Shenzhen, the Silicon Valley in China, is becoming a must-destination for the foreign hardware startups to start their business. On the other hand, Chinese startups are starting from Shenzhen and expanding to global markets, such as educational robot kit Makeblock, drone maker DJI, and smartphone manufacturer Huawei.
In the panel “Startup in Shenzhen”, Benjamin Joffe, Partner at HAX, the world’s most active early stage investor in hardware with over 200 startups, and Chad Xu, the managing director of Shenzhen Valley Ventures (SVV) discussed how Chinese startups can go global, and global startups can enter the Chinese market.
Eva Yoo: How do you position Shenzhen in the global hardware ecosystem?
Benjamin Joffe: I worked in China, Japan, Korea and Silicon Valley and know that each ecosystem has its own advantages and disadvantages. For example, Silicon Valley also has a lot of problems. Firstly, everything is expensive, it’s hard to hire and retain people, also there is no supply chain and little expertise about manufacturing. In the case of Shenzhen, the supply chain is amazing, but it might not be the place to find engineers, investors or customers. To find everything – engineers, manufacturing, investment, customers – you need to think very globally.
Eva Yoo: Many foreign hardware companies want to enter China. How do you advise them?
Chad Xu: First of all, you need to see if your product is innovative in technology. Secondly, you should see if you can put it into practice. Another point is that you need to deliver your product timely in China. If you are not moving fast enough to deliver, the production concept will eventually be copied by someone else.
Benjamin Joffe: For Chinese or non-Chinese enterprises, you have to consider the market fit. As an early stage foreign company, it is generally a distraction to try to enter China, unless you see a great fit, and if many local people confirm this. For instance, one of our startups from the UK named MilkSafe is developing a device to test breast milk and baby formula. It’s a great fit for China. There are not many examples of foreign hardware startups being successful here. Misfit, who worked with Xiaomi, is probably an exception.
Chad Xu: I advise foreign startups to find a Chinese partner to set up a locally operated company. For foreign startups, there are not many people who know the Chinese market. So first of all, they should have very good local partners to help them understand the local market and adapt to the market.
Eva Yoo: Do you think Chinese companies have a series of innovations? What is the innovation of Chinese companies in terms of technology?
Chad Xu: I think the innovative model between countries is different; some innovation, in fact, to solve a particular demand in a particular country. Here’s an example, air purification machines are sold in China, because the country has a very heavy air pollution problem in northern China. On the other hand, ofo and the Mobike’s model can be applied to the global market.
Benjamin Joffe: There are three innovative Chinese startups that I want to mention: Plecobot makes robots that clean windows of high-rises, replacing “spidermen” who risk their lives. The second is an industrial robot with computer vision named Elephant Robotics – much more versatile and affordable than traditional ones. Last is Sonicam, making 3D cameras with 3D sound using 64 tiny microphones. The founder used to work at Huawei for over a decade and invented over 100 patents before doing his own product.