Looking at growth opportunities for British entrepreneurs looking to enter the Chinese tech market.
A glance at China’s tech market: rising innovation and a business-friendly environment
Technology is changing our lifestyle, and undoubtedly bring us together in an interconnected world. In this context, Global Tech Advocates (GTA) has created a thriving community to campaign for the betterment of the global tech industry, and under this umbrella, Tech China Advocates (TCA) is striving to motivate Chinese tech leaders, experts, investors and tech enterprises, connecting China to the world.
Over the past 20 years, China’s economy has shifted from a stage of high-speed growth to that of high-quality development. Besides the improvement of the entrepreneurial ecosystem, China has adopted a broader national strategy to innovate. In the 14th Five-year Plan, China will continue to increase R&D investment, develop a sustainable society through high-technology and further open up the market for foreign investors. Meanwhile, promoting international cooperation remains a core priority in thenational agenda. The recent announcement of an EU-China Comprehensive Agreement shows the great efforts to facilitate foreign investment in China and generate supportive policies to improve global business.
In this spirit, what are the latest trends and opportunities in China tech ecosystem?
AI, 5G and Digital Economy as growth drivers
Artificial Intelligence (AI) is the new leading industry in China, underpinned by a rapidly growing market which amounted to around RMB 70 billion in 2020 and has increased almost five-fold since 2015 (Statista 2021; Deloitte report 2019). Its strength derives from huge volumes of search data, product lines and open-source communities guided by the tech giants, which supportAI startups to safely level up.
5G is an another innovation enabler in China, favoured by a top-down national agenda and tech giants such as Huawei and ZTE. A huge base of internet and mobile users (around 900 million) contributes to 5G development in China, with these 5G networksestimated to have 650 million users by 2023, covering around 40% of the Chinese population. As of September 2020, China hadconstructed over 690 thousand 5G base stations nationwide, which will generate a larger economic impact and R&D initiativeseven in a global sense (daxueconsulting blog 2020).
As for the wider digital economy, China is possibly best known for its massive online shopping through platforms such as Taobao, Tmall, Pingduoduo and particular events such as Double 11 that exceeded US$116 billion sales on Alibaba Tmall in 2020. Indeed, China enjoys considerable online retail sales, up to RMB 11,760.1 billion in 2020. This indicates growth of 10.9% year on year (Sources: China Internet Watch), based on the fact that around 95% of all purchases is conducted in China via e-commerce. Apart from China’s huge potential for cross-border e-commerce that may lead to a further international shopping boom, it’s also noticeable that China’s economy is deeply digitalised, accounting for 36.2% of the GDP with a growth rate threetimes higher than that of the traditional manufacturing economy (Global Times 2021). In this trend, China will play an important role in the transformation of the global economy in the fields such as fin-tech, mobile payments and KOC marketing.
Emerging opportunities in special zones: Free Trade Zone and Greater Bay Area
To welcome more foreign tech talent and companies, China has carried out multiple policies to boost investment.
Free Trade Zones (FTZ) as a proactive strategy of opening to the world, provide special preferential tax and regulatory policies, in 6 ‘weaves’ gradually covering 21 cities. Taking Lin-gang Special Area of Shanghai FTZ as an example, this zone features afavourable tax and risk management system, with free investment, free trade, free capital, free transportation, free mobility of talent and facilitating the efficient flow of information (Deloitte report 2020).
The Greater Bay Area (GBA), also known as the, Guangdong-Hong Kong-Macao Greater Bay Area, includes two Special Administrative Regions and nine municipalities in China. It’s the 12th biggest economy in the world (MGI report 2019) and witnesses the highest concentration of Fortune 500 companies in China, housing a majority of China’s most innovative technology companies. The GBA is also home to more than 170 universities, as well as 40 national key laboratories and partnership labs. It enjoys a rather mature industrial system, increasing real estate needs and advanced connectivity with neighbour cities.
TCA is your key to ‘open’ China market
In 2020, the direct investment into Chinese firms climbed 4% and FDI inflows into China reached USD 163 billion (UNCTAD 2020). China is becoming the world’s ideal destination for new FDI, behind which stands a promising ecosystem and innovativetechnology development, further boosted by its increasing exposure to the global market and embracing international cooperation. The potential of the Chinese market is still growing in diverse ways, as do the supportive policies for businesses.TCA is here to help better connect global businesses to the local tech community and smoothly land in the Chinese market.