Is China closing the gap on Silicon Valley?

Is China closing the gap on Silicon Valley?

In a talk by Anna Fung of ZhenFund (a VC fund) and Derrick Xiong of EHang (a Chinese start-up) titled “How China is closing the gap on Silicon Valley” at RISE 2017, 60% of the audience agreed that while China is rapidly closing the gap, it is still a few years behind in innovation. No doubt China is leading in many areas. Anna pointed out that Chinese consumers are eager to try new things, as evidenced by the number of apps on their smartphones. China is currently the leader in bike-sharing. Most of the new products from China are quite cheap, which means the products can be adopted very fast. However, China lacks out of the box thinkers like Elon Musk. The reason may be due to the fact there are relatively few foreigners in China. Also in the US there is much stronger collaboration between Silicon Valley and the research universities.

Derrick agreed that Chinese consumers are very adaptive to new technologies, which support start-ups. Moreover the Great Firewall around China can protect the development of local start-ups against foreign competition. China is also very strong in manufacturing. Most of the commercial drone production in the US has disappeared. The Silicon Delta centered on Shenzhen is strong in smart manufacturing. So China is indeed catching up with Silicon Valley in many areas.

Derrick also noticed the new generation of entrepreneurs in China who are born after 1990 tends to be much more global than the previous generation.   Anna commented the new start-ups are targeting India and Africa and therefore have taken a much more global view. So China is indeed catching up with Silicon Valley.

Kyle Wong, Ph.D. and CFA, is an educator, hedge fund manager, columnist and entrepreneur. At Kaplan Financial he teaches CFA and other financial programs for the public and financial institutions. He has been contributing regularly to iMoney.