There’s no doubt that China is a big target for many companies looking to grow – from domestic and pan-Asian companies to companies based in North America, Europe and other regions. All you have to do is look at some of the enormous deals occurring in the country to recognize the potential China offers. In Q3, VC investment in the country reached $9.6 billion (US dollars) – much of this thanks to Didi Kuadi, an online taxi hailing service company that raised $3 billon alone.
One reason why VC in China might be doing well right now is because investors continue to see the country as a place where proven disruptive business models can thrive. While taxi apps aren’t likely to get the same attention in the US these days now that Uber’s taken a big hold on the North American market – China is a different story. There’s still plenty of opportunity for a company to rise above the rest.
Looking more broadly at the business environment in China, there seems to be a lot more focus on entrepreneurialism than there’s been in the past. The Chinese government in particular is making innovation and entrepreneurship a big priority. At a policy level, the government recently hosted the China Innovation and Entrepreneurship National Summit in October. This conference was one of the first major government-sponsored summits focused on driving innovation and entrepreneurship across China.
The country is also matching policy with action. Recently, the government announced a $10 billion investment fund to promote innovation activities within sixteen cities within China, including Beijing and a number of cities in central China. These funds will be focused mostly on supporting the technology sector – but that’s not to say other complementary sectors will not get funding. One area ripe for attention is healthcare and health-tech. Given the percentage of the population that lives in rural and remote areas of the country, it’s not surprising that a number of companies based in China are working introduce technologies aimed at providing remote diagnostic and other complementary activities.
Another interesting aspect of the Chinese VC environment is the fact that government agencies in China are also starting to invest in startups – for instance, by setting up angel funds that can invest in high tech companies. Companies that are backed by funds from state-owned enterprises may have a leg up over other new companies because they will have a stronger relationship with the government and with specialists who can help connect them to the resources and funding they might need to grow. To help support this initiative KPMG in China opened the KPMG Innovative Startup Centre, at the Zhongguancun’s Haidian Park in metropolitan Beijing. The Centre acts as a base for more than 20 KPMG professionals and provides tailored services to the dynamic Chinese entrepreneurs in the area. It will be interesting to see how these initiatives evolve over the next few years.
Mr. Fung’s primary focus at KPMG in China is in serving clients in the technology, media and telecommunications space. He is actively involved in guiding clients through regulatory hot topics and accounting matters during the pre-IPO stage, to allow clients to succeed in IPO projects. Mr. Fung is also involved with the KPMG Innovative Startup Centre, based in Beijing, whose objective is to provide a one-stop service for startup companies to accelerate their growth in the ecosystem.