What role is your AHK playing in the local startup scene? Have there been any changes since the last year of the tour? (increased interest also among smaller firms to become international?)
The AHK Greater China has an innovation strategy department with dedicated staff focusing on China-wide innovation projects and events. We support innovation and R&D activities of German companies in China and connect startups with German corporates for specific projects. For example, the IGNITE event series focuses on best practice examples on how to tackle challenges in innovative ways and foster the exchange among member companies and with potential strategic partners, like startups. Additionally, we just published the innovation survey 2022 “Innovation from China Going Global” with nearly 400 German companies sharing their challenges, opportunities and approaches to R&D and innovation activities in China. We regularly participate in the Start.Up! Germany Tour and work on continuously expanding our network among key stakeholders and deepening our knowledge base on trends and developments in the Chinese innovation ecosystem.
How has the pandemic impacted China’s startup scene over the last years?
With the country’s rigid response to COVID-19 in 2020 and China’s economy recovering fairly quickly, the impact of the pandemic on startups was initially less pronounced, compared to other countries. However, recent local outbreaks followed by severe lockdowns in startup hubs such as Shenzhen and Shanghai had major negative effects on the development of the local startup ecosystem. For instance, the number of newly founded startups declined by almost 80% compared to previous years during the lockdowns. While the rest of the world is gradually opening up and returning to business as usual, China continues to impose travel restrictions. This restricts startups in their internationalization opportunities, knowledge and expertise exchange with other startup ecosystems and participation in international startup competitions.
The decarbonization goals of the Chinese government (reducing carbon emissions from the peak level by 2030 and achieving carbon neutrality by 2060) provide many opportunities for foreign and Chinese companies of any size, incl. startups. Innovative enterprises play a crucial role in achieving these goals. Innovative products, services, technologies, and solutions which contribute to reducing emissions along the entire value chain are in high demand. Additionally, digitalization of processes in which startups and their solutions are an important factor, enhance efficiency and support the development of a more sustainable industry. A best practice example for German startups in the Chinese hydrogen industry is Hydrogenious Technologies, which cooperates with the Chinese company Broad-Ocean Motor. Their technology is used in hydrogen stations in China. A similar example which was part of our IGNITE event series is the Chinese startup Pan Support, which uses AI technology to analyze and optimize energy management in industrial plants, also for German companies in China. According to the Asian Development Bank, more than two thirds of new energy enterprises in China were founded after 2010, an additional indicator that startups do play a crucial role in achieving local decarbonization goals and benefit from supporting regulations and policies.
How are Chinese startups tackling the current crises in the global supply-chains?
All companies which are sourcing goods internationally or supplying global markets with their hardware products are affected by supply-chain disruptions. Compared to startups, larger companies have often more rapidly the possibility to diversify their supply chains, building on pre-existing channels. On the other hand, startups which operate on a much smaller scale, are more flexible and innovative in finding solutions and can alter their business scope at a fast pace. Furthermore, many startups focus on digital products and services and are therefore less impacted by global supply-chain disruptions.
With the recent success of Chinese EV manufactures such as BYD, where do you see the future of startups in the mobility sector?
The startup environment in the automotive sector is flourishing. Including suppliers, over 600 startups are active in the electric vehicle space in China. The NEV manufacturers Nio and Xpeng gained international attention, as well as the supplier iFLYTEK (intelligent speech recognition and AI) and Momenta (autonomous driving). These startups reached unicorn status and shape developments not only in the Chinese automotive market, but also internationally. Several Chinese cities allow widespread testing of autonomous driving. For instance, Shenzhen is evaluating to open up the entire city for autonomous cars. Shenzhen is also famous for its fleet of 100% electric public busses and taxis. Self-driving cleaning vehicles or convenience stores on wheels in parks are a common encounter in daily life. The charging infrastructure for NEVs is often meeting the demand, especially in the cities. The possibility to gain practical experience and direct consumer feedback and involvement does provide advantages for Chinese startups in the mobility sector on a global scale.
How did you select the best startups in your country for the Start.up! Germany Tour?
We used social media marketing via WeChat to advertise the Start.up! Germany Tour among the Chinese startup ecosystem. This year we are planning on organizing an Innovation Night Startup Competition, as part of the Innovation Summit in Shenzhen with pre-events in several startup hotspots in China (all depending on pandemic situation and local regulations). All startups need to fulfill a certain set of requirements, and a jury made of experts and stakeholders of the Sino-German startup industry will vote for the best startups to participate in the tour.