The Boom of China Tech Startups

China’s registration of new businesses has gone up by 21.6% since 2015. This increase came about following the government’s efforts to lower the limitations on new business entry and reduce the red tape for entrepreneurs. Authorities began business registration reformations from March 2014 and went ahead to simplify the registration procedures by 2015.

Chinese Technology is the Future of Chinese Growing Tech Companies

This new startup boom is starting to take off; and the Chinese government wants to start broadening the industries in the country, with the aim of veering away from manufacturing and exporting based models, into innovation.
Amid the fervor for entrepreneurs getting ahead in life, it is apparent that the information technology sectors has the most start-ups. China’s IT industry has grown at breakneck speed over the past few decades.

However, the start-up scene in China seems to follow a ridiculous trend of rising and falling that everyone would be better off shunning. Let me go back to the boom, and not the failures.

Tech Companies are Changing the Face of Chinese Business

This new start-up growth comprises a mixture of people like foreign-trained Chinese, migrant workers, and individuals who know that getting ahead in life is important.

The Internet industry is the forefront of the start-up boom, and this is apparent from the high number of recently registered IT businesses and the volume of investment. China is blazing hot for venture capital funds and Angel investors.

The Chinese government has set up a state-backed investment fund that’s currently about $445 billion. The government’s fund is the largest fund set aside for start-up’s worldwide, much more than what has been raised by other venture capital firms globally.

This fund is part of Premier Li Keqiang’s attempt to move the Chinese economy into the innovative industry and to reduce its dependency on the manufacturing sector. The country started a crusade to support entrepreneurship in 2014 and since then has launched several tech incubators for start-ups.

Even though China is far from Western countries, it offers start-ups many perks apart from its legendary strengths of comparatively low-cost manufacturing.

Let’s have a look in more detail why China could be right for a tech start-up company. China’s start-up climate is very fertile because it has all the ingredients that start-ups traditionally need to be successful:
• Customers
• Funding
• Competition
• Products

More Chinese Tech Companies, Less Low-skilled Jobs

China is no longer about low-skilled workers in never-ending factories. There are now more educated people who are more cultured and are proficient in IT, coding, technology, design, and all of the areas required by tech start-ups.
Previously, people scampered to work in large companies or governmental organizations, but these days, most people are inclined to entrepreneurship.

The Chinese government wants to reduce the country’s dependence on exports and increase household consumption. This means encouraging people to spend within China. Any start-up that needs customers will find its niche market in the $1.4 billion people in China.

No matter the type of product you are creating, whether a new technological gadget or an innovative service, China will offer you the stage to produce it. Even though the undependable Chinese internet can make online service businesses difficult to manage, China is making inroads into the online-based and technical sectors, which will offer vast possibilities for foreign start-ups that want to create innovative services to improve this the general state of the industry.

Start-ups will have a hard time surviving with too much competition in the same sector, so the Chinese government is proposing several measures to foreign tech start-ups. There might be some local start-ups in the same industry as your international company, but thanks to your Western outlook, your business can benefit from your westernization and offer the Chinese people a different angle to the market.

Innovation is the Key to China’s Successful Tech Companies

Innovation is still somewhat new in the Chinese economy built on manufacturing and production, so new approaches from foreign companies will always stand a good chance of getting more attention.

Apart from the government funding and subsidies for tech start-up businesses, there are also numerous of offerings and fund from venture capitalists and Angel investors, all looking to invest in the right startups and get a piece of the China pie.

Some people and industry experts have cautioned about the possible risks of the China start-up growth, including the failure rate of start-ups and subsequent bad loans and bankruptcies.

The actual issue with this boom/pop cycle is the effect it has on the entire entrepreneurship scene. The news has the tendency to build up to the point where it good companies loses out because of the ricochet effect. Companies spend most of the time making marketing decisions rather than product development decisions. Of course making marketing decisions is useful for new products, but this is just a drop of water in an entire ocean of possibilities.

The Boom-and-Pop Cycle

We saw a scenario play out in the P2P lending industry. With numerous competitors, loan website Ezubao attempted to stand out from the crowd by offering massive returns. When the company failed to make good on its promise, execs became fraudulent.

This boom-and-pop cycle is a simple reality of any market; there might just not be any way to avoid it. But most economists believe that there is some way for China to grow its innovation new internet industry so that the booms aren’t so booming and the pops, not so popping!

Perhaps the Chinese economic growth needs to be reassessed, with cash and fund handling standards re-evaluated. As start-ups thrive, consumers will not feel the pain of poorly formed organizations or products that will cost them more than their monies worth. We hope to see creation of a certain, structured and well-regulated stage for new start-ups to grow.