China’s Silicon Valley sees surge in startups

web finance ‘hot’

China’s answer to Silicon Valley is experiencing a surge in new technology companies as the world’s most populous nation reduces its reliance on manufacturing.

In 2014, Beijing’s Zhongguancun saw some 49 startups launch every day as innovation takes root in the country, Wan Gang, China’s minister of science and technology, said recently.

China now has more than 1,600 technology incubators, he said.

Zhongguancun is home to a raft of established Chinese technology companies, from PC maker Lenovo Group Ltd. to search engine operator Baidu Inc. Xiaomi Corp., the nation’s biggest smartphone vendor, was established in the district five years ago and has reached a valuation of US$45 billion to become the world’s most valuable startup.

The country now has more than 1,000 organizations investing in startups with capital exceeding 350 billion yuan (US$56 billion), Wan said, adding China is also experiencing a surge in technological innovation, with more than 660,000 effective invention patents last year, up 12 per cent from a year earlier.

Xiaomi has already backed 27 startups and plans to fund as many as 100 new companies, its chief executive Lei Jun said this month. The investments are designed to help Xiaomi expand from smartphones and tablet computers into smart home products including cameras, security systems and air purifiers, Lei said.

Traditional businesses in China are ripe for disruption by innovative startups, Baidu’s chief executive Robin Li said last week. Internet finance is a “very hot” area for development, as services including banking, insurance and consumer credit can all be improved online, Li said.

“The market economy in China is only a few decades old so it is not very mature and not particularly efficient,” Li said. “Using the Internet to do it all over again, we can see that there are many chances.”