China VC has overtaken Silicon Valley, but do aggregates tell the whole story?

definitely interesting, and this article points out a valuable fact, without the 14b for ant (associated with alibaba) it is not nearly as big

There are several factors at work here. First, China is extremely protectionist. A lot of the Chinese tech companies are reimplementations of American companies where they get to learn from history and their counterpart's IP. This means that even if China was not developing any new products or technologies, they would still be spending a huge amount of money to replicate the US tech companies. Supposedly economists should be lambasting this wasteful protectionism, but that kind of negativity isn't commonly applied to China yet.

Secondly, American companies have received enormous pushback when they do attempt expansion overseas. Some of this pushback is valid, and some is not. But often American companies are hit hard for stupid reasons because they don't have the political cover that Chinese companies ostensibly possess.

Which leads to the next point which is that Tencent, Alibaba and Baidu (which are the biggest Chinese tech players) are effectively government sponsored entities. Baidu especially was created after the Chinese government ran Google out of the country. This gives them much more political firepower when working out deals with other countries.

American anti-corruption laws are some of the strongest in the world, which is a good thing, but this does mean that American companies are operating at a big disadvantage when working in countries and industries where bribery is practically required. Russia, Brazil and Mexico are often problem countries for example. To get away with the backroom shenanigans required for dealing in those countries, you need the kind of political clout that companies like Exxon possess, and nobody in the tech industry wields that kind of power.

American companies operate under a number of "disadvantages." Some of these are disadvantages are good and some are not, but it does mean Chinese tech companies have much wider latitude to act and have much closer access to the political levers of their country. The biggest question here (as always with China) is how much do metrics that are developed for a free market actually matter when applied to a country that is not a free market but is pretending to be one when it suits their needs. The west faced a similar problem with the USSR during the cold war. The only news the west had access to was news that made the USSR look good, so we were constantly panicking at how powerful the Soviet Union seemed to be while they ineptly blundered from one error to another.

> This is a good thing. These areas are not places where you want to "move fast and break things."

Nobody wants anybody to "move fast and break things":

https://xkcd.com/1428/

That was the motto of one jerk who nobody likes, who incidentally runs a multi-billion dollar company and not a small business, whose company has since disavowed it, and is in general not how small businesses actually operate.

You don't want doctors to "move fast and break things" but you also don't want them to spend 95% of their time filling out paperwork so that medicine becomes so expensive that people go untreated because they can't afford it, or it bankrupts the government.

You don't want Nazi experiments but you do want a cure for cancer. There is a trade off here. If you choose wrong people die, no matter which wrong you choose. Which is why the correct solution has more to do with informed consent and less to do with massive regulatory burdens that exclude small entities, increase costs and deter participation.

We[0] are currently raising Series A and are based in China. Notes from our experience to date:

(1) Very few VCs here speak fluent English. I have had to pitch in Mandarin many times, even to partners at local branches of leading international firms.

(2) Many mainland VC firms now run USD denominated funds, some are explicitly looking out of China, especially to Southeast Asia.

(3) A great place to be for VC next week is RISE in Hong Kong, http://riseconf.com/ ... please reach out with an email if you are attending.

(4) Many companies here seem open to partnership deals. I suspect that non-equity sources of funding may have a greater influence here than elsewhere.

(5) An environment of extreme capital availability combined with a huge largely homogeneously regulated market definitely affects business model and growth strategy. It would be interesting to see aggregate research in this space.

[0] http://infinite-food.com

Ya, crowded, usually no seats. Even getting in the station is a PITA with the security checks, it means waiting in line sometimes for greater than the trip takes.

Taxis are cheap, you just need to schedule your commute right.