Throughout its exponential economic rise, China’s digital innovation story has taken a backseat to its manufacturing boom.
Yet Startup Genome found that Beijing boasts the second largest population of “unicorns” – start-ups valued at over US$1bn – in the world, while Shanghai ranks eighth globally. Part of the reason is that financing in China often happens quickly. In fact, financing decisions are made faster in Beijing than almost anywhere else in the world, and it’s paying off.
From tech start-ups to larger businesses looking to digitise their operations, or companies looking to enhance their digital projects, there’s a lot to learn from China.
Confidence is high across China’s cities.
Beijing-based executives are confident in their city’s digital capabilities, ranking it among the top five cities globally in Connecting Commerce: Business confidence in the digital environment – a recent study by The Economist Intelligence Unit (EIU) commissioned by Telstra. The EIU research is a quantitative ranking of 45 cities around the world, based on executives’ confidence in the strength of their local environment to support their organisation’s digital transformation.
China’s rankings stem from its high levels of government support, available funding for shared working spaces, and the strength of its educational institutions.
Not only is business confidence high in Beijing, other major Chinese cities including Shanghai, Guangzhou, and Shenzhen also figure in the top 20 ranked cities.
So, what can other cities learn from Chinese cities?
Open spaces are driving transformative innovation.
Chinese cities are increasingly empowering the local start-up community through physical ecosystems. An example can be seen in the number of co-working spaces in Shanghai, which doubled in 2016.
Having identified the opportunities these spaces present,private-sector companies, multinationals, and state-owned enterprises have established accelerators and co-working spaces of their own, in the hope of nurturing innovative ideas. Examples include the Microsoft Accelerator Beijing, and Airmaker, an accelerator with strong Singapore connections focusing on the Internet of Things innovations.
Meeting education needs for technical skills.
Chinese cities boast a wealth of universities and technical schools which contribute highly-skilled graduates to the local talent pool. According to Connecting Commerce, nearly seven in 10 executives in Shenzhen say local educational institutions are effective in their ability to equip students with technical skills.
While education remains a focus, the Chinese market is experiencing a skills gap in key emerging technical capabilities. In all four cities, executives say they primarily look for people with skills in big data analytics, along with expertise in cyber security.
Increasing availability of open data.
Optimising IT through the availability of open data is a challenge facing many enterprises across China.
Data made available by city governments, such as traffic patterns or weather activity, is important to organisations in all four Chinese cities. The majority of respondents in Shenzhen and Guangzhou, and nearly half of those in Shanghai, said their city government could improve the availability and use of open data to support business development in these regions.
Chinese businesses are ready to partner.
The market in China offers many opportunities for international businesses looking to partner with local organisations. At the core of industry in China is manufacturing, which is ripe for technical collaboration.
The national “Made in China 2025” strategy calls for major investments in Industry 4.0 technologies such as robotics and the Industrial Internet of Things. An example of this is the Hax Accelerator, established in Shenzhen in 2012 by two US entrepreneurs, which has spawned start-ups in fields such as robotics, 3D printing, sensor technology, bionics, and medical devices.
While businesses across the four major Chinese cities have acknowledged the central government’s support in the Connecting Commerce study, the latter also found that city governments play a more important role when it comes to digital transformation. By working to overcome the challenges highlighted in EIU’s research, and remaining open to collaboration, China’s digital ecosystems should continue to thrive in innovation for a long time to come.