Jianmin Jin, Senior Fellow
As the economic growth rate slows down, in order to overcome the "trap of middle income countries", China has formulated a policy of "independent innovation" and aims for economic growth driven by innovation. Government-led policies have resulted in a surge of papers and patents, but issues such as low innovation efficiency and low productization rate remain. With innovation system reform, venture development policies such as "Mass Entrepreneurship and Innovation" are implemented, and grassroots innovation, an entrepreneurship boom, and leaders of the New Economy are born one after the other. With the benchmark of the Silicon Valley in the United States, China is aiming to innovate its economic and industrial structure.
In fact, such a venture boom has brought about the mass production of unicorns, and has led to the emergence of massive internet companies such as Alibaba, and these venture activities and the rise of emerging companies has gained worldwide attention. In the background of this are factors which give Chinese ventures a competitive edge such as the concentration of purchasing power by internet technology, the large number of talented middle-ranking people who are motivated, diversity of funding sources including risk money such as angel investors, utilization of the flow of open source development, the permissiveness of domestic regulations, and a national character where people flock easily to new technologies.
There is some doubt whether Silicon Valley-like innovation and venture activities can be sustained in China. Successful venture companies, however, serve as the driving force for economic growth, playing the role of an incubator to provide funding and know-how to new entrepreneurs, as well as nurturing them. As a result, the momentum of venture activities is maintained, and unicorns are being continuously born. If further advancement and expansion in the technology and industrial fields continues in this way, self-completing development will be realized in this New Economy.
However, issues such as the phase out of the industrial policy, where the Chinese Government intervened too much, and excessive control over overseas information, including knowledge and technical information, remain a challenge. In addition, the vitality of the New Economy has also spread to conventional industries, especially the manufacturing industry, and it will still take time to bring about the revitalization of the economic industry as a whole.
The full version of this report is available in PDF format below. This report is only available in Japanese.
Will Chinese Venture Activity be Sustainable in the IoT Era? (1.40 MB )
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