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ADG China Insights - November 2017

What to know before entering and making major investments in the China market

The China market for technology companies is huge and Chinese technology companies are getting stronger and going global at an accelerated pace.  However, Western technology executives know the many stories of failed or loss making China efforts or have experienced it themselves. Even in China today, it is still easy to be fooled by the lure of huge numbers and potential opportunities. 

However, attractive deals and partnerships do exist for those that approach the market properly with intent and preparation.  Here we discuss several of the things you should know before trying to enter the China market:

  1. Should you be in the China market?
  2. Are you prepared and do you have the right strategy?
  3. How to find the right partners?

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China is battling more intensely in global markets

Firms around the world face ever more intense competition from their Chinese rivals. China is not the first country to industrialize, but none has ever made the leap so rapidly and on such a monumental scale. Today the country is at the global frontier of new technology in everything from mobile payments to driverless cars. – The Economist

China has a real tech edge over the US, and it's cultural

Here is a good story by CNBC discussing China as a major tech innovator.  According to CNBC, there is such a hotbed of tech activity that China could soon rival — and even potentially overtake — Silicon Valley as the world's tech powerhouse. While many credit this surge to the country's market size or government support, the true secret weapon seems to be the strategic and innovative mindset with which the Chinese actually approach the business of technology.- CNBC 

Chinese are starting to pay for software

Chinese consumers are increasingly valuing time and efficiency and willing to pay. The freemium model is becoming a norm for many software companies in China. “The enterprise will always pay for business services that help them achieve a high priority. For them, the high priority is always achieving their goal.” – technode

China is reaching the top of Artificial Intelligence (AI) and the robotics industries

China is a country of 1.4 billion people - where 89% of people have a mobile phone and over 750 million people use the internet. The Chinese population is enthusiastic about its increasing technological capabilities – but the Chinese government is even more so. Keen to dominate both the AI and robotics markets, it has set out a range of initiatives in both industries. – The Market Mogul 

The Amazon Echo like smart speaker products are booming in China,e.g. Alibaba "Tmall Genie", Xiaomi Mi AI Speaker, LingLong DingDong

Hysta Annual Conference and Tech Summit Takeaways

ADG was pleased to speak at the 2017 HYSTA Annual Conference in Santa Clara on October 5/6.  Here are a few themes that played prominently at the event:

  • China - US as the Global Tech G2:  The view is increasing that China and the US (G2) will pull away from the rest of the pack vying for tech dominance
  • China is a world leader in Consumer Technology Innovation:  In the consumer technology space many companies and VC's are looking to China for the next consumer innovations.  Unless a Western company has something very unique or a product that relies on the global consumer base it may be hard to succeed in China.  On the other hand, the enterprise sector is showing stronger demand for Western companies' solutions.
  • China is coming:  We were surprised by the volume of Chinese companies planning to head to the USA.  On at least 20 occassions, ADG was asked if we could replicate our services to help Chinese companies enter and grow in the USA (in addition to our helping Western companies grow in China).  What is driving it all?  A belief that the US market is easier to pursue than the hyper competitive high speed China market.  We expect the initial excitment will rationalize a bit after several years as companies realize crossing the ocean is harder than they think.

More interesting Stories you may have missed

In China, big expectations from big data – TheNation

Why China Is Leading the Fintech Race – Wharton

4 Ways China Is Influencing the U.S. Tech Industry - Fortune

Why Tech Companies Grow Fast in China May Surprise You – Fortune

How Chinese brands are beating Samsung, taking on Apple – NZ Herald

Accelerating Fintech in China – TechCrunch

Chinese tech companies venture into unmanned convenience stores – DIGIDAY

Actility accelerating the Internet of Things in China – IoT Business News