China’s Big Tech Advantage Is Speed, Not Cost

Chinese flags wave near high-rise buildings
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China’s not just a copycat economy anymore; it has turned into a high-speed innovator. So says Ben Joffe, general partner of HAX, a five-year-old hardware accelerator and investor.

And the rest of the world had better watch out.

We call what China is doing “Xiaomization,” because smart-phone giant Xiaomi’s high-speed commoditization of product categories is driving a lot of people out of business. Right now, he says, Xiaomi has invested in 77 companies—and four are unicorns, meaning they have a market capitalization of over $1 billion.

Xiaomization, he says, knocked Fitbit out of the Chinese market when Xiaomi launched a $13 activity tracker. And no product category is safe.

“The advantage of China is not cost,” Joffe says. “It is speed. Everything works at startup speed. You will get a message from the supplier Sunday night telling you that they can ship your component in morning.”

It’s also becoming a research mecca, Joffe said, with top universities and companies from around the world starting research centers in China. And, he says, this year China will overtake Japan in terms of numbers of patents filed, making it second only to the United States.

There’s plenty of startup funding in China as well, Joffe indicated. “Currently, there is an overflow of funding,” he said, “particularly angel funding.” First round funding, he pointed out, tends to be larger than funding for comparable ventures in the United States, because, he said, China believes you have to win a market quickly.

“China today,” says Joffee, “is like Japan in the 1980s: incredibly creative and incredibly fast.”

As for particular technologies, he indicated, voice control is booming—as is virtual reality, with thousands of VR arcades introducing people to the technology. Rental ventures are booming, with, he said, some companies introducing rental bikes that don’t need to be docked at a specific station, others are renting umbrellas, batteries, and even basketballs.

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