Why London startups should start looking to China for expansion
The Chinese tech scene is thriving. In the past years, we’ve witnessed the rapid growth of companies in the sector with China facilitating the creation of some 4,000 technology, media, and telecom startups in 2017. Further to that, in the first nine months of 2016, the amount financed by China’s fintech companies accounted for more than 50% of the total amount financed by the global fintech companies. The recipe for success is a combination of policies that encourage investment and innovation, anticipating the market’s needs and looking ahead when it comes to developing initiatives on new technologies, such as Blockchain and Artificial Intelligence (AI). These factors create the perfect kind of environment for UK startups that want to take their businesses to the next level.
The opportunities China presents to UK companies are vast. The Chinese investment being channelled into tech is unparalleled to any other country in Europe, and startups venturing into Asia have the chance to get their products exposed to one of the largest consumer bases on the planet. The Chinese government is also in-sync with the current tech trends and is consistently increasing incentives for companies working on cutting-edge products. This is further backed by corporations and various investment vehicles to offer a well-rounded offering for tech companies.
Breaking into China, however, is not an easy task. One of the main challenges UK companies encounter when they decide to expand into China is the difference in both the overall and business culture. The way the China market operates and do business is very different to how it is done in Britain, and the market also behaves differently.
When UK companies arrive in China one of the key problems they face is adapting to local market conditions and finding the right channels through which to drive commercial agreements. In China, earning and giving trust takes longer and business is usually done in person. This slows down potential partnerships and commercial deals, as companies try to navigate through various decision makers.
Fintech companies struggling to make the transition from the UK to China now have the option to turn to BGTA, that also founded earlier this year the UK-China Fintech Alliance, a not-for-profit organisation to establish a clear communication channel between trusted corporates, research institutions, trade bodies, startups and investor communities in the fintech industry from both countries. The alliance aims at addressing the issues of executing and driving results in the cross-border fintech market by bringing together the relevant parties who want to start operations in the UK or China, which has a knock-on effect of accelerating commercial agreements and that’s when BGTA’s growth engine kicks in. Once the intent of starting operations in either country has been established, a strategic fit with one or multiple partner organizations is established and then the acceleration phase starts.
Startups focusing on Cleantech, IoT, Smart City and Fintech solutions that want to start working in China can also turn to the new Shanghai International Energy Innovation Centre (SIEIC), which will be launched on June 26th. The SIEIC is a purpose-designed centre focused on aspects of energy generation and use, environmental management and protection and support of the development of smart cities. It will focus on UK and China technology acceleration in the broader Cleantech and Energy verticals.
The innovation centre offers a space of 1,300 square meters fully refurbished with co-working and multi-function rooms, to serve as a physical hub for UK tech companies as an entrance gateway to the Chinese market, where residential pilot programs are also offered to those UK companies to then roll-out full-scale commercial contracts.
Inherently, UK and China business practices differ and by firstly forming a trusted community of industry practitioners on both sides and enabling both sides to speak to each other is key in delivering a form of harmonization between different practices. This is already taking shape as we are working together with some of the biggest corporations in China and leading startups in the UK.