With a reputation of a big imitator, the Chinese tech sector currently experiences a shift in paradigm and approach.
The rapid expansion of the Chinese tech start-up in high-tech sectors fuels the national economy like never before. With a mature tech sector and expansion plans overseas, China moves up the value chain in domestic and foreign investments in a novel manner, leaving behind the imitation patterns and focusing on becoming an innovator.
With shy beginnings that started more than a decade ago with the Lenovo’s acquisition of the IBM personal computer arm, now the tech sector in the region is at the midst of its journey to becoming one of the most prominent players in tech-focused sectors. From biotechnology to semiconductors and green energy, the private investment sector plays rough on markets in the US and other key-regions of the world.
The Lack of Government Investments in the Tech Sector Fuels Start-up Growth
Being a culturally different economic environment that the western investment sector, Chinese foreign investments are traditionally marked by government-owned players that dominate foreign investments.
However, the high-tech sector is weakly tied to governmental bodies, an aspect which allows a healthy and rapid growth of small, independent players. But this is due to raise some problems for Western tech companies and governments, especially in the US, as we observed earlier this year. Worried about the negative impact on local players and economy, the Chinese tech expansion overseas is seen with a doubtful eye by state leaders trying to protect their economy. But still, nothing seems to put a cap of the remarkable growth of the flourishing innovation capabilities and striking evolution of small tech start-ups in the region.
During the following years, China’s capabilities in tech-connected sectors are expected to grow at a fast pace, especially in the highly favourable context of partnership and collaboration tech summits. The impact of the players in the sector will become visible even for the non-believers.
China Reassesses Investment Goals
Routinely, China has focused on importing technology, resource acquisition and trade facilitation in the niche. These were the only investment patterns observed in developing areas of the world, such as Latina America and Africa. But still, these investments were mainly focused on rail and electricity infrastructure development. Although the same investment patterns have been noticed in thriving countries, they were more technology acquisition-focused.
While the country doesn’t seem to abandon soon the old investment patterns, new ones with higher potential emerge. Attractive markets have been already identified by Chinese tech players. At the end of 2018, the China-Israel collaboration efforts intensified, in anticipation of the upcoming tech and innovation summit. According to Dorian Barak, CEO of Indigo Global, “The ultimate measure of Chinese investment in Israel will be when Chinese companies begin establishing development, sales and manufacturing hubs in Israel.”
Licensing technology goods and systems is the next step for domestic companies in the ever-changing economic and market climate in the region. From mimicking what big players in other countries develop, Chinese tech development companies have recently focused on independent licensing middle and high-end technologies and devices. But no matter how much China wants to advance in the tech development sector, many specialists worry about the inevitable strain put on the process by governmental regulations and economic controls.
But China’s ambition is obvious, nonetheless. It wants to become a worldwide force in the high-tech sector, changing the way it leverages technology to become a leader, not a follower in multifaced sectors with an increasing emphasis on cutting-edge technologies.
The bigger picture in regards to technological developments is also mutating in China. Instead of isolating themselves and carrying out all the processes in-house, players in the tech sector try to focus on designing efficient “science and technology diplomacy” practices.
Focusing on growing collaboration, China is now opening opportunities and collaboration chances to other tech development hubs around the world. “Israel has a strong impetus to do business in China,” according to Dorian Barak. China will certainly be advantaged as well from similar collaborations. The Israeli agricultural technology can open new partnership opportunities for Chinese players, the country being a location with an immense need of recent and innovative agro-tech.
Collaboration and overspecialization are now the focal points for tech start-ups. When one lacks from the equation, developing innovative commercial products in the tech sector is burdened by a series of challenges.
Collaboration and Partnership in the China-Israel Dichotomy
The growing tech partnership between China and Israel which began in 2015 is focusing on growing collaboration between Chinese and Israeli key-developers in the tech innovation niche. Since 2015, the trade between the two countries expanded sensitively. Israeli exports to China increased by more than 60% in the first half of 2018. Exports from China have also increased by 10% during the same timeframe. Stronger trade relations fuel partnership and collaboration.
The developing sectors in both countries make this partnership stronger and with higher potential. Huawei, Xiaomi and Lenovo already established research and development centres in Israel. According to a series of NGOs focused on surveying Israeli start-up activity in foreign areas, more than 6,000 start-ups and multinationals have entered the Chinese market over the past few years.
The growing capabilities in AI and sophisticated manufacturing methods seem to pair perfectly with the logistics brought to the country by Israeli players. Besides, China benefits from this partnership in numerous other ways, according to tech specialists and investors. More citizens are now hired in Chinese-Israeli enterprises, tax money enters the Government’s pockets and most exports operated by these new tech players are mainly operated from here.
In the near future, Chinese tech start up will be innovation drivers, playing at a large scale globally in developing new, innovative technologies and products. New partnership opportunities re due to arise, thanks to a bigger acknowledgement from other countries’ part.