Venture: China's Rise In Tech Threatens Silicon Valley
The week of Feb. 21 in 1972 would later have an enormous impact on international relations as Richard Nixon became the first U.S. president to visit the People’s Republic of China. The meeting between Nixon and Mao Zedong, China's former chairman of the Communist Party, would later pave the steps for China as it was transformed from an isolated member of the international community to the country possessing the second-largest GDP in the span of three decades.
Since that historic one-week visit, the Chinese people had witnessed their country ascend in various fields such as sports, business and global politics. Recently, China has excelled in the tech industry and may have the potential to overtake Silicon Valley as the premier hub of technology worldwide.
For a country that once promoted worldwide revolution under the Maoist ideology in every country, China has now emerged as the leader of venture capital funding in Asia. Forbes reported that of the 40 percent total share of venture capital funding from Asia, 24 percent of it came from China. Airbnb and Uber were among the most prominent American companies that now had significant financial backing from Chinese investors such as Didi Chuxing and China Broadcast Digital Partners. CNBC’s 2018 Disrupter 50 list had the aforementioned Didi Chuxing and Xiaomi on it as these two companies had attracted billions of dollars in equity financing.
The Chinese startup scene today has seen its growth due to a lack of regulations that could have limited the number of innovations coming out of the Middle Kingdom. The Chinese government is supportive of startups that want to bring out the latest products onto the markets such as self-driving cars and the startups in China have more access to data sets than their American counterparts.
Investors in Silicon Valley have feelings of fear and amazement as they have been noticing at how fast the Chinese tech industry has grown over the past decade. The Chinese tech industry has been growing due to emphasis on developing more innovative products every year, as well as having a government that is very supportive for the creation of these products.
One major fear that Silicon Valley investors have for China’s tech growth is the possibility of a brain drain as the Trump Administration considers implementing immigration reforms, which may to lead talented employees from Silicon Valley companies to relocate to China.
Chinese innovators such as Jack Ma and Lei Jun are considered some of the best personalities in technology today and their successes have inspired many Chinese who are currently working in the startup scene. As reported in The Atlantic, Ma’s firm Alibaba’s IPO in the United States raised $25 billion in 2014 and Jun’s Xiaomi IPO in Hong Kong is expected to raise $10 billion. Both of these men came from humble beginnings when they established their companies and today, they have seen their companies turn into some of the most powerful firms in the world alongside the likes of Google and Facebook.
The premier of China, Li Keqiang, had vowed that China will be the leader in the development of new innovations, particularly in artificial intelligence and robotics, by 2025. This government-backed strategy is called, “Made in China 2025”, and this strategy builds on influencing potential entrepreneurs in the country and stresses the importance for Chinese manufacturing to create more products based on quality and less on quantity.
One example of 21st-century Chinese innovation that is used daily by many people inside and outside of China is the social messaging app, WeChat. Similar to its American competitors like Facebook Messenger and Skype, WeChat has a vast amount of features and options for its users to choose from whenever they’re using the app to connect with their friends and families.
There are a few features that separate WeChat from their American counterparts, however. Some of those features include having news content for subscribers to look at if they’re not busy communicating with loved ones and allowing organizations and companies to have official accounts so that they can closely communicate with their followers.
The success of Chinese tech companies can also be seen from a cultural outlook. The Chinese culture is one that is still prevalent for thousands of years and one trait that the Chinese people is synonymous with is that they are generally very hard-working and have a desire to learn about new ideas, especially those that are from the West. The world has seen the Chinese nation rise from living under a ruler who once declared that capitalism would soon be extinguished to living with an economy that is the second-largest in the world and with an ever-growing middle-class in over 40 years.
The increasing capital that is present in the Chinese tech industry has motivated many Chinese nationals to return to China, especially those who were educated in American universities and had already established their careers in the United States. The skill sets and knowledge that these nationals had attained while studying and working in the U.S. are considered to be vital for the creation of new startups in China and the increased development of high-quality technology.
Chinese history has seen its fair share of glory, shame, tragedy, and resurgence. Some of the most important events in recent history have occurred in China such as World War II, the Cultural Revolution, Richard Nixon’s visit to Beijing, and the Chinese government’s implementation of economic reforms after Mao Zedong’s death in 1976. The world has been witnessing the rise of a future superpower since the 1970s and is looking forward to see how much China is continuing to contribute to technology around the world.