Technology startups have to run fast to bring their products to market or bite the dust. Entrepreneurs must understand this new reality in order to compete globally. This is the key insight Australian entrepreneur Ben Sand discovered during his visit to Shenzhen in southern China last year.
Shenzhen’s rich manufacturing ecosystem enables quick development cycles for high tech entrepreneurs. Want to prototype a gizmo? Just walk into an electronics supermarket and pick up the necessary components. Need programming? No problem, there are many software developers who can write code quickly. New product failed to work? Buy another set of components and begin again.
This rapid iteration of product development means that Chinese entrepreneurs move speedily to bring products to market. And it’s not all hardware either. Using mobile apps, they have also solved problems people outside of China have been trying to solve for a while. Like “gifting” money to loved ones during festive seasons or splitting a dinner bill among friends.
While developers and entrepreneurs in Silicon Valley are still discussing these challenges, “in China all these problems have been solved”, said Ben who is the entrepreneur-in-residence at muru-D, Telstra’s startup accelerator.
Shenzhen may have some obstacles but it’s very welcoming, he explained. While it is not as established as Silicon Valley, startups involved with something “more outlandish”, like the latest mobile application using augmented reality, will get a warmer reception among China investors and consumers.
His three-week Shenzhen experience has been instructive for him. Entrepreneurs in Australia and elsewhere, he explained, must understand that speed is essential to survival: develop and commercialise products quickly or die.
It also impressed on him that Shenzhen’s speed in innovation has made their startups very competitive with both within and outside China. Chinese startups can develop new ideas rapidly. They are also well-connected, and eager to learn.
“People in Shenzhen are so eager to meet new contacts. I found people extremely welcoming and receptive. I was invited to events, involved in meetings and attended celebrations.”
While visiting a startup co-working space, a developer he never met walked up to him to ask what he was doing there. Soon the developer dragged him in to meet his CEO so that Ben could advise him.
This experience highlighted that the Chinese are eager to seek out new contacts to improve themselves. “This is a level of interaction I haven’t experienced before not even in the US. Such connections can form a support base for startups.”
A common question asked of Ben since his visit to the Chinese city is whether startups from Australia and Asia will converge in Shenzhen as it is fast becoming China’s Silicon Valley.
Ben believes that startups must find the environment that they can thrive in. Silicon Valley in the US, he said, is a more obvious route and a better one for entrepreneurs involved in traditional tech business. But he warned that it is hard for outsiders to break into the US market.
“There’s an astonishing amount of money available in Shenzhen, and people are more accepting of something truly transformational. There’s also a drive to want to make things happen.”
The city government also has attractive programs including financial incentives to entice foreign skilled professionals to work in Shenzhen. For example, the Peacock Plan provides foreign professionals with financial incentives starting from US$500,000 to work in the city. Typically the incentive is US$2 million per person for a skilled professional or post-doctoral candidate, he added.
Ben visited Shenzhen over Christmas to find out more about the startup ecosystem there. Among the places he visited was the vast multi-level Huaqiangbei electronics mall. All sorts of electronic components from transistors, memory chips to cables and drones can be bought off the shelf.
“Shenzhen is a place I would visit regularly. There’re so many things happening here, it’s at the edge of technological innovation that as an entrepreneur I would want to plug into.”
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