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Overview

 At a glance

  • China, officially the People's Republic of China (PRC), is a sovereign state located in East Asia. It is the world's most populous country, with a population of over 1.35 billion. The PRC is a single-party state governed by the Communist Party, with its seat of government in the capital city of Beijing.

  • ŸSince economic reforms in 1978, China has become one of the world's fastest-growing major economies. As of 2013, it is the world's second-largest economy by both nominal total GDP and purchasing power parity (PPP), and is also the world's largest exporter and importer of goods. Graph 1 is China’s historical real GDP growth from 1995 to 2010, while Graph 2 is worldbank’s forecast about China’s economic growth in next 3 years. Although China has said goodbye to two-digit growth rate, it’s still one of the economies with highest growth rate globally.

  • China is in the process of rebalancing its economy from being investment-driven to being consumption-pulled, during which there will be lots of opportunities for startups to meet people’s diversified demand after their basic needs being satisfied. According to CNNIC, as of June 2013, Internet penetration had already reached to 45%. According to Flurry, China has a large volume of connected device (pls refer to graph below).

  • More and more college students has been inspired by stories of several successful entrepreneurs (such as Pony Ma, Robin Li and Jack Ma, founders of Tencent, Baidu and Alibaba respectively) and made up their minds to do startups instead of finding a secure job.

  • As for the funding side, although Chinese government has advocated innovation and industrial upgrading and promised to do as much as they can (government incentives, hi-tech district, official incubator and accelerator, etc.) to support entrepreneurs, it didn’t work out very well mainly because most government officials are too conservative to support some brilliant but maverick entrepreneurs. Investors and investment institutions like VCs were in hype past few years and are gradually back being rational. According to wind, 102 investment institutions with small fund size (under RMB 10mn) were founded in past 2 years.

  • Startup Community: Opposite to the government sector, coffee shops (such as Garage Coffee, 3w coffee, Beta coffee) near the top universities in China has become quite popular among startups due to its cheap office space (buy a cup of coffee for RMB20 and you are allowed to sit there for all day long), startup atmosphere(gathering of different startup teams to communicate), fund raising platform (angel investors like to drop by and dig some undervalued startup program), promotion platform (periodic presentation to public). Not only entrepreneurs are well supported there, but a lot of students from top universities in China has been inspired.

  • Crowdfunding platforms: Since China forbids individuals or groups to issue shares to the public, so most projects on these platforms (such as Dian Ming Shi Jian) are based on products to be launched later (such as wearable devices).

  • ŸWhat’s more, it’s worth noting that BAT (stands for Baidu, Alibaba and Tencent) has taken a leading position in Chinese internet industry, and they have enough cash and capacity to replicate promising products when new entrants enter the market.