Hardware industry comes under spotlight in China with the emergence of more and more smart wearables and the entrance of domestic Internet giants, like Baidu and Qihoo. Jiang Zhaoning, founder of appcessory solution provider Yeelink, recently shared his insights on the difference between Chinese and the US hardware entrepreneurial environment. We have it partly translated as below:
- The most prominent difference between Chinese and foreign hardware entrepreneurial environment is that foreign hardware products are made for international market (mainly English-speaking world), while Chinese ones are focused on domestic market (mainly Chinese mainland market).
- Here I compared the difference between Yeelink, a startup backed by a Chinese team, and Spark, a hardware platform developed by an American group.
1. Supply Chain/ Manufacturing
Chinese startups enjoy advantages in this aspect, because they have easy access to strings of large-scale IC factories and module makers in Shenzhen. But how to make the best use of this advantage is still a big problem, since most Chinese engineers, especially software engineers, are introvert science geeks and awkward speakers. On the other hand, their US counterparts are able to communicate with confidence, giving full play to their exploring spirit to push the project even though they are hindered by language obstacles.
There are many excellent US accelerators, which is a crucial factor for the development of startups. In addition to early-stage funding, accelerators also help startups to get quick access to follow-up capital. Founders or program directors of most US accelerators like Halxr8r, 500Startup and YY are entrepreneurs who have rich technological and industrial experiences, or founders of some well-known companies. Their experiences can broaden the vision of startup companies and help them to get connected with outstanding industry practitioners. There are few accelerators in China and I doubt if there were any ones dedicated to hardware sector.
3. Fund Raising
There are plenty of channels for US startups to secure early-stage funds: 1) Crowdsource fundraising platforms like Kickstarter (most of well-prepared projects booked more than $100,000 of initial capital), 2) Accelerators: Haxlr8r, an accelerator program for hardware-based startups around the world, usually grants $300,000 to $500,000 seed funding to each project, 3) Angel Investors: Both veteran and amateur investors are quite active on various platforms, such as Angellist.
4. Seed User
Compared with US seed users, their Chinese counterparts are not only few in number but low in consumption abilities. Moreover, US seed users often provide professional suggestions to research teams.
Chinese and US groups have different advantages in this aspect. American people who play with DV since childhood are quite experienced in facing media. Xu Xiaoping, a well-respected angel investor and founder of early-stage investment fund ZhenFund, said that each startup team should have one music professional, because he will inspire the whole team while other members are overwhelmed by technical problems. CTO of SparkDevices got a doctoral degree in music composition and its CEO is a state TOP 10 finalist in America’s Got Talent.
Pricing strategy for Chinese startups is more flexible, but US teams cannot slash prices due to various reasons.
Although domestic OEM market is huge, it is difficult to scale up the business without homegrown brands. It is interesting to note that almost all of US teams developed their own brands.