Start-ups headquartered in Asia’s largest economy want to conquer not just the domestic field, but also to come out on top worldwide, while companies the world over compete for a slice of China’s populous consumer market.
That move will upgrade the country’s position in the global value chain and is ambitious, analysts said.
China’s “Going Out” — a policy initiated at the turn of the century to increase the country’s outbound investment by encouraging companies to go abroad, is being led by an increasing number of private companies, such as Alibaba and Tencent. And this move comes amidst such an environment.
Extended of their sales networks overseas or expanded their footprints through mergers and acquisitions by state-owned enterprises and large Chinese firms was the strategy in the earlier stages of the policy. Lenovo’s purchase of an IMBM unit and ChemChina’s takeover of Italian tire maker Pirelli were among those spending sprees.
Start-ups set their eyes internationally in the early stages of operations — even as their home market offers plenty growth opportunities in what could be a new chapter in the story of China’s spreading its economic influence globally.
“We are very much a Chinese company and China is a big market, but the adoption of new technology and new products like ours may be faster in other markets so we shouldn’t confine ourselves,” said Wang Mengqiu, founder and chief executive of Zero Zero Robotics to a TV news channel.
Since setting up the firm in 2014, Wang and his team have been operating from both China and the United States. Since launching in 2016 and recently debuted in Apple stores in the U.S., U.K., Canada, Hong Kong and China, their first product, an autonomous flying camera, is sold globally online.
Start-ups also see surviving the global marketplace as a test of their businesses’ viability and resilience beyond the prospects of better financial returns.
While, barely a year old when it announced in January that it will lease more than 60,000 square feet of space in an office building in Singapore’s central business district was co-working space operator Distrii, taking their bicycle sharing concepts overseas are Ofo and Mobike.
“The vision is to IPO, though only when we have reached a mature state… To grow and bring more value to our network, we will need to expand to new markets. Bringing our product to international markets will be the ultimate test of our value proposition,” Distrii chief executive Hu Jing said in an email.
The “Made in China” label that many perceive as synonymous with low cost and low quality would be redefined and the country’s economic competitiveness would be enhanced by the Going Out movement of start-ups from China, analysts said.
“The international development of start-ups is accompanied with demonstration of high-tech products, which shows the world that ‘Made in China’ products are also innovative and user-friendly,” said Neil Wang, global partner and China managing director at Frost & Sullivan.
After years of being a favored investment destination, the country’s outbound investments will get a further boost and China will solidify its position as a major exporter of capital and innovation as more start-ups set up operations and export their business models beyond the Chinese borders.
(Adapted from CNBC)