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More entrepreneurs, less innovation please

I have just returned from a federal government trade mission to China, the bi-annual Australia Week in China. I attended the Innovation stream starting in Shenzhen, then Beijing and finally Shanghai. There were other streams with over a 1000 Australians attending, culminating in a very Australian lunch attended by the Prime Minister and many other government representatives.

I went to look and discover new networks. I did not go trying to promote any particular business as I was totally unfamiliar with the landscape in a business sense and truly went to discover. I had been many years ago as a guest of Huawei in 2007 but that was to look at fibre optic transmission equipment. This was a different trip.

A few years ago I attended a trade trip to Israel with the Australia Israel Chamber of Commerce but this was far different to that. Given the recent signing of the China-Australia Free Trade Agreement and the fact the trip was done under the auspices of Austrade this style of visit was very different to something organised by a private chamber. Not better or worse just very different – more diplomats. As a regular attendee at conferences over the years I can assuredly say that this was no conference but it was a stage managed and deliberate attempt to join Australian business to Chinese business. I congratulate the government for the week – Australia-China trade will be all the better for it.

China is big. Big cities, big regions, fast grown regions (from fishing villages to 30M+ residents in 30 years). Regions of 20 million and 30 plus million just roll off the tongue. They are doing lots things in many places at once. If we, in Australia, are doing or would like to do one thing, each region has at least 4 or 5 different versions of it underway. Is that a reason not to do it – hell no – it is a reason we must; we just need to understand where we fit and/or who we can cooperate with.

A good example of this was our visit to HAX, the world’s first and largest hardware accelerator, situated in Shenzhen next to the largest electronic component retail space in the world in a district renowned for their design, manufacture and support of all things hardware. If you are going to do anything in the hardware space you need to understand their story as much as you can, whilst they have recently opened in the US it is their proximity to this density of electronic manufacture that makes HAX in Shenzhen a worthwhile place to visit and understand.

The Internet in China is hamstrung by the information restriction policies of the government (the great firewall) making Internet access hard if you like certain things that the Chinese government doesn’t. VPNs I found to be a so-so solution – they had a habit of dropping and/or not establishing and whilst I found that my iPhone worked OK in Shenzhen on 4G it only had sporadic Edge network access elsewhere. In Shanghai some overseas websites actually “slipped” through the firewall. One speaker mentioned that the Internet in China was a parallel universe and they weren’t wrong. For all of that it has not held them back – they have embraced ecommerce voraciously where local firms – thanks to the trade barrier that is the great firewall – can get a leg up past their overseas rivals.

One of the first speakers mentioned something that caught my attention, something we don’t seem to get in Australia – they spoke of the Mass Entrepreneurship and Innovation program (MEI). The subtly of the statement is as important as the scope of it: mass – they want lots of it. Importantly it places the correct emphasis on Entrepreneurship first – good entrepreneurs will use innovation to seize market/create share. It seems to me that everybody wanted to be in business, maybe that is an artefact of some other economic factor but from the people launching tens of thousands of startups each year in the Shenzhen region alone to the lady on the street recycling old mobiles for their constituent components and resources to be recycled, they talked about enabling business and having that drive/ innovation – they get it. They want businesses to use research and employ PHDs and understand that PHDs and research alone does not grow a business.

Want to go to China and check it out? Just go and do it. It is probably easier than Silicon Valley – it is surely cheaper. Just like Silicon Valley though do not go there and expect to have any impact early, if you plan to do business there (maybe raise money) you need to be all in. You need to learn the local language, you really need to use WeChat, you have to learn the cultural things that will see you have a value rich engagement. This is not that different to Silicon Valley – people over there do not like blow-ins, they want to see you operate maturely in that market and China, in that respect is no different. Before you go make sure you learn some Chinese, understand cultural habits to help ease into relationships, make sure you understand issues around intellectual property, talk to others who have been and get warm introductions.

Everybody we met was warm and friendly, one example outlined starkly how much you need to be prepared to enter any market when five Aussie investors took an hour to catch a cab (and a special thanks to the two girls in Beijing on the street who helped us get the hotel address translated into Mandarin on a post-it note so cab drivers could have some idea where to take us), if you can’t catch a cab then you probably aren’t ready to boot up in China. That being said, you need to start somewhere. #startsomething

This article was originally published on Linkedin. Read the article here.

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