In the last few months, I’ve become quite familiar with a term that I would now consider almost redundant: startup.

In June, I started working at Influence Matters, a tech PR startup that “creates influence for innovators;” only a couple of month ago, I was curating the Networking Matters’ agenda, a WeChat agenda of interesting tech and entrepreneurship events in Beijing put together by the agency – see the QR code to follow it at the end of this article -,  and there happened to a pretty interesting event: “Can Silicon Valley be cloned to China?”; even The New York Times has recently published an article themed on, guess what, the Chinese Silicon Valley, the new cradle of life for tech innovations, developed by Asian startups.

So, what’s up with all this entrepreneurial spirit, in a country that is still living the process of reforming (or actually dismantling) its old, gigantic SOE?

The incredibly fast growth that has characterized the Chinese economy in the past decade, helped by the country’s huge population, as well as some governmental restriction, has plunged the number of emerging local startups, which started taking advantage of foreign investments and are now aiming at IPOs.

In 2015, a total of $56b was the capital invested in startups, as reported by an article published on Bloomberg. The first half of 2016 is slowly unveiling a similar trend, with reported booming investments of $37b, about double the tally of the same period last year. Interestingly enough, 38percent of the 929 companies surveyed by a report of Silicon Valley Bank, expects venture capital to be the main source of funding in the years to come.

Despite its constantly being under attack due to copycat issues, China is boosting innovations, especially in the tech field, with more than 660,000 effective invention patents last year, an increase of 12percent from 2014, Bloomberg reported.

So what is the secret of the surprising trend we are witnessing? Why is China giving birth to a growing number of startups and what are their foreign investors expecting from them?

To have a better understanding of the current Chinese startups panorama, I had the chance to interview Liam Bates, CEO and co-founder of Origins Technology, a Beijing based tech startup and former Influence Matters client that designs and sells outstanding air purifiers and air quality detectors. He explained me how China is switching its focus from big state-owned enterprises, to numerous, extremely competitive and fast developing startups. Despite the numbers and predictions made though, Liam doesn’t seem to totally agree with the definition of “New Silicon Valley” that was given to the Asian country.

According to Liam, the positive economic conditions that have characterized the country in recent years helped to pave the way to the foundation and development of local and foreign startups on Chinese ground, that said, China can’t be considered a “startup friendly country”, as it still presents too many limits and bureaucratic issues that make it difficult for entrepreneurs to set up a business in a country that nevertheless offer many opportunities.

Liam also points out that starting a business in China requires a deep understanding of the Chinese culture and market environment, and that he’s “never met anybody who came to China to start a business and ended up being successful.” Knowing language and local policies are indicated as essential elements that only characterize people who have been living in the country for a long time, or Chinese people re-entering their homeland after an experience abroad.

The team at Origins Technology

Even though China is faster at developing ideas and the business scale is bigger than in the West, which helps to create differentiation, Liam doesn’t consider China as innovative as its Western counterpart, nevertheless it is finally getting rid of its long-lasting stigma of copycat realm.

He also doesn’t see many opportunities and acceptance of Chinese startups abroad; other countries wouldn’t choose Chinese products over their own, the country’s goods are still characterized by poor customer service and branding. The same WeChat, taken as an example, has been largely promoted abroad, but it didn’t prove successful, not even in Chinese speaking countries.

In summary, Origin’s CEO recognizes the new development trend adopted by the country, but he claims that China is still not at the same level of the American Silicon Valley and wouldn’t recommend to start a business in the PRC, unless relying on local people or targeting the vast expat community.

Why then should investors consider China as the new basin for their capital? Well, despite its economic slowdown, China is still undergoing a revolutionary process, with one of its main goals being the implementation of the internal consumption. The Asian leading nation is still determined at keeping its status of net exporter, which means that the country will have to fulfil domestic consumption needs with domestic production. But there’s more…as previously mentioned, China isn’t the world’s manufacturing nation anymore, as it’s slowly being recognized as an innovator.

Besides, China doesn’t appear to have too many competitors, at the moment, turning around the statement made in the article “After three weeks in China, it’s clear Beijing is Silicon Valley’s only true competitor.” Basically, China only comes second to the American Silicon Valley, given the fast pace of the Chinese startups development, led by the speed of consumer adoption rates. Apps receive faster appreciation or are faster rejected than in the West, a big startup can take only 3 to 5 years to be set up and the Chinese working schedule is much tighter than the Silicon Valley’s one.

There seem to be plenty of opportunities for those brave entrepreneur who aren’t scared of intense competition in a country characterized by a totally different business culture. As the Chinese economy is rejuvenating itself, slowly moving toward its recognition as a market economy and, possibly, a new opening, Influence Matters will keep an eye on the country for you. Only a tip: it would definitely be useful to approach this market after having spent considerable time in the country and, of course, assisted by a Chinese partner to rely on when dealing with bureaucracy and fast changing policies.

Whenever a new trend comes around, it is normally followed by the subsequent development of groups of people interested in the subject matter. If you are looking for startups/tech/entrepreneurial related events, join our weekly agenda, which selects interesting conferences and seminars for you to attend!

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