Opportunities and risks in the Chinese IT market

On July 15, June 2, Beijing time, the tech blog TechCrunch editor Sarah Lacy recently ended her visit to China. Article China is not the next Silicon Valley.

The main content of this article is as follows:

When I returned from China last week, I found that the most common saying I heard in China is the next one in Silicon Valley and the same way I did in Silicon Valley.

However, although China has a large number of capital and entrepreneurial enterprises, China will not be the next Silicon Valley. In fact, the current situation in China is very different from what I have seen in the past.

In fact, Silicon Valley is not as fast as it is described. Of course, compared with traditional American enterprises, the growth from nothing to billions of dollars in market value in a few years is amazing, but these entrepreneurial enterprises are still outsiders. Although there are some very young entrepreneurs in Silicon Valley who are on the cover of a magazine, it takes more than 30 years for many people to see their NASDAQ moments, however, more people cannot even achieve such success.

Google and Facebook have made breakthroughs in their decades of infrastructure accumulation in Silicon Valley. These infrastructures include not only chips, routers, open-source protocol stacks, but also entrepreneurial speed. In Silicon Valley, you can come up with an idea during breakfast and create a company at noon. In the rapid development of Silicon Valley-the bubble burst cycle, it took decades to establish a complex set of systems, such as venture capital, angel investors, lawyers, commercial terms, accounting methods, and best practices, to benefit new entrepreneurs.

What's astonishing in China is that what has happened in the U.S. business over the past few decades is happening at the same time, including the booming TV and Media Studios in 1950s, the greedy market in 1980s, and the emergence of the Internet bubble, IT infrastructure construction, as well as current Web2.0 and green technology innovation.

Imagine the rapid development of e-commerce and TV shopping. The development of online advertisements is not due to the increasing number of Internet TV advertisements and online advertisements. Entertainment and piracy are also happening in the United States. However, when Hollywood believes that the Internet threatens its legitimate business, China's entertainment industry is developing rapidly in piracy. No one thinks that someone will buy the official CD, so people are considering other ways to make money. What's interesting about China is not only the scale of the market, but also the mutual maturity of the old economy and the new economy, as well as the super network effect of this economic development in China.

For Chinese entrepreneurial systems, they are building their own infrastructure similar to those in Silicon Valley. However, Chinese startups have not accumulated for decades. Experts said that China currently has at least $20 billion of venture capital. Rocky Lee of law firm DLA Piper points out that this number will double if Angel investors, unofficial funds and local funds are taken into account.

Therefore, China's next Silicon Valley cannot fully reflect what happened in the Chinese market. Silicon Valley has never seen the Chinese market, and the Chinese market will not have an impact on Silicon Valley. In all respects, the sound development of Silicon Valley is healthier, but there is also a lack of passion. The chaos in the Chinese market will cause losses to entrepreneurs in the next decade or longer, but it will also help many people make money.

It should be noted that there are differences between developing products in parallel and launching products in serial mode. For the former, you can raise a lot of money and hire oneProgramTeam members to develop all products at the same time. For the latter. You can only develop one product each time and prove that this product is effective and profitable, and then raise funds to develop the next product. When the economy is booming and investment bubbles emerge, enterprises with parallel approaches will increase. The serial mode becomes popular when funds are tight. Parallelism is always exciting, but serialization is more rational.

Silicon Valley startups tend to develop in serial mode. There are always outsiders who can seize the opportunity, such as the development of green technology and Web2.0. Investors and entrepreneurs will focus on high-growth industries until some enterprises stand out and most enterprises fail. Then they will wait for the next time.

China is developing in parallel. China's economic carriage is driving at high speed and points to all directions. This chaos may hurt entrepreneurs, but it is also unique in modern economic history. Any ambitious entrepreneur cannot ignore the Chinese market. This is why some European and American companies will continue to stay in China for a longer period of time after two years of successful development in China.

Chinese start-ups are more concerned with the internal market, which is different from Israeli and European enterprises. On the first day of its establishment, the latter needs to be considered globally in order to gain a sufficiently large market. In China's Internet and mobile phone fields, the biggest surprise comes from local non-English-speaking entrepreneurs who may not live in China's largest city. They do not read TechCrunch, or even cannot find Silicon Valley on the map. However, these are not problems, because the local market in China is very different from that in the United States.

Although Chinese entrepreneurial enterprises often imitate their American counterparts, american entrepreneurial enterprises are also learning more and more from the elements of Chinese entrepreneurial business plans, such as creating value through virtual goods, test alternative network payment methods and develop more social e-commerce.

In a constrained environment, you can always get better ideas. This is also why the best companies are born in the recession, why Israel became a hotbed of nasdaq ipo in the end of 1990s, And why Chinese Internet companies can come up with ways to make money other than advertising, because they must do this.

I will go to China again in October this year, and I will also learn Mandarin, because the opportunity may be hidden in these non-English-speaking internet cover characters.