comparisons. One fact is wrong though. > Startups can achieve massive scale quickly, because the domestic market is 1.3 billion people, which is four times the U.S. or European population. I don't know what definition of Europe (Western maybe?) gives you 300 million people. Demographically Wikipedia says Europe had 70 million people in 210 so presumably it's over 3/4 billion now. I feel like people don't appreciate that Eastern Europe / Russia is Europe too for a lot of definitions of Europe. The E.U. includes a lot of Eastern European countries and Balkan states and Slavic states but not all. Ukraine and Russia _are_ European in many respects, be it ballet, opera, classical music, theatre, cinema, religion, architecture, you name it. Arguably modern Turkey is the least European _culturally_ because of the influence of Islam and Arab culture but geographically Istambul is closer to Rome than London is and when the Western Roman Empire fell the seat of power shifted to Constantinople and continued on for another, I don't know, more than _500_ years anyway. Wikipedia say Europe had 300 million people in 1916, midway during the First World War (sorry world!), exactly one century ago. side note: I have to chuckle to myself when some point out that air pollution in China will be a limiting factor. It didn't stop the industrial revolution in the UK or US so why should it stop China? And it wasn't _that_ long ago that air pollution was a real problem for London and LA, for instance. Judging by history air pollution will be a thing of the past within one generation (25/30 years) in China. You can quote me on that.
- igravious 10y agoAaargh. That 70 should read 740 :( 740 million. https://en.wikipedia.org/wiki/Demographics_of_Europe https://en.wikipedia.org/wiki/Demographics_of_Europe
- studentrob 10y ago> side note: I have to chuckle to myself when some point out that air pollution in China will be a limiting factor. It didn't stop the industrial revolution in the UK or US so why should it stop China? And it wasn't _that_ long ago that air pollution was a real problem for London and LA, for instance. Judging by history air pollution will be a thing of the past within one generation (25/30 years) in China. You can quote me on that. I can think of a few factors that make Beijing different from the industrial revolutions of the US/UK. (1) In 2016, the brightest can move to pollution-free zones which don't really exist in urban China (2) Environmental policies were spurred on by environmental activism which was enabled by free speech. It's not clear this will happen in China. They keep saying the air quality will get better, but each year is worse than the last, and more and more rivers are no longer usable due to intense pollution. I think there's something to be said for the whole country being responsible and being able to protest about local conditions. That said, I wish China luck.
- dude3 10y agoDude the air was clear the day you were wearing masks. Creadabilty lost.
- seanmcdirmid 10y agoYesterday the air quality was yellow (i.e. Clean air), but I still ran into an American Chinese girl wearing a face mask asking for directions. Weird....
- Supi-lee 10y agoI am pretty sure India would be building its own devices, OSes , search engines, social networks etc if the govt gets more protectionist. There is no reason this can't happen overnight. It has an endless supply of cheap labor and high end talent. It (protectionism) has worked well for them in the auto, pharma, telecom sectors where the local companies are market leaders despite serious competition from the west.
- bayesian_horse 10y agoLabor in China isn't really that cheap and limitless any more. And the sheer number of university graduates to select from slightly distorts the overall quality of education in China.
- tormeh 10y agoIt has struck me that the real key to American tech dominance is NASDAQ and the American stock market in general. It values tech and especially young companies a lot higher. In biotech, an IPO on NASDAQ will be valued at 2-3x one on Euronext. Frankfurt is even worse, which is why even German biotech firms don't IPO there. The value that the American stock market sees in tech in turn drives investment in startups that can expect a more lucrative exit. Ever wonder why so many European tech companies are bought by American ones? It's because any young European tech company will be valued higher as part of an American one listed on NASDAQ than it will be when listed on its national exchange, even with the conglomerate discount. So much in the world depends on funding.
- jgalt212 10y agoI know this may sound flip, but as far as innovation goes the Chinese* have not invented anything since gunpowder. Of course SV, is much more than just innovation: it's access to financing and technical and sales talent. Along these dimensions, Beijing may represent a competitive threat. *only those based in China. Chinese people freed from strictures of autocracy, colonialism, communism, and kleptocracy have made great innovations.
- up_and_up 10y agoCan someone name one innovative or disruptive technology that has come out of China in the last 20 years? Honest question. I am admitting ignorance here. I have this assumption that many Chinese companies just copy/refactor existing ideas and apply them to their protected market.
- apahwa 10y agoisn't that enough? they have a much larger population so if they copy then they could still become much larger and end up winning in the long run
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- contravert 10y agoLower-priced but "lower-quality" is one of the quintessential properties of a disruptive technology. You can probably apply this to all electronics manufacturing, from smart phones to consumer drones. Could smart phones have become so ubiquitous if each cost over $1000 to buy?