Sil­i­con Val­ley cre­ates Chinese start-ups

The Mercury - - BUSINESS REPORT - Koh Gui Qing and Sal­vador Ro­driguez

BEI­JING’S un­slake­able thirst for the lat­est tech­nol­ogy has spurred a pro­lif­er­a­tion of “ac­cel­er­a­tors” in Sil­i­con Val­ley that aim to iden­tify promis­ing start-ups and bring them to China.

The surge in the num­ber of China-fo­cused ac­cel­er­a­tors – which sup­port, men­tor and in­vest in early-stage start-ups – is part of a larger wave of Chinese in­vest­ment in Sil­i­con Val­ley.

At least 11 such pro­grammes have been cre­ated in the San Francisco Bay area since 2013, ac­cord­ing to the tech-sec­tor data firm Crunch­base. Some work di­rectly with Chinese gov­ern­ments, which pro­vide fund­ing. Interviews with the in­cu­ba­tors showed that many were fo­cused on bring­ing US start-ups to China.

For US gov­ern­ment of­fi­cials wary of China’s grow­ing high-tech clout, the ac­cel­er­a­tor boom reaf­firms fears that US tech­no­log­i­cal know-how is be­ing trans­ferred to China through in­vest­ments, joint ven­tures or li­cens­ing agree­ments.

“Our in­tel­lec­tual prop­erty is the fu­ture of our econ­omy and our se­cu­rity,” Se­na­tor Mark Warner, the Demo­cratic vice-chair­per­son of the US Se­nate In­tel­li­gence Com­mit­tee, said about Chinese ac­cel­er­a­tors. “China’s gov­ern­ment has clearly pri­ori­tised ac­quir­ing as much of that in­tel­lec­tual prop­erty as pos­si­ble. Their on­go­ing efforts, le­gal or il­le­gal, pose a risk that we have to look at very se­ri­ously.”

The US has al­ready moved to block many Chinese ac­qui­si­tions in the tech sec­tor, and is con­sid­er­ing sev­eral mea­sures that could im­pose sweep­ing new stric­tures on Chinese in­vest­ment in Sil­i­con Val­ley.

US Pres­i­dent Don­ald Trump’s crack­down down on visas for foreign tech work­ers and threats of a trade war with China are also chang­ing the land­scape.

And to be sure, the Chinese pro­grammes are a small part of the picture; there are 159 ac­cel­er­a­tors and 70 in­cu­ba­tors of all types in the San Francisco Bay area, ac­cord­ing to Crunch­base.

Yet the ac­cel­er­a­tors re­flect close ties be­tween en­trepreneurs, tech in­vestors and top engi­neer­ing tal­ent in the US and China.

US uni­ver­si­ties re­main a ma­jor train­ing ground for Chinese en­gi­neers, for ex­am­ple, and US com­pa­nies such as Mi­crosoft have long had re­search lab­o­ra­to­ries in China.

Of­fi­cials at sev­eral Chin­abacked ac­cel­er­a­tors said their goal was to help start-ups gain ac­cess to the China mar­ket and nur­ture re­la­tion­ships be­tween en­trepreneurs and in­vestors in both coun­tries.

“We are build­ing the door or bridge to the China mar­ket,” said Wei Luo, chief oper­at­ing of­fi­cer at ZGC Cap­i­tal, which runs the ZGC In­no­va­tion Cen­ter.

They said their goal was to help start-ups gain ac­cess to the China mar­ket and nur­ture re­la­tion­ships.

The cen­tre is backed by Zhong­guan­cun De­vel­op­ment Group, an en­tity funded by the Bei­jing lo­cal gov­ern­ment; its name refers to the Zhong­guan­cun neigh­bour­hood, which is some­times called China’s Sil­i­con Val­ley.

Ac­cel­er­a­tors like ZGC “help US en­trepreneurs un­der­stand China bet­ter,” Luo said.

Ethan Schur, a US en­tre­pre­neur and co-founder of Grush, a smart tooth­brush that com­bines brush­ing with gam­ing to en­cour­age chil­dren to clean their teeth, has teamed up with ZGC and called the part­ner­ship “very help­ful.” ZGC helped Grush set up shop in China, Schur said.

“We’re able to meet the man­u­fac­tur­ers we want to work with, are trustable, re­li­able and have a good price,” he said.

For en­trepreneurs David Lee and Grace Wang, who founded a ZGC-backed travel plan­ning app called The Ex­, run­ning a com­pany that is not well con­nected to China is bad for busi­ness.

“It’s all about col­lab­o­ra­tion,” said Wang, who was born in China and moved to the US in 2011 for col­lege be­fore at­tend­ing grad­u­ate school at the Univer­sity of Cal­i­for­nia Berke­ley.

Dur­ing a visit, the ZGC In­no­va­tion Cen­ter in Santa Clara, in the heart of Sil­i­con Val­ley, was bustling with tech en­trepreneurs of both Chinese and US ori­gin. Since its 2014 open­ing, the cen­tre has hosted 55 start-ups and has in­vested in more than 40. – Reuters

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