Top 3 Startup Industries in China

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China is known as the manufacturing capital of the world. All from plastics, electronic, toys, glass and many more are manufactured and imported from China. However, its booming cities are now also home to numerous startups and multinational/international companies.

 

Cities such as Hong Kong, Shanghai and Beijing are fast becoming tech and innovation hubs – aside from being well-known financial districts in the Asia-Pacific region. These cities can very well rival Singapore and Tokyo in terms of growth.

 

In fact, in a report by The Shanghai Daily, over 70,000 startups had been established in China by the middle of 2016 – and that number grows each year. Although Beijing is known as a startup hotspot among the locals, Shanghai also takes the cake as the startup haven for foreigners and expats, due to its internationally-friendly climate.

 

The most significant of all is that, China has a good number of “unicorns,” or startups that are already valued at $1 billion or more. That is according to CB Insights, a data company that recorded over 41 startups which attained unicorn status at the start of 2017. 15 of these companies are based in China – only 2 companies short of the US which finished 1st on the list with 17 unicorns. Europe on the other hand is lagging behind, producing only 5 unicorns by the start of 2017.

 

With a population of over 1.3 billion, China is a powerful market. But what kind of startup industries see huge success in the country? Below is a rundown of the top 3 ones:

 

E-Commerce

Like in the US, e-commerce is also a big thing in China – Alibaba’s immense success is proof of that. Foreign entrepreneurs might find it hard to break through the Chinese market – especially in e-commerce and online services, but Chinese startups know their market well. Marketing is not much of a problem when there are no language and cultural differences that can rub potential customers the wrong way.

 

Aside from Alibaba, China’s startup e-commerce scene includes niche industries such as steel-making and trading. One such startup is Zhaogang which was founded in 2012 and is now valued at approximately $1 billion by June 2017. The company is founded by Dong Wang and their investors include Matrix Partners China and K2 Ventures, among others.

 

E-shang Redwood is also an online industry which focuses on the business of real estate. They develop and operate real estate properties in major urban cities in China, and they also maintain around 20 e-commerce sites. The company is already valued at $2.8 billion by July 2017 – and is currently looking to expand their business in India.

 

Artificial Intelligence

Artificial Intelligence (AI) is yet another growing startup niche in China, and most of these AI companies have developed very interesting projects. Cambricon, which is backed by the Alibaba Entrepreneurs Fund, is developing a processor chip that mimics or simulates how the brain cells work, so a robot can emulate deep learning like humans can. Their AI chips are also designed to be placed on computer cloud servers and smart terminals. By August 2017, the company is already valued at $1 billion.

 

Sense Time is another AI startup which develops text and face recognition technology to mobile companies. It is a homegrown business with local-based investors, and as of July 2017, the company is valued at $1.47 billion – which is impressive, considering that the company was just founded in 2015.

 

Streaming and Online Services

A slew of entertainment, streaming and online services are included in the 15 unicorns that were listed by CB Insights. In fact, 9 out of the 15 startups belong in this category. Niches vary, but a couple of educational online services can be found on the list, such as Vipkid and Yuanfudao.

 

Vipkid is an online tutorials service that provides one-on-one video lessons to Chinese kids aged 5 to 12. Vipkid however outsources their online tutors from North America. The company is valued at $1.5 billion on August 2017, and aside from local investors, it garnered 2 Los Angeles-based investors too.

 

Yuanfudao (valued at $1 billion) is another online educational service which provides kids with “electronic exams,” or exams via digital devices such as smartphones and tablets. Like Vipkid, it also has a multinational pool of investors, with a New York-based investor.

 

Other startups under this category is Mobike – a popular app that allows bike renting for commutes. By June 2017, the company is already valued at a whooping $3 billion. Tuandaiwang, a peer to peer lending service also made the list, along with Netease Cloud music, a Shanghai-based music streaming service.